House yet to give support to plan to revise MSAA

House yet to give support to plan to revise MSAA

JAKARTA (JP): The House of Representatives would only support
the government's plan to revise an earlier agreement with former
bank owners after a thorough study has been completed, according
to House Speaker Akbar Tandjung.

Akbar said on Wednesday that the government had agreed to form
a joint investigation team with the House to study the
controversial agreement called the Master of Settlement and
Acquisition Agreement (MSAA).

"The government has said that it plans to revise the MSAA...
But the House needs more time to study it first before we can
come up with our final say," he told reporters in a joint press
conference with Finance Minister Bambang Sudibyo.

"The proposed revision will be a valuable input for us," he
added.

He said that the team would work over the next two to three
weeks, but didn't give any deadline.

The government, represented by Bambang, met with the House in
an apparent bid to seek support for its bid to force the powerful
and influential former bank owners to completely repay their
multi-billion dollar debt to the government.

The MSAA agreement was made during the previous administration
of president B.J. Habibie. Under the agreement, former owners of
four private banks were allowed to surrender assets to the
Indonesian Bank Restructuring Agency (IBRA) to repay their debts.
The banks included nationalized Bank Central Asia (BCA), the now
defunct Bank Dagang Nasional Indonesia (BDNI), Bank Umum Nasional
(BUN) UN and Bank Subentra.

The government, through the central bank, injected more than
Rp 100 trillion in emergency liquidity support loans to the four
banks during the peak of the country's financial crisis to
bailout the banks amid massive bank runs in 1998 and 1999.

In addition to the MSAA, IBRA signed another less
controversial agreement called the Master of Refinancing
Agreement (MRA) with another group of former bank owners.

Coordinating Minister for Economy, Finance and Industry Kwik
Kian Gie was the first to raise the controversy surrounding the
MSAA. He said late last month that the present value of the
assets was much lower than the total obligations of the former
bank owners.

Kwik said that the MSAA must be revised because under the
agreement it was the government which would cover any commercial
loss if the realized value of the assets turn out to be lower
than the debt.

Kwik pointed out as an example that the Salim Group, the
former owner of BCA, had total debt of around Rp 52 trillion, but
the more than 100 companies surrendered to IBRA are now only
worth around Rp 20 trillion, leaving the government and tax
payers to cover the difference.

Bambang said that there were three main reasons why the MSAA
must be revised.

Firstly, the agreement was legally defective, benefiting the
former bank owners at the expense of the government.

"It is an uneven agreement," Bambang said.

"Secondly, we have observed that the debtors have not complied
even to this inequitable agreement," he said.

"And thirdly, there is evidence that the agreement was not
based on good faith (of the former bank owners)," he added.

"These reasons are enough to justify revision of the MSAA,"
Bambang said.

He also said that according to his personal opinion, the
former bank owners should be held responsible for any crimes they
committed in relation to the channeling of the liquidity supports
even if they have surrendered assets to repay their debts to the
government.

He said that the original MSAA tended to compromise banking
crimes of the past.

An audit made by the Supreme Audit Agency (BPK) revealed that
out of the Rp 144.5 trillion of the emergency liquidity support
injected to 48 commercial banks, some Rp 138.4 trillion had been
misused. BPK said that instead of repaying depositors, the banks
used the cheap loans for currency speculation or lending to
affiliated business groups, raising the possibility that the
banks had breached the legal lending limit. (rei)