IBRA: A case of too much politicking
IBRA: A case of too much politicking
or
IBRA: too much politicking
It all depends on the owner, said an executive at the
Indonesian Bank Restructuring Agency (IBRA).
He was referring to the changes of programs, direction and
approach adopted by IBRA in carrying out its duties:
restructuring banks, loans and assets and then selling them.
He was also alluding to the all-too-frequent changes in IBRA's
leadership.
During its mere four years in existence, IBRA has seen all of
six chairmen: Bambang Subianto, Iwan Prawiranata, Glenn Yusuf,
Cacuk Sudarijanto, Edwin Gerungan and I Putu Gede Ary Suta.
The first three were appointed during the Soeharto and Habibie
administrations; the last three were chosen by former president
Abdurrahman Wahid.
It appears that politics have played a major role in the
repeated turnover in the leadership role at IBRA.
As president, Habibie reshuffled IBRA chairmen while Golkar
was still at play, and no other political parties were in the
position to challenge Golkar.
However, when Abdurrahman came to power in October 1999
through a power brokerage between political parties, the position
of IBRA chairman once again became the center of intense
infighting among politicians.
As such, no less than three IBRA leaders came and went during
Abdurrahman's one and a half years in power.
IBRA has been the focus of political wrangling because it
manages more than Rp 600 trillion (about US$60 billion) in
assets, including loans pledged by debtors and owners of failed
banks.
When President Megawati Soekarnoputri was catapulted to power
in late July, speculation was rife that she would replace Putu,
who had been chosen by Abdurrahman a month beforehand.
Megawati defied market predictions and allowed Putu to stay on
as IBRA chairman.
But although Putu remained chairman, Megawati transferred
control of IBRA to the state minister of state enterprises,
Laksamana Sukardi. Previously it was under the control of the
finance minister.
A significant change indeed.
With IBRA firmly under his control, Laksamana, who is also an
executive of Megawati's Indonesian Democratic Party of Struggle,
now controls most of the country's assets.
Judging by the apparently cool relations between Laksamana and
Putu, market players once again started to speculate that
Laksamana would replace Putu outright.
But once again, these anticipations have proven wrong.
Putu is still solidly in command and, in fact, wields even
more power within the agency, apparent in his recent success in
replacing his four deputies with men of his own choice.
Speculation is again rife as to why and how Putu has managed
to maintain his position as the top man in IBRA.
Some answers may bubble to the surface. One possible reason
may lie in Putu's masterful ability to play the game of politics.
Unlike his predecessors, who were professionals in their
respective fields, Putu himself is a former bureaucrat. He was
previously an official at the Ministry of Finance, and later a
chairman of the Capital Market Supervisory Agency (Bapepam).
Many people assume he knows how to deal with government
officials and, even more importantly, legislators.
In this time of rowdy democracy, coming to terms with
legislators for an IBRA chairman is a must. And Putu has proven
highly capable of dealing with them.
The recapitalization of Bank Internasional Indonesia (BII)
serves as a good example. Although the government and the House
of Representatives had agreed that there would be no second phase
of bank recapitalization, BII's recapitalization went ahead
smoothly, and without hurdles.
The latest example has been the quick, successful sale of
carmaker PT Indomobil Sukses Internasional at a price slightly
above its market value -- and far below the price with which it
was ceded by Salim to the government.
Although the former owner of Indomobil, the Salim Group, is
suspected of having been behind the transaction, objections by
legislators have been muted.
The next test will concern the sale of Bank Central Asia, the
jewel among domestic banks. Will Salim manage to acquire BCA --
despite the central bank's ban against the former owner acquiring
a stake?
It seems that nobody in power cares. What does concern them is
that IBRA meets its annual goal of collecting a certain amount of
revenue.
Therefore, it is only logical that members of the public have
grown suspicious about what IBRA is up to. In fact, this agency
has been under public scrutiny since its very beginnings.
When it was founded in early 1998, it was supposed to manage,
and then sell, huge assets in the best interests of the
Indonesian public and complete its work within a seven-year time
frame, by 2004 -- exactly the end of Megawati's administration.
IBRA, therefore, has an obligation to sell assets in a timely
fashion.
The problems facing the agency revolve around two main issues:
for how much, and to whom, should the assets be sold.
Actually, there are already clear guidelines by which IBRA
must do business: sell off assets at their maximum value.
What is the maximum value? Some analysts contend that it would
be realistic for IBRA to recover 20 to 40 cents on the dollar.
But who will shoulder the losses? According to the old
agreement between the government and the debtors, taxpayers will
bear the losses. And that's a shame.
But that's not the concern of IBRA officials. Their main duty
is to sell assets, and recoup as much money as possible in the
process so that the government, in turn, can recoup most of the
fund it used to bail out banks.
However, to whom should IBRA sell its newly acquired assets?
The government has clearly stipulated that the assets must be
sold to the most credible investors, rather than their former
owners.
This means that IBRA's job is to cut deals with Indonesian
tycoons and members of the elite.
There was once a big hope that IBRA could eventually help
distribute wealth formerly concentrated within a number of
tycoons to as many people as possible.
However, that hope faded very early on because of the
tremendous power yielded by old economic interests and the elite.
This situation has stirred smoldering public resentment.
Late last year, for instance, the government was forced to
block the Salim Group from bidding for more of its former assets
after this group repurchased Karimun Granite and a piece of
Singapore-listed food company QAF.
Who, however, can guarantee that Salim will refrain from
buying its former assets?
The restructuring of the multibillion dollar debt owed by
Texmaco to IBRA serves as yet another example. Although it was
criticized as favoring Texmaco, no one has been able to pinpoint
what exactly is wrong with the transaction.
All these things only serve to prove that the same old tycoons
and corporate interests still reign supreme, and that the public
can only seethe with resentment.
Indeed, it all rests with the owner. Unfortunately, the owner
is a government that caters to the will of a narrow, privileged
elite, rather than the overall good of the Indonesian people.