IBRA: A case of too much politicking

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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.