IBRA admits pressure from outsiders

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA), the country's largest and most powerful economic entity, acknowledged on Friday to facing massive pressure from "outsiders" trying to take advantage of huge assets under its control.

IBRA deputy chairman for risk management Arwin Rasyid said the agency had so far succeeded in weathering the pressure and maintaining its professionalism and credibility.

"With the size in wealth and assets we're holding, no wonder many parties try eagerly to take advantage and want a piece of the action from us," he told reporters after a seminar on IBRA.

"This is an acid test for IBRA's professionalism," he said.

"But to my knowledge, the pressure (from outsiders) was never successful," Arwin said.

Arwin was responding to increasing concern caused by the disclosure of an alleged Rp 546 billion (US$78 million) under-the-table payment from Bank Bali that many lobbyists had tried to influence the agency's policy and decision.

IBRA, an agency under the Ministry of Finance, was set up early last year to help the government restructure and recapitalize the banking sector. It is also in charge of administering the government's blanket guarantee scheme for bank deposits and claims launched in late January 1998.

The agency has become a mammoth entity controlling a total of Rp 600 trillion worth of assets, including over $30 billion in bank nonperforming loans (NPLs) and $10 billion worth of shares in various companies, pledged by former bank owners to repay their debts to the government.

IBRA is vested with extrajudicial power in executing its tasks, authorized to seize and sell bank assets without going through the court process and to restructure and change the management of various large companies.

But the emergence of the Bank Bali scandal, which allegedly involved a deputy chairman of the agency, has raised the question of possible irregularities at IBRA and damaged its integrity and credibility.

IBRA chairman Glenn S. Yusuf confirmed on Friday the finding of a preliminary audit that Bank Bali paid Rp 546 billion to an investment firm, PT Era Giat Prima (EGP), in what was called a fee for recouping the bank's interbank claims on closed-down banks from IBRA.

EGP is owned by businessman Setya Novanto, who is deputy treasurer of the ruling Golkar Party.

Glenn said that the agency was aware of the questionable transaction only after the UK-based Standard Chartered Bank reported on July 20 the result of its due diligence audit on Bank Bali.

Standard Chartered conducted the audit because it intended to buy a 20 percent stake in the under-capitalized bank.

Glenn's statement confirmed an earlier revelation made by banking legal expert Pradjoto who alleged that an IBRA deputy chairman was implicated in a fraud related to the reimbursement of Bank Bali's interbank loans from closed-down bank BDNI.

Pradjoto earlier speculated that the money from the transaction might have been given to Golkar.

Glenn said that the payment made by IBRA to Bank Bali was based on prudent principles and verification made jointly with Bank Indonesia (the Central bank). But the process did not involve any mediators.

"There is no reason at all for Bank Bali to use the service of third parties like EGP because the interbank claims were guaranteed by IBRA under the government blanket guarantee program."

He said that the agency was investigating the transaction.

Glenn said IBRA received from Bank Bali's caretaker management on Wednesday a report confirming a cession agreement between Bank Bali and EGP and the payment of Rp 546 billion by the bank to EGP in early June.

"But the cession agreement is unusual. Unlike the standard cession contract, the Bank Bali-EGP agreement does not stipulate any up-front payment by EGP as the buyer of Bank Bali's interbank loans."

Arwin said that a credible and transparent investigation into the controversial Bank Bali case was necessary to clear IBRA's reputation.

"We have to move very fast ... because all the eyes of the world from Washington to the (local) House of Representatives are watching us closely," he said.

"We'd like to be fully transparent with the Bank Bali case but, of course, within the boundary of the regulation," he said, citing the banking secrecy clause.

Arwin said that the agency must not succumb to external pressure, including influential politicians, if the agency is really serious about maintaining confidence in its policy.

"Once we make a fatal mistake, the repercussion could be quite devastating," he said.

Concern over the possible fraud of IBRA's assets has increased, particularly in view of rumors that a special team in charge of securing the reelection of President B.J. Habibie was going all out to raise a huge sum of funds to buy votes in the November presidential election.

Meanwhile, Kwik Kian Gie, a senior official of the Indonesian Democratic Party of Struggle (PDI Perjuangan), said at a media conference on Friday that his party would cooperate with the reformist faction at Golkar to probe the alleged fraud at Bank Bali.

Kwik said that the revelation made by Pradjoto was factual and based on a set of documented data.

"The detailed information contained in the data is so elaborate that its authenticity is beyond a reasonable doubt," he said after a meeting with Pradjoto at the PDI Perjuangan office.

Separately, Minister of Finance Bambang Subianto said on Friday that he was completely caught off guard by the irregularities at Bank Bali.

PDI Perjuangan's chairwoman Megawati Soekarnoputri is the leading contender of Golkar's presidential candidate, the incumbent President Habibie, in the upcoming presidential election. (rei/udi)