IBRA appoints an asset tracing senior officer

IBRA appoints an asset tracing senior officer

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
has appointed a senior official to take charge of tracing the
personal assets of the country's bad bankers and debtors,
possibly concealed to prevent seizure, and to check the quality
of the assets.

"We have appointed Roy Basuki to oversee our asset forensic
and asset tracing activities," IBRA chairman Glenn S. Yusuf told
the House of Representatives commission IX on banking and
commission II on legal affairs at a joint hearing session on
Friday.

IBRA is responsible for retrieving from former bank owners the
massive liquidity support injected by the government last year to
help banks survive the deepening crisis.

The agency must also recover some Rp 230 trillion in bank non-
performing loans of which some 80 percent is owed by companies
belonging to politically well-connected businessmen.

There have been increasing fears, however, that former bank
owners and bad debtors have concealed many of their valuable
assets to prevent seizure by IBRA.

A few of the country's tycoons have already surrendered some
of their personal assets worth over US$10 billion to repay the
government's liquidity support and as a penalty for violating the
bank legal lending limit, but they are still obliged to hand over
more of their personal assets in case that is not enough.

But the agency has had a hard time making the former owners of
38 banks closed down in March and seven banks nationalized during
the same month repay the credit.

IBRA has also been facing difficulties recovering the large
bad debts owed by the well-connected businessmen.

IBRA has threatened to take legal action, including bankruptcy
petitions and asset seizures, against the delinquent debtors, but
this may be meaningless as many of the valuable assets are
believed to have been hidden away.

Glenn said the survival of the government budget in the
2000/01 fiscal year would depend on the ability of IBRA to raise
enough proceeds from the recovery of its various bank assets.

"Indonesia faces a critical situation in 2000. If the (asset
recovery) can't succeed it will have a big impact on the budget,"
he said.

"This is crucial for the survival of the Republic," he said.

Glenn said that IBRA was expected to raise some Rp 28.5
trillion for the next budget, which would be used to pay half the
interest rate on government bonds issued to finance the country's
bank restructuring and recapitalization program now estimated at
Rp 637 trillion.

IBRA currently controls some Rp 573 trillion (about US$80
billion) worth of various bank assets.

But Glenn said that since many of the assets were in the form
of non-performing bank loans, the current market value of the
assets was only 31 percent of the book value or worth only about
Rp 200 trillion.

Glenn said that IBRA would first focus on raising cash by
selling the fixed assets surrendered by the former bank owners to
repay the liquidity support because its recovery rate was 90
percent of its book value.

IBRA is targeted to raise Rp 17 trillion in the current fiscal
year ending in March 2000.

Glenn said that some Rp 9.1 trillion had already been raised.

IBRA's tough job to force former bank owners and bad debtors
to repay their dues, has often put its chairman in a difficult
position.

Over the past couple of weeks, there have been attempts by
certain influential politicians to remove Glenn from the agency
on the grounds that he had failed in doing his job, particularly
in relation to the high profile Bank Bali scandal and in
restructuring bad debts.

Glenn is now in a difficult situation as the House of
Representatives is pushing him to cancel IBRA's contract with the
U.K.-based Standard Chartered Bank (SCB) covering the latter's
plan to invest in Bank Bali.

SCB has been appointed by IBRA to temporarily lead the
management team of Bank Bali prior to recapitalization.

But Bank Bali staff have accused SCB's foreign staff of being
arrogant, costly, and failing to improve the performance of Bank
Bali since they took control of the bank's management in July.

Glenn has asked the House for one week to assess the problems
and review the contracts with SCB.

But a cancellation of the contract may have a serious impact
on foreign investors' confidence in the country's bank
restructuring program. (rei)