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)