IBRA completes 1st round of internal restructuring

IBRA completes 1st round of internal restructuring

By Reiner S

JAKARTA (JP): The new chairman of the Indonesian Bank
Restructuring Agency (IBRA), Cacuk Sudarijanto, quietly completed
the first round of the agency's "internal restructuring" last
week, but formidable challenges lie ahead.

When he took over the helm at IBRA early last month, Cacuk
said a management reshuffle was his top priority, in order to
bring in "fresh blood" to reinvigorate the agency, which had been
hit by the Astra sale debacle and domestic political uncertainty.

"I have made internal restructuring a priority because a
successful leader is one who succeeds in internal restructuring,"
he said at a media briefing held on Friday to introduce his new
deputies.

Cacuk said he selected the new deputies himself, but added
that the final decision was made by Minister of Finance Bambang
Sudibyo.

He dismissed suggestions the new faces represented certain
powerful businessmen who owed billions of dollars to IBRA, a unit
of the finance ministry.

"(They) don't represent any conglomerates ... and I'm not
representing any political party," he stressed.

Cacuk had been active in a small political party before
entering IBRA, raising concerns that his new position would
benefit a certain political grouping.

The internal restructuring at IBRA also creates two new
deputy-level positions in charge of bank restructuring and risk
management, which previously were working units.

IBRA's new structure is headed by Cacuk. Arwin Rasyid, the
former head of the risk management unit, is now the agency's
senior vice chairman.

The other new faces include Jerry NG, former vice president of
Bank Universal, who is now deputy chairman of bank restructuring.

Mahmudin Yassin, a former official at the finance ministry,
has been appointed deputy chairman of asset management
investment, which is responsible for the sale of the agency's
assets.

Risk management affairs at IBRA are now being handled by
Chandra Purnama, the former head of state Bank BNI's card center
division.

Sumantri Slamet and Eko S. Budianto retain their respective
positions as deputy chairman for support and administration and
deputy chairman for asset management credit, which is responsible
for recovering more than Rp 230 trillion in nonperforming loans
at banks under the agency's management.

Cacuk did not say whether he would launch a second round of
internal restructuring at the agency, but said he was determined
to take strong action against IBRA officials found guilty of
misconduct or accepting bribes.

"I will not discriminate. I won't hesitate to take action
against those who flirt (with IBRA's debtors)," he said in
response to reports that a subordinate of Eko's had received a
payoff from one of the agency's largest debtors.

"I can't stand corruption," he said, pointing to his dismissal
as president of state telecommunications firm PT Telkom in 1992
for attempting to block unfair contracts between Telkom and well-
connected businessmen.

But Cacuk said his main priority now was to speed up the sale
of IBRA's various assets.

"Our mandate is to expedite the sale of assets to meet the
government's target, but it won't be through fire sales," he
said.

Cacuk's predecessor had been criticized for moving too slowly
in selling the assets managed by the agency.

"The challenge now is how to (help) stabilize the rupiah at Rp
7,000 (to the US dollar)," he said, highlighting the current
weakening of the rupiah to around 7,600 to the dollar.

IBRA is expected to raise some Rp 17 trillion in the current
fiscal year ending on March 31 to help finance bank restructuring
and recapitalization. The agency has also been set the target of
raising around Rp 16 trillion in the April to December 2000
budget year.

The agency has so far raised more than Rp 12 trillion from the
sale of assets under its control. There are questions as to if
IBRA can meet the Rp 17 trillion target in less than two months,
particularly after its failure to sell publicly listed auto giant
PT Astra International to a consortium led by Newbridge Capital
and Gilbert Global Equity Partners.

IBRA canceled its exclusivity agreement with the
Newbridge/Gilbert consortium last week after the latter failed to
provide a 30 percent down payment by the set deadline.

The consortium had earlier criticized Astra's Rini Soewandi-
led management for obstructing a due diligence by not providing
the necessary information. Rini denied the accusation.

But Cacuk is optimistic the Astra sale can be completed by
March 25.

The bidding process is scheduled to reopen on Friday.

Cacuk is also optimistic that Astra will remain attractive to
investors. He said that during a recent presentation in London,
European businessmen hurried to call their offices after learning
IBRA had canceled the planned sale to the Newbridge/Gilbert
consortium.

IBRA has said it expects to raise at least Rp 2 trillion from
the sale of its 45 percent stake in Astra. The agency also plans
to sell around 30 percent of Bank Central Asia (BCA) in March
through an initial public offering, which it expects to raise
around Rp 3 trillion. Astra and BCA are among the agency's most
valuable assets.

But domestic social and political problems are undermining
IBRA's attempts to lure foreign investors.

The standoff between President Abdurrahman Wahid and
Coordinating Minister for Political Affairs and Security Gen.
Wiranto, who is also a former military commander, rumors of a
military coup, separatist movements in resource-rich provinces
and sectarian clashes are factors causing jitters to would-be
investors.

But Cacuk seemed to downplay these fears. "President Wahid has
said that he's in control of the situation .... So our plans will
not be hampered by security and political problems."

He said many investors in London had expressed interest in
investing in IBRA's plantation assets.

"England is the guru of the plantation industry. If investors
from this country invest in our plantations, the performance of
the local plantation industry will greatly improve," he said.

Analysts have said IBRA's success in raising cash will be key
to ensuring the country's economic recovery.

"The success of bank and corporate restructuring will largely
depend on the performance of IBRA," said Gadjahmada University
economist Sri Adiningsih.

IBRA senior vice chairman Arwin Rasyid said that besides
raising cash, the most challenging task facing IBRA was how to
restructure the ailing real sector by encouraging foreign
investors to enter into the various companies now under the
agency's management.