IBRA completes sale amid alleged graft

IBRA completes sale amid alleged graft

Dadan Wijaksana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said it had
completed its massive loan asset sale program amid mounting
allegations of irregularities.

IBRA Chairman Syafruddin Temenggung said late on Thursday that
the agency collected Rp 5.7 trillion (about US$640 million) from
the second round of sales, bringing the total proceeds to Rp 23.1
trillion from the sale of some Rp 135 trillion worth of non-
performing loans.

"It is expected that all the payment processes will be
completed by the end of September," Syafruddin said, adding that
the lion's share of the earnings came in the form of cash, which
stood at Rp 18.6 trillion, while the remaining was in the form of
bank recapitalization bonds.

IBRA took over the loans from ailing banks in the wake of the
late 1990s financial crisis.

The completion of the loan sale takes IBRA one step closer to
meeting its target this year of raising Rp 42 trillion from asset
and loan sales, the proceeds of which are to be used partly to
help plug the 2002 budget deficit, projected at Rp 42 trillion.

However, there have been growing allegations of irregularities
in the sale process.

A member of one of the consortium that bought the loan assets,
for instance, turned out to be managed by a former president of a
consulting firm which had been advising IBRA in the restructuring
of the loans. This is seen as a competitive advantage to the
particular bidder, which is unfair to other bidders because the
former had obtained "inside information" about the assets.
Analysts said IBRA should have disqualified the particular
bidder, whose president also turns out to be a relative of IBRA
deputy chairman Mohammad Syahrial.

There have also been accusations that some of the winning
bidders were merely acting as vehicles for the debtors to
repurchase the loans at a huge discount.

IBRA said that the transaction could be canceled if the
bidders turned out to be linked to the debtors of the loans.

The House of Representatives has said that it would summon the
agency next month, with a possibility that legislators would ask
the Supreme Audit Agency (BPK) to launch an investigation into
the case.

State Minister of National Development Planning/Bappenas
chairman Kwik Gian Gie has repeatedly called on the government to
review the program by launching an investigation to avoid more
losses.

Some have even suggested the sales to be annulled.

Syahrial addressed the mounting calls by challenging anyone to
prove the allegations, saying that he had made every effort to
keep the process of the programs in line with the required
regulations and procedures.

"For those of you who can prove that corruptive practices have
taken place, you can file a lawsuit," he was quoted by Antara as
saying.

Elsewhere, Syafruddin said that 70 percent of the buyers were
local banks, asset management firms and securities companies. The
remaining investors were foreign, although none are from
internationally known investment firms or banks.

Established in 1998, IBRA controls over Rp 600 trillion worth
of assets transferred by indebted bank owners, closed banks and
recapitalized banks, and is mandated to restructure and sell the
assets to raise cash.