IBRA employees to receive severance pay, but not much

The Jakarta Post, Jakarta

After much debate, it has been decided that employees of the Indonesian Bank Restructuring Agency (IBRA), which will close down later this month, will receive severance pay in accordance with existing regulations, which means they will receive much less than the Rp 500 billion (US$59.52 million) that had been earlier reported.

The decision, which follows weeks of heated debate, was taken during a Cabinet meeting on Thursday led by President Megawati Soekarnoputri.

"The Cabinet decided that (the severance pay) should be in accordance with Law No. 13/2003 (on labor). And I must reiterate that IBRA has never asked for more than that," IBRA chairman Syafruddin Temenggung said after the meeting.

Accompanying Syafruddin were Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti, State Minister for State Enterprises Laksamana Sukardi and State Minister for Information and Communications Syamsul Mu'arif.

According to the law, severance pay should be equal to the amount set out by the Ministry of Manpower.

Consequently, Syafruddin said, the severance pay for IBRA employees would be much lower than the figures bandied about in news reports, which had the figure as high as Rp 500 billion.

He said the agency would soon calculate the exact amount of severance pay and report it immediately to the Financial Sector Policy Committee (FSPC) -- a powerful body comprising senior economic ministers headed by Dorodjatun.

IBRA, which was set up in 1998, currently has some 2,500 employees.

Unconfirmed reports have it that IBRA's top officials are being paid between Rp 40 million and Rp 100 million a month, while lower ranking employees receive between Rp 5 million and Rp 20 million.

This decision should end the recent uproar over IBRA's severance pay, which has been commented on by various parties, including from within the Cabinet. Vice President Hamzah Haz, State Minister for National Development Planning Kwik Kian Gie and Minister of Manpower Jacob Nuwa Wea have all expressed their opinions on the subject.

IBRA was set up in 1998 to clean up the country's banking sector, which was saddled with huge bad debts following the economic crisis. In total, the agency took over more than Rp 600 trillion worth of assets from bankrupt or ailing banks.

The agency was mandated to restructure and sell the assets -- in the form of bank nonperforming loans and fixed assets surrendered by indebted former bank owners -- to raise funds to help finance the state budget.

As of last year, IBRA had raised Rp 163.2 trillion from the sale of assets under its supervision.

Elsewhere, Dorodjatun said there were still major tasks to be carried out before IBRA's termination.

"The first team will carry out all the preparations to manage unsold assets -- shares, property, credits -- that are deemed as free and clear, to be later handed over to other institutions, the Ministry of Finance for instance," he said.

There will be what Dorodjatun referred to as a "housekeeping team" to manage those assets categorized as "troubled" or not free and clear.

"This team will work together with related institutions including the police and the Attorney General's Office," he said.

IBRA will also have to submit accountability and financial reports to State Minister for State Enterprises Laksamana, whose office oversees the agency.