IBRA forms new team for troubled Bank Bali

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) formed a new management team for the beleaguered Bank Bali on Tuesday in response to protests against the Standard Chartered Bank (SCB) directors who had been leading the bank.

"The new eight-member management team consisting of IBRA officials and outside professionals is coordinated by Henry Koenaifi, formerly the caretaker of nationalized Bank Jaya," IBRA spokesman Franklin Richard announced on Tuesday.

Franklin said in a press release IBRA also would conduct a financial and legal audit of alleged irregularities at Bank Bali to ascertain what actually occurred at the bank.

The press statement, however, did not explicitly state that the SCB management team, which has led Bank Bali since late July under a contract with IBRA, had been terminated.

Representatives of IBRA and Bank Indonesia met earlier on Tuesday to attempt to defuse the protests against the SCB management team.

Local Bank Bali staff members, seemingly unhappy with the SCB- appointed expatriate directors' management of the bank, have staged daily protests since last month. The local staff have alleged that SCB is engineering a hostile takeover of Bank Bali.

The Bank Bali employees also accused the SCB directors of being "arrogant English people" who were paid too much and lived luxuriously in Jakarta.

SCB reportedly hired more than 40 foreigners at a cost to Bank Bali of almost the combined salaries of the 6,300 local employees.

The foreigners also are alleged to be working at Bank Bali without proper visas.

SCB fired one Bank Bali employee and suspended 47 others last week. In response, local staff members forcefully evicted the foreign employees from the bank's headquarters.

Voicing supporting for the Bank Bali employees, legislators urged Bank Indonesia on Tuesday to exercise its authority to terminate the management and investment agreements between SCB and IBRA.

However, Bank Indonesia Governor Sjahril Sabirin said during a hearing with the House of Representatives Commission IX on banking and Commission II on legal affairs that he was not in the position to judge whether the management contract was legal or not.

"I think we should give this matter to the legal experts," he said.

He cautioned that the unilateral cancellation of the contract would negatively impact foreign investors' perception of the country's bank restructuring program.

IBRA and Bank Bali also would have to pay US$25 million to SCB if the three-year management contract was terminated early, according to a clause in the agreement.

Bank Indonesia Deputy Governor Anwar Nasution said if SCB pulled out of Bank Bali, the bank would face the risk of liquidation because it was currently operating with negative capital.

"If there are no other investors to replace SCB, Bank Bali should be liquidated," he said during a break in the hearing with the House commissions.

IBRA, a unit of the finance ministry, took over Bank Bali in July after its former owner, the Ramli family, failed to raise 20 percent of the bank's total recapitalization cost.

The agency selected SCB to manage Bank Bali after the British bank offered $56 million for a 20 percent stake in Bank Bali.

The publicly listed Bank Bali was scheduled to launch a rights issue in October to finance its recapitalization program, but the issue was postponed until December following the high profile Bank Bali scandal. The scandal centers on the questionable transfer of some $80 million from the bank to a politically well- connected company. (rei)