IBRA forms new team for troubled Bank Bali

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)