IBRA promises to review contract with SCB

IBRA promises to review contract with SCB

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
will review its contracts with Standard Chartered Bank (SCB) amid
growing animosity of Bank Bali's employees toward the U.K. bank,
agency chairman Glenn S. Yusuf said.

"Give me one week to assess the problems. There will be a firm
decision," he told members of House Commission IX on banking and
Commission II on legal affairs at a joint hearing on Friday.

He said the review would include examining the possible
dismissal of Douglass Becket, SCB's executive in charge of Bank
Bali's management team, and the cancellation of the investment
contract if SCB was proven to have violated its contract with
IBRA.

"But we must be very careful. We must consider the impact on
the market," he said, adding that he had requested that SCB's top
officials come from London to Jakarta for a meeting.

Glenn was responding to pressure from legislators to cancel
both the management and investment contracts between IBRA and SCB
covering the latter's plan to invest in Bank Bali.

"SCB has committed several mistakes. You must have the guts to
cancel the contracts," said Max Moein, a legislator of the
Indonesian Democratic Party of Struggle (PDI Perjuangan), the
largest political party in the House.

Bank Bali employees who crowded the hearing room loudly
applauded his statement.

SCB is the first foreign bank to have committed to
participating in recapitalizing one of the country's banks. IBRA
entered into a strategic partnership with SCB in July whereby the
latter was given the authority to temporarily lead the management
of Bank Bali.

SCB also agreed to buy a 20 percent stake of IBRA's ownership
in the publicly listed bank to help finance the recapitalization
program. SCB, which has put some US$56 million in an escrow
account at Chase Manhattan Bank, has the right to buy up to 100
percent through a call option.

Friction between Bank Bali staffers and SCB foreign staff
began last month, and culminated on Thursday when angry Bank Bali
employees ejected the SCB's expatriate executives from the bank's
headquarters.

The incident occurred after SCB decided on Wednesday to fire
one Bank Bali employee and suspend 47 others for allegedly
leading a campaign of noncooperation with SCB.

Glenn said on Friday he would override the decisions.

SCB's staff did not return to the Bank Bali building on
Friday.

Bank Bali's employees accuse SCB of conspiring with IBRA to
take over the troubled bank from its former owner, the Ramli
family, including former president Rudy Ramli.

They have described SCB's expatriate staff as arrogant and
behaving like "English colonialists".

They said the cost of the 60 SCB staff, including about 42
foreigners, was too high. The total payroll for the SCB staff,
Bank Bali employees said, was Rp 7.5 billion, compared to Rp 8
billion for the entire 6,300 Bank Bali workforce.

"This is too much. One of the foreigners drives a luxurious
BMW series 7 car and lives in an expensive apartment that costs
Rp 1 billion a year. Who will pay for all of this?" said Theo
Toemion, another PDI Perjuangan legislator.

Glenn responded that he was still looking into the figures.

The legislators also lambasted IBRA for allowing too many
expatriate staff.

Glenn could not give an exact figure on the number of SCB's
expatriate staff, but the agency previously stipulated no more
than eight foreigners would be hired.

"We told them recently to reduce the foreign staff to around
two or three," he said.

Legislators also said some of the SCB staff were working
illegally on tourist visas.

They also accused the expatriate staff of transferring major
accounts from Bank Bali to SCB.

"If these claims are true, it's a violation of the contract,"
Glenn said.

He promised to resolve the friction between the banks as soon
as possible because it could cause a further delay in the bank
recapitalization program.

He said the recapitalization cost for the bank could further
increase from a revised estimate of Rp 4.1 trillion if the
problem dragged on.

Bank Bali's recapitalization was delayed after the disclosure
of the high-profile Bank Bali scandal late in July which
implicated several influential government officials and
businesspeople. (rei)