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)