IBRA strives to boost legal power

IBRA strives to boost legal power

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
is seeking to boost its legal power in a bid to bolster the
legitimacy of its decisions, a senior official has said at the
agency.

IBRA legal division head Pandu Djajanto said on Tuesday that
the agency would propose to the President to upgrade the legal
basis governing the agency to a government ruling in lieu of the
law.

IBRA is currently directed under Government Regulation No.
17/1999.

Speaking at a news conference, Pandu said the agency's
decisions were often overruled by higher rulings as proven by its
recent failure in a commercial court battle to force a bad debtor
to repay its obligation.

He explained that strengthening the agency's legal status
would help accelerate the restructuring and recovery of the bad
loans under its management, and to ensure former bank owners
repay their obligations to the government.

Many former bank owners and bad debtors are politically well-
connected businessmen.

Pandu said the agency would submit the draft of the
recommended change to the government later this month.

He expected the House of Representatives to subsequently enact
the new ruling.

But many analysts have criticized that the ruling already gave
IBRA excessive power.

Separately, finance minister Bambang Sudibyo said on Tuesday
that he was not aware of the agency's demand to upgrade its legal
status.

"I'm not aware of the demand. I have to think this over
carefully. I have to check the problem," he told reporters on the
sidelines of a hearing with the House budget committee.

IBRA currently controls over Rp 600 trillion worth of various
bank assets, including ownership in companies or in the form of
nonperforming loans (NPLs) transferred by closed banks,
nationalized banks or recapitalized banks.

The agency has been criticized for its slowness and
indecisiveness in dealing with bad debtors.

Another IBRA official, Andreas Bunanta, separately said on
Tuesday that the agency now controlled a total of Rp 250 trillion
in NPLs after state Bank BNI transferred some Rp 19 trillion
worth of NPLs last week.

He said Rp 15 trillion of the loans were owed by the Texmaco
textile conglomerate, making it the agency's largest debtor.

Andreas said state Bank Mandiri was also expected to transfer
its remaining Rp 16.5 trillion NPLs to the agency by the end of
this month.

He added that state Bank Rakyat Indonesia would also soon
transfer its NPLs.

Banks joining the government recapitalization program have to
transfer their NPLs to create a clean balance sheet.

Pandu said the agency was also considering taking legal action
against former owners of four closed banks who had not yet paid
their obligations to the government.

Many former bank owners have pledged various forms of fixed
assets to repay their obligations.

Pandu added that the agency would propose to the government to
lift the travel ban on 137 former bank owners and senior
management as they had completed the settlement of their
obligations.

The government has slapped a travel ban on some 206 former
bankers and bank owners. (rei)