IBRA vows to regain Bank Bali's Rp 546b

IBRA vows to regain Bank Bali's Rp 546b

JAKARTA (JP): Chairman of the Indonesian Bank Restructuring
Agency (IBRA) Glenn S. Yusuf said on Monday that his organization
would do its utmost to recover the Rp 546 billion (US$80 million)
payment from Bank Bali to an investment firm.

He said that IBRA could use government regulation No. 17/1999,
which empowered the agency to unilaterally annul earlier
contracts made by banks under its control which were loss-causing
ventures for the government.

"IBRA can annul the contract if it wants to. But we're still
waiting for the completion of the investigation (of the Bank Bali
scandal)," he said on the sidelines of a meeting with top
officials of the House of Representatives.

IBRA is an agency under the Ministry of Finance set up last
year to help restructure and recapitalize the country's ailing
banking sector. It has so far taken over 13 private banks and
recapitalized seven private banks.

The use of the regulation would be a test case of IBRA's
power.

He said that the Ramli family, the former majority shareholder
in Bank Bali, must repay the loss because the government would
not contribute a single cent toward the payment.

IBRA has to recover the loss to prevent the recapitalization
cost of Bank Bali, currently estimated at Rp 4.3 trillion, from
soaring.

Separately, Bank Indonesia Governor Sjahril Sabirin said that
the funds would have to be returned if their transfer was proven
illegal.

Shake-up

Calls are growing for a massive shake-up of IBRA's management
and the prosecution of Bank Bali's former directors on charges of
corruption.

Ichsanuddin Noorsy and Thomas Suyatno, members of the House of
Representatives budget and financial commission, were skeptical
that IBRA remained unaware of the questionable deal between Bank
Bali and investment firm, PT Era Giat Prima (EGP), in which the
bank paid Rp 546 billion for assistance in recouping the bank's
interbank claims on closed-down banks from IBRA.

"After all, Bank BDNI and other closed and taken-over banks
which owed interbank debts to Bank Bali are all under the control
of IBRA," Noorsy added.

Expressing shock over the scandal, Suyatno said he had never
known of blatant fraud involving such a huge sum during his 30-
year career in the banking industry.

The scandal has damaged the reputation of IBRA, which now
controls about Rp 600 trillion in state assets. Banking legal
expert Pradjoto disclosed late last month the scandal and
implicated IBRA's deputy chairman Pande Lubis.

Glenn declined to confirm reports that Pande Lubis had been
suspended, but said that all officials, including himself, should
be suspended if they were implicated in the scandal to allow for
the investigation to proceed.

Bank Bali is one of the country's private banks selected to
join the government-sponsored recapitalization program.

Glenn said that the government was still committed to
recapitalizing Bank Bali although the scandal could slow down the
recapitalization process.

"This (the case) is just an anomaly ... Bank Bali is still a
good bank," Glenn said.

IBRA confirmed last week Pradjoto's claim that Rp 546 billion
was transferred from Bank Bali in early June to EGP, which is
owned by businessman Setya Novanto, as a commission for the
firm's services in helping the bank recoup some Rp 904 billion in
interbank claims on closed banks.

The then owner and president of Bank Bali, Rudy Ramli, signed
the contract with EGP in January.

IBRA said that Bank Bali did not need to use a third party to
recoup its interbank claims because it was guaranteed by the
agency through the government blanket guarantee program.

Standard Chartered Bank of the UK found out about the transfer
of the Rp 546 billion from Bank Bali on July 20 after the former
completed its due diligence audit on the latter, IBRA said.

Standard Chartered planned to buy a 20 percent stake in the
bank.

Bank Bali was put under IBRA control after the Ramli family
failed to put up its share of the recapitalization funding by the
July 23 deadline.

Publicly listed Bank Bali will offer a rights issue in
September to raise proceeds for its recapitalization program.
Standard Chartered plans to buy 20 percent, with the government
to purchase up to 80 percent of the remaining new shares.

Separately, National Police spokesman Brig. Gen. Togar
Sianipar said the police had identified potential suspects in the
scandal, including former Bank Bali administrators Rudy Ramli,
Rusli Surjadi, Firman Sucahyo and Henri Kurniawan, EGP executives
Setya Novanto and Joko S. Chandra and IBRA deputy chairman Pande
Lubis.

"We have asked the immigration office to impose travel bans on
these executives, except Lubis," Togar added. (rei/ylt/jsk)