IBRA's new oversight board struggling to define role

IBRA's new oversight board struggling to define role

By Reiner S

JAKARTA (JP): The newly formed oversight committee of the
Indonesian Bank Restructuring Agency (IBRA) is still struggling
to specify the scope of its role.

While all nine members of the committee agree that its
function is to improve the performance of IBRA, ensure
transparency and good governance, they have yet to decide on
whether they should have the power to overrule any of IBRA's
decisions should they be different to those of the committee's.

The committee's chairman, Mar'ie Mohammad, said, "The role of
the oversight committee should be limited to providing
recommendations plus a supervisory function. It should not (be
given a power to) annul decisions taken by IBRA."

"There should not be two captains in IBRA. The executive role
must be fully given to IBRA's chairman and his deputies."

"This is my view. I don't know what the other members think,"
he said.

Mar'ie said the committee members would soon meet to define
and specify the role of the committee and hand this over to the
Financial Sector Policy Committee (FSPC), which groups senior
economic ministers.

The government formed the oversight committee recently as
demanded by the International Monetary Fund in a bid to improve
the performance and transparency of IBRA, which controls huge
assets transferred from the banking sector.

IBRA is mandated to recover and sell the assets to help
restructure the banking and corporate sector as well as to raise
cash to help finance the state budget.

But there has been strong criticism that IBRA has been very
slow in doing its job, and fear of possible fraudulence and
corruption within the agency as well as interference from
politicians because of the huge assets under its control.

The forming of the oversight committee is expected to help
resolve the problems, although some analysts fear that the
committee would likely only create new bureaucracy within IBRA,
hampering the work of the agency.

Overlapping

Analysts also pointed out on the overlapping role with the
existing committees, including the International Review Committee
(IRC), the FSPC and the Ombudsman Commission.

The IRC was formed jointly last year by the government, the
IMF, the World Bank and the Asian Development Bank. Its role is
to give IBRA "recommendations". Mar'ie also heads the IRC.

The FSPC makes final decisions on transactions made by IBRA
that are worth more than Rp 1 trillion.

IBRA formed the Ombudsman Commission in May in a bid to also
ensure good governance.

Mar'ie, a former finance minister known for his integrity, has
vowed to prevent such concerns from happening.

"I agree that the existence of the oversight committee must
not slow down the work of IBRA," he said.

"Duplication of roles between the oversight committee and the
FSPC must be avoided," he added.

Mar'ie also said that he would evaluate the performance of the
oversight committee in the first three months, and if he thinks
that the committee does not create "added value", he would
propose to the government to terminate it.

"We will see in three months time. If the committee is not
effective and only hampers the work of IBRA, there is no need
(for its existence)," he said.

"The committee must be an asset not a liability."

The forming of the committee had created some controversies.
Some reports stated that IBRA chairman Cacuk Sudarijanto, with
the backing of President Abdurrahman Wahid, had first wanted to
also chair the committee.

Cacuk had been quietly preparing a law that would allow him to
lead the oversight committee. But the maneuver was cut off by
Minister of Finance Bambang Sudibyo.

Cacuk is now a member of the oversight committee.

IBRA controls Rp 600 trillion worth of assets in the form of
nonperforming loans (NPLs) and ownership in various companies
transferred from closed banks, recapitalized banks and former
bank owners.

The agency must sell the fixed assets and restructure and
recover the huge NPLs.

In the current 2000 budget year, IBRA is targeted to raise Rp
18.9 trillion in cash to help finance the state budget. So far
the agency has raised more than Rp 4 trillion.