IMF acknowledges BCA bidding process as fair

IMF acknowledges BCA bidding process as fair

Berni K. Moestafa and Dadan Wijaksana, The Jakarta Post, Jakarta

The International Monetary Fund (IMF) threw its support behind
the government's much-criticized handling of the Bank Central
Asia (BCA) sale process, saying it was progressing properly.

Suspicion of unfair practices has surfaced as two foreign-led
consortiums vie for BCA in the last stage of the bidding process.

"My understanding is that all bidders have had an equal
opportunity to make their bids and to explain their bids, and in
that sense there has been a level playing field," the IMF's
senior resident representative here, David C. Nellor, was quoted
by Reuters as saying on Monday.

"We are confident that the process is being handled
appropriately," he added.

The BCA sale process is being closely monitored by investors,
wanting to ensure that Indonesia is capable of closing a clean
deal on state assets as crucial as BCA.

The IMF's confidence in the sale comes amid high tension
between the two foreign final competitors for BCA.

U.S. investment firm Farallon Capital Management alleged that
the Indonesian Bank Restructuring Agency (IBRA), which is
handling the sale, had unfairly allowed bidders to revise their
final bids.

That came as a direct hit against competitor Standard
Chartered Bank Plc of Britain, which admitted it had changed its
final bid after the submission deadline to IBRA in late January.

IBRA argued all bidders had been allowed the same chance, but
Farallon insisted that "final" bids were, and should remain,
final.

It is unclear as to how far the bids could have been revised,
with IBRA assuring that changes were only minor, but Farallon
claiming the opposite.

In a further move to improve the credibility of the sale, the
government said BCA's winner would be handpicked by a team of
high-ranking officials.

State Minister for State Enterprises Laksamana Sukardi said he
would be in the team, along with Minister of Finance Boediono,
Bank Indonesia Governor Sjahril Sabirin and two others he did not
name.

It was not immediately clear whether IBRA chairman I Putu Gede
Ary Suta would be in the team. Laksamana said he would include
people who had been involved in the sale process from the
beginning.

The establishment of the team has come as something of a
surprise, given that the government had allowed IBRA to handle
the sale so far without interference.

"It's important to have an independent process because if we
let just one party control the process from A to Z, there is a
tendency for funny things to happen," Laksamana remarked.

StanChart's chief executive officer for Indonesia Ray Ferguson
was quoted as saying by detik.com that he had not been told of
the team's presence, but hoped for a continued smooth sale
process.

The need for tighter control over BCA's sale only highlights
the importance of selling the bank correctly this time.

Attempts to dispose of the bank ran aground twice since the
sale was first launched in 2000. The one major stumbling block,
analysts said, was too much political interference.

As the country's largest retail bank, BCA is among the most
precious assets on sale, and a magnet to various vested interest
groups.

Last year concerns centered on suspicion that BCA's
politically well-connected former owner, the Salim Group, was
aiming to regain control over the bank.

But as it became clearer that of the bidders only the foreign
consortiums were qualified enough, rumors about Salim gave way to
bickering between the two final foreign bidders.

Farallon warned that if it lost in this bid, which, it
claimed, could only occur if it had been treated unfairly, that
would seriously hurt foreign investor confidence.

Others, however, believe that StanChart, with its longtime
presence in Indonesia, is too important an investor to be let
down.