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.