Jamsostek sues ailing bank to recover funds

Jamsostek sues ailing bank to recover funds

Ridwan Max Sijabat, The Jakarta Post, Puncak

State-owned insurance company PT Jamsostek and other depositors
of Bank Global International have formed a strong alliance to
file a lawsuit against the bank's stakeholders in a bid to
recover their money from the ailing bank.

Jamsostek's president Achmad Djunaidi said that following a
meeting in Jakarta over the weekend between the bank's depositors
and Bank Indonesia's deputy governor Miranda Gultom, the
depositors unanimously agreed to hire a renowned lawyer to
represent them in the lawsuit.

"We will ask the court to trace all assets of the bank and of
the stakeholders so that they can be used to pay the bank's
obligations to its depositors," he said in a press gathering here
on Sunday.

Jamsostek's investment director Samuel Tobing who accompanied
Djunaidi in the meeting of depositors, acknowledged that
depositors would face difficulties in recovering their funds from
the bank because a majority, or 70 percent, of the bank's stake
belonged to the public.

"We will do anything to recover our as much of our money as
possible. But if we fail to do so, (no problem), as Jamsostek
still has reserve funds in anticipation of such an incident," he
said.

The central bank announced last Monday that it had temporarily
suspended the bank's operations as its financial indicators had
deteriorated sharply over the last two months, allegedly due to
fictitious lending activities and other banking fraud.

Bank Global's capital adequacy ratio (CAR) had dropped to
minus 39 percent and its management was accused of using fake
securities certificates to increase its CAR. The CAR measures the
financial health of a bank and must be at a minimum of eight
percent.

The police have arrested several executives of the bank.

Samuel explained that Jamsostek invested Rp 100 billion (about
$10 million) in bonds issued by the publicly listed bank in May
2003. They were 10-year bonds with an annual interest rate of 7
percent.

"Jamsostek's management decided to invest in the bank because
the central bank's audit put the bank on the list of healthy
banks with an A rating. Furthermore, it was offering an
attractive interesting rate.

"So, our investment in the bank complied with Government
Regulation No. 28/1998 requiring Jamsostek to use extraordinary
caution and apply secure principles when making investments," he
said.

Despite the Bank Global case, Jamsostek would continue
investing in stocks and securities certificates, including bonds
and mid-term notes (MTNs), to gain maximum profit.

Samuel denied the allegation that the management had received
fees for investing in the bank, saying Jamsostek bought the
bank's bonds through its initial public offering.

"Not only Jamsostek but also state oil company Pertamina, the
pension funds of the Indonesian Churches's Communion (PGI) and
several other churches have invested in the bank because of the
central bank's report about Bank Global's good condition," he
said, citing that long before the bank's collapse, Jamsostek had
several times tried to sell the bonds but there were no
interested buyers.

He also questioned Bank Indonesia's performance in carrying
out its supervisory role.

"If the central bank fails to improve its supervision over all
banks, its credibility will be put at stake and foreign investors
will be reluctant to invest in the banking sector," he said.