Lippo gets new management, Mochtar retained as chairman

Lippo gets new management, Mochtar retained as chairman

Zakki Hakim, The Jakarta Post, Jakarta

Shareholders of publicly listed Bank Lippo appointed Joseph
Luhukay as the new president of the bank at an extraordinary
shareholders meeting on Tuesday.

But the meeting retained former controlling shareholder
Mochtar Riady as chairman of the board of commissioners, a
decision which some said could derail efforts to instill investor
confidence in the bank, whose image has been tarnished by reports
of financial scams, allegedly conducted by the former management.

Syafruddin Temenggung, the chairman of the Indonesian Bank
Restructuring Agency (IBRA), which holds a controlling 59 percent
stake in Bank Lippo, declined to explain to the media why the
agency defied public concern by retaining Mochtar as the bank's
chairman.

The move to reshuffle the management of Bank Lippo came
following reports of alleged financial scams aimed at allowing
the Riady family to regain control of the bank for a very cheap
price at the expense of the state, which bailed the bank out
during the late 1990s banking crisis.

The Riady family currently holds a 9.5 percent stake in Bank
Lippo, while the remaining shares are held by minority investors.

The country's banking and capital market authorities are still
investigating the alleged scam. The Capital Market Supervisory
Agency (Bapepam) recently imposed a penalty of Rp 2.5 billion on
Bank Lippo's management for issuing misleading information to the
public in November last year.

Luhukay is an executive at consulting firm Ernst & Young and
was a former chief operating officer of the Jakarta Initiative
Task Force, which is in charge of facilitating debt restructuring
talks between local firms and foreign creditors. He replaces I
Gusti Made Mantera.

In addition to Luhukay, five other directors were also
appointed by IBRA. Two other directors represented the Riady
family.

On the nine-member board of commissioners, IBRA assigned five
people, while the three others are Roy Tirtadji, Rudi Toha
Bachrie and Masagoes Ismail Ning, who are closely associated with
the Riady family. They were also on the board previously.

Meanwhile, the chairman of the Indonesian Security Investors
Society (Missi), Murdani, said as a minority shareholder he was
disappointed because the interests of the former owner remained
strong as reflected in the new management composition.

He was hoping that no family members or people closely linked
to the former owner would sit on the Bank Lippo board of
directors and commissioners in order to restore the bank's image.

"I don't expect the new management to deliver significant
improvement," he said.

Separately, State Minister of State Enterprises Laksamana
Sukardi said that the government had violated the IMPA agreement
by assigning more than two nominees to sit on the board of
directors and commissioners.

But he said that the move was needed to help resolve the image
problem of Bank Lippo.

He said that the new management composition was a result of
negotiations with the former owner of Bank Lippo.

The IMPA agreement is a document containing the details of a
bank recapitalization agreement signed in 1999 by the government
and the former owner. The contents of the document have never
been disclosed to the public.