More resignation rumors plague IBRA management

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) was hit by rumors of more major resignations following a report on Monday that claimed its chairman Edwin Gerungan and deputy chairmen Irwan Siregar and Slamet Sumantri planned to quit from the agency due to the unbearable level of outside intervention, including politicians and people claiming to be close to the President.

But finance minister Prijadi Praptosuhardjo denied the rumors.

"It is not true," Prijadi announced to reporters, but declined to provide further comments.

IBRA officials were not available for comment.

The agency, a unit of the finance ministry, controls more than Rp 600 trillion (US$58 billion) worth of various assets transferred from ailing and closed down banks and former bank owners. IBRA is responsible for selling the assets to raise cash to help finance the state budget deficit. It is also mandated to restructure some of the assets, in the case of non-performing bank loan (NPL) assets.

This year, the agency is targeted to raise around Rp 27 trillion in cash plus restructure some Rp 10 trillion worth of NPLs under its management.

A major resignation at IBRA would have a negative impact on the state budget as well as the overall economy as further delays in the sale of IBRA's key assets could further erode investor confidence.

Edwin, a career-banker, assumed his current position last November after President Abdurrahman Wahid's initial candidates were not welcomed by the financial market and the International Monetary Fund.

One of the most important tasks of the agency this year is to complete the divestment of government majority ownership in the publicly listed Bank Central Asia (BCA) and Bank Niaga during the first semester. The sale was supposed to be implemented late last year but it was delayed due to unfavorable market conditions. The delay has irked the IMF, which later suspended the disbursement of its latest $400 million loan tranche to Indonesia.

The agency has often been a target of intervention not only from politicians, but also from senior ministers.

Earlier this year, two IBRA deputy chairmen Jerry Ng and Mahmuddin Yassin tendered their resignation amid reports that they could no longer work effectively due to strong intervention including from the so-called Financial Sector Policy Committee (FSPC), which groups several senior economic ministers but is effectively run by Coordinating Minister for the Economy Rizal Ramli.

The FSPC has the final say on any major transactions made by IBRA.

Jerry was recently replaced by Felia Salim, a former FSPC secretary, while Mahmuddin remained in his position after Prijadi rejected his resignation request.

There have also been rumors that Edwin has been under strong pressure to agree to a proposal from Japan's Marubeni Corp. in the restructuring of petrochemical company PT Chandra Asri, which owes around Rp 3 trillion to the agency and around $700 million to a Marubeni-led consortium.

Edwin has demanded Marubeni have a greater equity stake in Chandra Asri, while the Japanese creditor has insisted that it only wants to convert around $100 million of its debts into a 20 percent equity.

IBRA has also been under pressure lately to sell its dollars to help defend the ailing rupiah. The agency is in control of around $500 million mostly from the sale of assets, and has so far only converted just over $50 million.

Recent reports also indicated that several indebted conglomerates had placed pressure on IBRA to restructure their debts under favorable terms. IBRA was supposed to have reached a final debt restructuring agreement last week with the Texmaco Group.

IBRA had also encountered problems with its recent sale of 25 oil palm plantations to Malaysia's Kumpulan Guthrie Bhd. Some legislators had demanded that the government cancel the deal on the grounds of lack of transparency and nationalist sentiment.

Legislators also demanded IBRA cancel the appointment of a consortium led by Malaysia's DRB-Hicom as the preferred bidder for the acquisition of a toll road project in Jakarta. (rei)