More resignation rumors plague IBRA management

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)