Fri, 09 May 2003

Mystery of city's lost hotel shares unravels

Zakki Hakim, The Jakarta Post, Jakarta

The mystery behind the city's shrinking number of shares in Sheraton Media hotel has started to unravel, although new questions have arisen surrounding the case. The city administration's initial 25 percent of shares is reported to have dwindled to only around 8 percent.

City Council Commission B for economic affairs met with the Jakarta Economic Administrative Bureau on Thursday in an effort to gain back the city's shares in the jointly owned company that were lost unexplainedly, according to a council member.

It turned out that the administration's shares were reduced when Bank BNI 46 acquired some of them as compensation for debts which the joint venture company could not pay.

Thursday's meeting revealed, among other things, the following:

Back in 1991, the city administration and PT Bhakti Citradaya (BCD) jointly established a company, PT Grahasahari Suryajaya, in order to build a hotel, known at present as the Sheraton Media hotel, located on Jl. Gunung Sahari, Central Jakarta.

Under a Document of Approval issued by the Ministry of Home Affairs No. 556.2/1608/PUOD, dated May 22, 1992, the administration must retain a minimum of 25 percent of shares in the joint venture company under all circumstances.

However, it turned out that the company had outstanding liabilities with Bank BNI 46 amounting to Rp 108.51 billion (approximately US$12.72 million), and to London Forfaiting Asia Limited the sum of US$50 million, which was guaranteed by BNI 46.

At the end of 1999, the jointly owned company was considered incapable of paying its obligations, and therefore it was given the option of exercising a debt for equity swap, which means that instead of getting cash, the bank may take a certain amount of shares.

By Jan. 20, 2000 there was a new composition of shares where the administration held 19.28 percent of shares, BCD 57.82 percent, and BNI 46 22.90 percent.

However, the reduction in shares did not stop there. After a shareholders' meeting on Feb. 14, 2001 the composition changed further. The administration then came to hold 8.40 percent of shares, BCD 25.21 percent and BNI 46 66.36 percent.

The above mentioned details were presented at the meeting by Hari Sandjojo in official from the Bureau.

The presentation also revealed other unusual things had occurred in the early days of the joint venture.

The total investment was worth about Rp 44.35 billion, in which both the administration and BCD were obliged only to invest a total of Rp 14.35 billion.

Of the total amount the administration provided Rp 3.59 billion, which entitled it to hold 25 percent of the joint venture shares, while BCD had only submitted Rp 5.5 billion -- or about half the amount it was required to give -- but was nevertheless entitled to hold 75 percent of shares at that time.

Moreover, Hari said that the administration also sold 18,628 square meters of land worth Rp 14,35 billion to BCD to be used as the hotel site.

However, Ugiek Soegihardjo, a Commission member, said that up until now, the administration has been finding difficulties in providing any proof that BCD ever paid for the land.

Council members also implied that finding a solution that serves the city's interest might be hard to arrive at because a powerful media figure cum-presidential candidate for the next president is the owner of BCD.

The Sheraton case is only one among thousands of other examples of the city's poor management of its assets.

City Assets Bureau director Rama Budhi admitted recently that the city administration had lost many of its assets due to poor management in business ventures with private companies, and because of the fact that it had no deeds to the properties.

He refused to elaborate further, but he did say that of the 8,000 or so properties belonging to the city, worth Rp 74 trillion in total, the city only had deeds for 2,600.