No more deal reviews after Guthrie deal, says IBRA

No more deal reviews after Guthrie deal, says IBRA

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
assured on Thursday it had no plans to review other or future
deals over the sales of its assets, while noting that the review
of the sale of oil palm plantations to Malaysia's Kumpulan
Guthrie Bhd. was just an exception.

IBRA chairman Edwin Gerungan explained that the review of the
Guthrie deal followed demands from legislators, who questioned
the fairness of the deal.

"Once we sell assets then that's it, it's finished," he told
reporters at his office.

He was responding to concerns that the review of the deal
could set a bad precedent for sales of future assets by IBRA.

Foreign investors, whose confidence in Indonesia's legal
certainty is already minimal, may shy away from IBRA assets, say
analysts.

Last year, Guthrie paid IBRA US$350 million for the Salim
Group's oil palm plantations in Sumatra, Kalimantan and Sulawesi.

IBRA took over the plantations as collateral for loans the
Salim Group received from local nationalized banks.

However, the deal sparked uproar among legislators, who
questioned the deal and the status of the plantations' ownership.

Edwin said IBRA's internal auditor recently completed its
review of the deal and concluded it was acceptable.

"The outcome of the review is that the transaction was
conducted professionally and fairly," he explained.

He said that during the bidding for Salim's plantations,
Guthrie had offered the highest price.

For Salim's plantations, he said, Guthrie paid a price that
was 60 percent higher than the share prices of oil palm
plantation firms listed here.

What remains to be discussed, he said, is how Guthrie will
deal with local farmers at its newly acquired plantations.

Salim's plantations in Riau were partly developed under the
"people's nucleus farming scheme", which allows farmers to own
some of the land after a certain period of time.

The farmers have questioned their future following the change
in ownership of the plantations.

Edwin said the government had left negotiations with the
farmers up to Guthrie.

He further said the audit results on Guthrie's deal had been
forwarded to IBRA's oversight committee. The latter had also
given its clearance.

The oversight committee, chaired by former finance minister
Mar'ie Mohammad, is responsible for supervising IBRA's policies
and provides the agency with recommendations.

But the committee has no authority to cancel or alter any
deals that have already been made.

It was formed last year following criticism that IBRA was too
powerful as an agency, controlling a substantial amount of the
country's private assets.

The agency amassed assets worth some Rp 600 trillion (about
$54.5 billion), mainly as collateral for unpaid loans, which IBRA
took over after it nationalized several local banks.

Criticisms have also been leveled against IBRA's Finance
Sector Policy Committee (FSPC), which is in charge of
restructuring debt worth more than Rp 1 trillion.

FSPC has the final say on major bank and corporate
restructuring deals. Led by Coordinating Minister for the Economy
Rizal Ramli, the committee groups together economic ministers.

Legislators recently demanded the government review all IBRA's
debt-restructuring deals made by FSPC.

IBRA's oversight committee are currently reviewing debt-
restructuring deals made by FSPC, Edwin said.

"We'll just have to see whether the oversight committee agree
with the debt restructuring deals in its review," he remarked.

Asked whether the reviews may lead to the cancellation of some
of the deals, he said it would depend on FSPC. (bkm)