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)