Repurchase of QAF shares by Salim 'unethical'

JAKARTA (JP): Coordinating Minister for the Economy Rizal Ramli said on Thursday that the repurchase of QAF Pte. Ltd.'s shares this week by the Salim Group was "unethical."

Rizal said that although there was no law forbidding Salim to repurchase its assets, it was unethical because the business group had not settled their debts to the government.

"They haven't settled their debt, but in reality, they have the money to buy assets," he told reporters following a meeting with Vice President Megawati Soekarnoputri.

The Salim Group is the former owner of the publicly listed Bank Central Asia (BCA), which owes some Rp 53 trillion to the government after the bank received massive liquidity support via Bank Indonesia. The huge obligation was also due to violations of the legal lending limit in which the bank channeled most of its money to its affiliated businesses.

To repay its obligations, Salim surrendered to the Indonesian Bank Restructuring Agency (IBRA) some of its assets, including shares in various companies like the Singapore-listed QAF.

IBRA announced this week that it had sold its more than 19 percent stake in QAF to company chairman Didi Dawis of Qalif Ltd., a unit of the Salim Group, for more than S$35 million.

QAF is a holding company, running various businesses including bread making, logistics, supermarkets, and trading.

Legislators have also criticized plans by some former bank owners to repurchase their assets from IBRA because they had claimed they had no money to repay their debts to the government.

The legislators also warned the government not to allow the business tycoons to repurchase their assets because the country's economic structure would then be again controlled by only a handful of conglomerates.

There has been speculation in the Jakarta financial market that Salim is also planning to buy back BCA, the group's former financial flagship.

IBRA plans to divest all of its more than 70 percent stake in BCA in March next year.

In addition to Salim, the other business tycoons who had pledged assets to IBRA to repay similar obligations to the government include, Sjamsul Nursalim, Bob Hasan and Sudwikatmono. Their banks have been closed down by the government.

Rizal is scheduled to meet with the businessmen today to push them to surrender more of the assets to IBRA and provide personal guarantees.

Kwik Kian Gie, Rizal's predecessor, was the first to demand the tycoons inject more assets because the amount of assets they pledged last year was insufficient to cover their obligations.

The assets pledged by the Salim Group, for instance, is only worth around Rp 20 trillion (US$2.2 billion) compared to its total obligation of Rp 53 trillion.

Rizal had said earlier if the tycoons refused to inject additional assets, they would risk legal sanctions.

There have been calls for former bank owners who have violated their banks legal lending limit ruling, to be slapped with legal sanctions.

But under the Master of Settlement and Acquisition Agreement or MSAA with IBRA, the ex-bank owners are free of any legal sanctions as long as they repay their debts to the government. (rei)