Rudy asserts right to control of Bank Bali

Rudy asserts right to control of Bank Bali

JAKARTA (JP): A day after the South Jakarta District Court
dismissed charges of banking crimes against him, Rudy Ramli
stepped up on Thursday his campaign to win back Bank Bali from
the U.K.-based Standard Chartered Bank (SCB).

Rudy said he was now fighting another battle to have the State
Administrative Court annul the banking authority's decision to
take over his bank on April 23 and put it under SCB's management.

"I feel cheated after knowing that Bank Bali has been taken
over by IBRA," Rudy told a press conference, referring to the
Indonesian Bank Restructuring Agency.

"And why should IBRA have insisted that Bank Bali take SCB as
its strategic partner? ...There's a mystery in this," he added.

The State Administrative Court on Thursday heard his lawsuit
case against Bank Indonesia's Governor Sjahril Sabirin, whom he
accused of illegally handing over his bank to IBRA.

IBRA has signed an investment agreement with SCB that entitles
the UK bank to buy a 20 percent stake in Bank Bali to help
finance the bank's recapitalization, and with an option to wholly
own the bank, delist it from the domestic stock exchanges and
turn it into a private company within five years.

IBRA also has assigned SCB to lead the bank's management under
a three-year contract which has sharply been criticized by the
House of Representatives as too favorable to the UK bank.

IBRA defended its move, saying that Bank Bali was nationalized
because its controlling owners, the Ramli family, had failed to
come up with cash to finance 20 percent of the bank's
recapitalization costs.

Under the country's bank recapitalization program, the
government would provide up to 80 percent of the recapitalization
costs.

Rudy claimed that his bank would not have required
recapitalization had then minister of finance Bambang Subianto
approved the request from IBRA Chairman Glenn Yusuf on April 22,
1999 that the government settled his bank's claims worth Rp 904
billion with Bank BDNI under the government deposit guarantee
scheme.

Bambang finally allowed the repayment of Bank Bali's interbank
claims in late May under what is now known as the Bank Bali
scandal as the repayment process allegedly involved political
intervention and required Bank Bali to pay Rp 546 billion in
commission to a broker company owned by politically well
connected businessmen.

Rudy questioned the complete lack of transparency and total
unfairness in which the government decided to nationalize his
bank and to pick SCB as the strategic investor in the bank.

Rudy recalled how Bank Bali employees, who also felt robbed,
had, until two weeks ago, staged protest rallies against SCB
demanding that SCB's management and investment contracts with the
bank be canceled.

But the agency sustained the contracts and only replaced the
SCB management team at Bank Bali last week to expedite the
process of the bank's rights issue, scheduled for later this
month.

"It will be better for our country if SCB backs down," Rudy
said, dismissing concern that foreign investors would be
discouraged from investing in the country's banking sector if the
government deal with SCB turned sour.

"Many investors remain greatly interested in investing in Bank
Bali as long as the government makes the bidding process
transparent and uses proper manners," Rudy said, adding that one
foreign investor had already approached him.

The Netherlands-based ABN Amro bank and GE Capital of the U.S.
were previously among the most serious foreign bidders for a
stake in Bank Bali, besides SCB.

But Rudy regretted that IBRA had not responded properly to ABN
Amro and GE Capital's strong interest.

Rudy began preliminary discussions with 10 foreign banks and
finance companies in September, 1998, but the bidders were
shortlisted to only four -- ABN AMRO, GE Capital, United Overseas
Bank and Sanwa Bank -- in November. SCB entered the scene only in
March, according to records at IBRA.

Like most other domestic banks, Bank Bali, which was used to
be considered one of the best managed banks in the country and
the only major bank that was not part of a widely-diversified
business group, suffered financial distress as the impact of the
rupiah meltdown.

Rudy had been accused of being involved in the Bank Bali
scandal, but the South Jakarta District Court decided on
Wednesday to dismiss the case against him and three other former
Bank Bali directors due to an unclear indictment from the
prosecutor.

Rudy is, however, facing corruption charges related to the
scandal which are being prepared by the Attorney General's
Office.

IBRA plans to launch a rights issue to facilitate the
recapitalization of Bank Bali which is estimated to cost slightly
more than Rp 4 trillion.

The agency would buy any rights which are not exercised by
Bank Bali's existing shareholders and SCB would immediately
purchase 20 percent of IBRA's shares.

The Jakarta Stock Exchange (JSX) announced on Thursday that it
had lifted the trading suspension on Bank Bali shares, which were
clamped in August, after the bank provided the necessary
information surrounding the Bank Bali scandal.

The JSX said that trading on Bank Bali shares could start on
Friday, thereby expediting its rights issue licensing. (rei)