Salim Group 'obeys MSAA agreement'

Salim Group 'obeys MSAA agreement'

JAKARTA (JP): Attorney General Marzuki Darusman said on
Thursday that only the Salim Group had so far properly observed
the Master of Settlement and Acquisition Agreement (MSAA).

Marzuki said the government would take further action against
the other conglomerates which had not complied with the MSAA, but
declined to reveal what the measures would be.

"We still need to reach a consensus with the House of
Representatives," he said during a business forum.

He did not specify which part of the MSAA was not fulfilled by
the other conglomerates.

The MSAA is an agreement signed by seven former bank owners
with the previous administration of B.J. Habibie. Under the
agreement, the conglomerates surrendered assets to repay the
debts of their banks to the government.

The government injected more than Rp 144 trillion (US$16.94
billion) in liquidity support between 1998 and 1999 to bail out
banks facing massive ruin when confidence in the industry was at
its lowest point.

The Salim Group, the former owner of Bank Central Asia (BCA),
has surrendered ownership in more than 100 companies to the
Indonesian Bank Restructuring Agency (IBRA) to repay the bank's
debt.

But the MSAA turned into heated controversy after Kwik Kian
Gie, when he was still the country's chief economics minister,
called late in July for a revision of the agreement, arguing that
the state would suffer huge losses if the MSAA was implemented
without any amendments because the assets pledged by the
conglomerates were not sufficient to cover their obligations to
the government.

As an example, Kwik pointed out that the assets transferred by
the Salim Group turned out to be worth only some Rp 20 trillion,
compared to its total debt of more than Rp 52 trillion.

The new economic team under Coordinating Minister for the
Economy Rizal Ramli decided earlier this week that the
conglomerates must hand over additional assets if the amount
pledged earlier was not sufficient to cover the debt.

Rizal also said that the former bank owners must provide a
personal guarantee to relinquish more assets if the future value
of the assets pledged dropped.

Rizal said that in return for being cooperative, the
government would agree to extend the repayment period of the
debts from four to six years.

The decision had yet to be approved by the House. The
government is scheduled to meet for a consultation with the
House's special team on Oct. 3.

Meanwhile, former finance minister Bambang Sudibyo, who was
Kwik's partner in the previous Cabinet, lambasted the decision to
extend the repayment period.

"It is a nonsense policy, because even under the existing MSAA
that is greatly in their favor, the conglomerates have been
reluctant to repay their obligations. Why should they be given an
additional facility. This will only spoiled them," Bambang told
Antara.

He added that except for the Salim Group, the conglomerates
had been uncooperative and had no good will to settle their
obligations.

He also lambasted the Attorney General's Office for its
slowness in taking the necessary legal action. (rei)