Fri, 22 Sep 2000

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)