Salim, Nursalim agree to settle Rp 78t debts

JAKARTA (JP): The government said on Tuesday that the Salim and Gajah Tunggal groups had agreed to settle Rp 78 trillion (US$7 billion) in debts belonging to failed banks they controlled by ceding shares in almost all their global investments to the government.

The Salim Group, the former controlling shareholder of the nationalized Bank Central Asia, pledged assets totaling Rp 48 trillion to repay Rp 35 trillion in Bank Indonesia (BI) liquidity support and pledged a further Rp 13 trillion to cover intra-group loans, the Indonesian Bank Restructuring Agency (IBRA) said in a statement.

It added that Rp 30 trillion had been promised by the Sjamsul Nursalim family's Gajah Tunggal Group, the former owner of the suspended Bank Dagang Nasional Indonesia, to repay their debts to the central bank.

"In this binding agreement, the shares in the companies of the two groups (pledged as assets) will be transferred to IBRA, including cash and property," IBRA said.

However, the agency added that all the pledged assets would first be assessed by the Financial Sector Action Committee (FSAC), which includes key economics ministers and the central bank governor. The committee will judge whether the assets are enough to cover the banks' obligations.

The agreement with two of the country's richest business groups is the first major step toward recovering more than Rp 141 trillion in BI liquidity support given to commercial banks to help them meet massive demand for withdrawals by panicked depositors.

A total of 14 banks were given until midnight on Monday to return the liquidity support and bring their intra-group loans down to within the legal limit.

Most of the banks breached the 20 percent limit on intra-group loans and channeled between 70 and 100 percent of their equity capital to affiliated companies.

IBRA said that Mohamad "Bob" Hasan, a part owner of the suspended Bank Umum Nasional (BUN), property mogul Usman Admadjaja, the former controlling shareholder of nationalized Bank Danamon, and the owners of seven other suspended banks had failed to meet Monday's deadline.

BUN received Rp 6.8 trillion in liquidity support from the central bank, while Bank Danamon received Rp 25.8 trillion. It wasn't clear how much the two banks' owners had to recover to meet the legal limit on intra-group loans.

IBRA said that the FSAC would meet next week to determine the fate of the former owners of these banks, and said they could face criminal proceedings.

Bob Hasan is the long-time golfing partner of Indonesia's former president Soeharto.

Deputy Attorney General Soehandjono said on Monday that the former owners of nationalized banks and closed banks had offered assets they claimed to be worth Rp 177 trillion (US$16 billion) to repay Bank Indonesia liquidity support and to return the money channeled by their banks into their own business groups.

The tycoons who must pay back their obligations to the government include several of the country's richest businessmen who amassed wealth from lucrative business deals during Soeharto's 32-year rule.

The Salim family, one of the richest families in Asia, controls diverse business operations including the publicly- listed instant noodle manufacturer PT Indofood Sukses Makmur, cement manufacturer PT Indocement Tunggal Prakarsa and car manufacturer PT Indomobil Sukses International.

IBRA did not reveal which assets the Salim family had promised the government, but sources close to the negotiations said the family would have to release their controlling share in the above companies and some of their overseas operations.

The agency said the assets transferred by BCA and BDNI's owners would not become state-owned companies but would remain under IBRA control and eventually be sold off.

IBRA will create separate holding companies for the Salim Group and Gajah Tunggal assets. Both groups will be given minority stakes in the holding companies and continue to run their businesses "under the supervision of IBRA".

IBRA will dispose of the assets in the holding companies as soon as practical, either through sale to strategic or financial investors or to the public through the stock market.

It added that the sale would be timed to maximize revenue to the government.

"It is crucial that IBRA preserves the value of the assets that have been transferred to us. We must motivate the management of the relevant companies so that they continue to function effectively in the real sector of the economy and help to bring about an economic recovery," IBRA chairman Glenn S. Yusuf said in a statement. (rei)