Texmaco probed over sale of German asset

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) is currently investigating textile conglomerate Texmaco group over an alleged sale of the group's asset in Germany, according to agency deputy chairman Irwan Siregar.

Irwan said on Thursday if Texmaco had intentionally hidden the sale transaction, which was made prior to the signing of a debt restructuring agreement with IBRA, then the indebted group had violated the spirit of the deal.

"If it is true... that contravenes the spirit of the (debt restructuring) Memorandum of Understanding (MoU). IBRA will take action," he told reporters.

Irwan declined to say if the case would prompt the agency to annul the MoU, saying he had yet to be fully informed about the transaction.

"We're waiting for confirmation from an independent party," he said.

"Texmaco has certain responsibilities that must be fulfilled under the terms of the MoU," he added, without elaborating.

Texmaco is IBRA's largest debtor, owing around US$2.7 billion.

Irwan was responding to a report in Wednesday's edition of the Asian Wall Street Journal that claimed Texmaco sold its 60 percent stake in Trevira GmbH, an affiliate of Germany's Hoechst AG, to the company's management for an undisclosed amount.

Trevira, Europe's largest polyester fiber maker, is controlled by European Fiber Industries BV, a unit of Texmaco's Multikarsa Investama.

The sale transaction apparently occurred three weeks before Texmaco reached a debt restructuring agreement with IBRA, a unit of the finance ministry, earlier this month.

Under the controversial debt restructuring agreement, Texmaco must surrender assets to a new holding company which would be controlled by IBRA. The holding company would then issue convertible bonds to the agency. Texmaco could regain ownership of the surrendered assets if it repaid the government in 11 years.

Many had dubbed the deal as a government bailout of the textile conglomerate.

The International Monetary Fund and the World Bank had also expressed concern over the Texmaco restructuring deal.

Texmaco initially owed local banks. But after the debts became nonperforming they were transferred to IBRA which has a mandate to restructure and recover the huge nonperforming loans of the domestic banking sector.

Texmaco is owned by businessman Marimutu Sinivasan.

President Abdurrahman Wahid stirred another controversy last week when he said in Seoul, South Korea that he had asked the Attorney General's Office to delay the legal processes against three conglomerates including Sinivasan because their companies could boost the country's exports and help the country out of the current economic crisis.

The other two conglomerates are Prajogo Pangestu of the Barito group and Syamsul Nursalim of the Gadjah Tunggal group.

The three conglomerates owed huge debts to IBRA.

Some experts have said the move by Abdurrahman was basically aimed at protecting the conglomerates, which could become potential financiers for the 2004 general elections.

Economists have also questioned the quality of the Texmaco assets that would be transferred to IBRA via the new holding company.

The sale of Texmaco's German asset prior to the debt restructuring agreement could provide another prove of IBRA's weakness in tracing overseas assets of indebted conglomerates.

The agency had also been lambasted with regards to the Master of Settlement and Acquisition Agreement (MSAA) made with five former bank owners to settle debts to the government. Under the deal, the conglomerates agreed to transfer their assets to IBRA but it turned out that the value of the assets were not sufficient to cover their obligations.

According to the MSAA, the conglomerates were not obliged to cover the difference. However the new economic team is stepping up pressure to force the former bank owners to surrender more of their assets. (rei)