Texmaco probed over sale of German asset

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)