Top CEOs change their spots to bite Mega from behind

Rendi A. Witular, The Jakarta Post, Jakarta

A recent remark by outgoing President Megawati Soekarnoputri that she has been deserted by most of her close circle following her defeat in the presidential election to her former security chief Susilo Bambang Yudhoyono may not be far from the truth.

A number of chief executive officers (CEOs) of prominent, publicly listed state-owned enterprises (SOEs), who had been installed by the Megawati administration, have criticized her administration's policies to improve the performance of the country's SOEs.

During a seminar held by the Blora Center, a think tank that supports president-elect Susilo, Bank Mandiri president director E.C.W. Neloe criticized the Megawati administration for what he termed its recklessness in selling stakes in some state- controlled banks.

"To help spur economic growth of between 6 percent and 7 percent, the role of the state banks will be crucial. Thus, it is unwise to disrupt or sell them as the state will have no tools left to support financing," said Neloe.

Neloe also questioned the aims of the current government in selling shares in SOEs, a program that he said only benefited foreign institutions and reduced the opportunities for domestic institutions to participate in the economy.

"There is policy inconsistency here. State banks are forced to privatize, but at the same time the government wants us to increase our capital so that we can become international player," he said.

Neloe's critics opposed his stance when he supported the government's sale of some 20 percent of the government's stake in Bank Mandiri via an initial public offering in July, 2003, in which 69 percent of the offered shares were purchased by foreign institutions.

Neloe did not complain when the proceeds of the privatization only contributed some Rp 2.7 trillion to the state, lower than many had expected.

Neloe was not the only state sector bigwig at the seminar. He was accompanied by the president director of state-owned telecommunications firm PT Telekomunikasi Indonesia (Telkom), Kristiono, and the president director of PT Pos Indonesia, Alinafiah.

The three CEOs, who are normally more accustomed to attending seminars in luxury hotels, came down to earth somewhat by deigning to accept an invitation from the Blora Center to discuss the problems of SOEs at its headquarters, a small, cramped house on Jl. Blora.

During the seminar, Kristiono said the government as the controlling shareholder of SOEs had failed to strictly supervise and control the operations of SOEs, thus leading to a lack of responsibility on the part of SOE managements.

"The performance of the SOEs is poor because the controlling shareholder is not strict enough in supervising their managements. This is different from the private sector where there is a rigid policy of reward and punishment," said Kristiono, who refused to accept responsibility when Telkom was hit by an accounting scandal late last year.

Kristiono suggested the next government keep those SOEs that were strategic for the public and state in public ownership, and to entirely sell off those that were not strategic, such as SOEs engaged in the construction and hotel businesses, to investors.

He also urged the government to dissolve the Office of the State Minister for State Enterprises within the next five years as it was ineffective in managing the country's SOEs, and to replaced it with a holding company like Temasek in Singapore.

Several analysts attending the seminar said that the criticism voiced by the CEOs, who were formerly close confidants of Megawati and her inner circle, showed that they were now trying to curry favor with Susilo so as to be left undisturbed in their posts.

"They are opportunists who have abandoned their ousted patron to seek favor from the incoming powerholder in order to maintain their current positions, or secure better ones," said an analyst on condition of anonymity.