Top CEOs change their spots to bite Mega from behind

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.