August 13, 1999 
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| August 13, 1999 | atimes.com | |
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| Southeast Asia Bank Indonesia helping Habibie cronies, says report JAKARTA - The policy adopted by Indonesia's central bank of dividing banks into those deserving and those not deserving government assistance is aimed at accommodating the interests of President BJ Habibie and his close aides, according to a report prepared by consultant McKinsey & Co for Bank Indonesia and cited by the newspaper Neraca. The report showed that Bank Indonesia was concerned about saving many business entities with ties to Habibie, including Bank Nusa, which is owned by tycoon Aburizal Bakrie, one of Habibie's economic advisors, Neraca said. An auditing result by PriceWaterhouseCoopers, also quoted in the McKinsey report, showed that Bank Nusa had a capital adequacy ratio (CAR) of minus 210 percent, but the central bank had refused to accept the auditor's interpretation. To many it appears that the central bank wanted to save the bank from liquidation. Based on a regulation issued by the central bank itself, only those banks having a CAR of no less than minus 25 percent were qualified for recapitalization by the government. The report said that 99 percent of Bank Nusa's credits were categorized as non-performing, and 29 percent of that amount had gone to businesses of the Bakrie family - exceeding the legal lending limit determined by the central bank. Bank Nusa has rejected the allegations of special treatment from the central bank. Meanwhile, the Indonesian Bank Restructuring Agency (IBRA) has started the process of confiscating the assets of four of 200 large ''bad debtors'' under its control. Eko S Budianto, deputy chairman of IBRA, said legal proceedings with asset confiscation are the only way to deal with the four companies now considered uncooperative. Eko said a bankruptcy suit might not be necessary against the four bad debtors as they had put their assets as collateral under IBRA. He refused to give the names of the debtors, saying their names will be announced later. Neraca said on June 30 that IBRA put 26 firms on their list of uncooperative debtors for failing to sign a letter of commitment with the agency. IBRA gave until August 31 for the 26 companies to sign the letter of commitment about the settlement of their debts. By Wednesday most of the 26 companies had given their commitment. IBRA said it would use a third party to handle the management of credit assets valued at less than Rp50 billion ($7.1 million). Many Indonesian banks in category A (with capital adequacy ratio of 4 percent or higher) reportedly indicated interest in becoming the outsourcing partners of IBRA to handle credit assets. Bank NISP, Bank Lippo and BII are among the banks cited as possible outsourcing partners. (ANTARA/Asia Pulse) | |||||||||
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