PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5142 57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
b. Development Agreement with the Operational Risk Management ABN AMRO Bank N.V.
On 25 February 2005, Bank Mandiri and ABN AMRO Bank N.V. signed an agreement on the development of Operational Risk Management to assist in the implementation process of operational
risk management, and has been modified by the Addendum. This cooperation is used as a means of transferring knowledge to improve the capabilities of the Bank and their employees to apply
operational risk management methodologies, as well as improving the capabilities of calculating the allocation of capital according to Basel II standards. Based on the agreement, ABN AMRO Bank N.V.
will support the development of Bank Mandiris internal capabilities in terms of operational risk management. The capability development will be done through the nine Action Track in the form of
transfer of knowledge and consultation. The agreement is worth USD1,200,000 full amount. This cooperation ended in December 2008.
c. Legal Matters
Bank Mandiri received a request from a customer to liquidate its demand and time deposit since the Directorate General of Taxes has taken off the blockage and confiscation. Due to several conditions,
the request cannot be executed directly since Bank Mandiri has to clarify first to IBRA.
After sending the admonition, since the request to liquidate its demand and time deposit has not been fulfilled due to absence of approval from IBRA, on 7 June 2006, the customer filed a lawsuit against
the Bank as the first defendant and the Ministry of Finance of the Republic of Indonesia as the second defendant at South Jakarta High Court.
Ministry of Finance of the Republic of Indonesia in his letter dated 27 August 2008 and 28 August 2008 has asked Bank Mandiri to liquidate the customer’s demand and time deposit on behalf of the
customer because these represent loan customer’s collateral, whilst the purchase and sale agreement of the customer’s receivables with demand and time deposit as collateral have been cancelled. Based
on the cancellation agreement, the customers collateral in form of demand and time deposit was transferred to the Government to be accounted for the customer’s loan. Liquidation of the funds have
been executed and placed in the State General Treasurer’s account in Bank Indonesia.
On 23 October 2008, Bank Mandiri received notification about the cessation decision of the Supreme Court related to customer’s cassation plea submission which in principle decided that the demand and
time deposit under Bank Mandiri are owned by the customer and instructed Bank Mandiri to liquidate the demand, time deposit and its interest to the customer. Based on the cessation decision, Bank
Mandiri and Ministry of Finance applied for a judicial review on 31 March 2009. Up to the date of this consolidated financial statements the judicial review is still in process.
The Bank’s total potential exposure arising from outstanding lawsuits as at 31 December 2009, 2008 and 2007 amounting to Rp2,204,722, Rp1,277,161 and Rp2,529,424, respectively. As at
31 December 2009, 2008 and 2007, Bank Mandiri has provided a provision included in “Other Liabilities” for a number of outstanding lawsuits involving Bank Mandiri amounting to Rp514,366,
Rp176,316 and Rp205,742, respectively Note 29. Management believes that the provision is adequate to cover possible losses arising from pending litigation, or litigation cases currently in
progress.
