Lippo anticlimax<\/p>\n
The great controversy over the past 10 weeks regarding the two
\ndifferent audited financial reports of publicly listed Bank Lippo
\nfor the third quarter of 2002 ended in an anticlimax on Monday
\nafternoon, after the capital market watchdog announced that the
\nbank's management did not intentionally disseminate misleading
\ninformation.<\/p>\n
The conclusion seemed absurd, especially after the Capital
\nMarket Supervisory Agency (Bapepam) had found during its
\ninvestigation that another version of an audited report existed
\nfor the same period, which was submitted by independent auditors
\nto the bank's management on Jan. 6.<\/p>\n
We realize that corporate fraud is hard to detect and is even
\nharder to prosecute, and that cases of financial misstatements
\noften turn on arcane accounting issues that do not lend
\nthemselves to black-and-white interpretations.<\/p>\n
However, simply concluding -- after only a few weeks of
\ninvestigation -- that no criminal prosecution would be initiated
\nagainst the bank's management with regard to the strikingly
\ndifferent financial reports, is completely a mockery of capital
\nmarket rules and the principles of good governance.<\/p>\n
Herwidayatmo, chairman of the Capital Market Supervisory
\nAgency, damaged the integrity and degraded the competence of his
\noffice when he stated that Bank Lippo management, or board of
\ndirectors, had only committed a misdemeanor by erroneously
\nincluding the word \"audited\" on the financial report it
\npublicized in late November 2002.<\/p>\n
Issuing an audited financial report in late November noting a
\nRp 98 billion net income, then publicizing another audited report
\nfor the same period in late December showing net losses of Rp 1.3
\ntrillion, as Bank Lippo did, is nothing but an act of
\ndisinformation.<\/p>\n
Punishing the directors with an administrative fine of only Rp
\n2.5 billion (US$280,000), as the agency did, is certainly not
\neffective in deterring other company directors from committing
\nsimilar crimes in the future.<\/p>\n
Disseminating misleading information on a publicly traded
\ncompany, let alone a bank with fiduciary responsibility, is truly
\na crime, because financial reporting has a major effect on the
\nway the economic game is played, and is also the cornerstone on
\nwhich market discipline rests.<\/p>\n
Bank Lippo's independent auditors, the Prasetio, Sarwoko &
\nSandjaja accounting firm that is affiliated with Ernst & Young,
\nclaim that they had clearly stated at a meeting with Bank Lippo
\nmanagement held immediately after completing their audit on Nov.
\n22, that they could not yet give a final opinion, pending
\ncompletion of the reappraisal of several assets by independent
\nappraisal companies. The auditors submitted their final report
\nonly on Jan. 6.<\/p>\n
Yet, the management went ahead and publicized the report on
\nNov. 28 as an audited version, then filed another audited report
\nto the Jakarta Stock Exchange in late December.<\/p>\n
As reported earlier, the reappraisal of Rp 2.4 trillion worth
\nof foreclosed assets in Bank Lippo's books resulted in a deep cut
\nin their value to Rp 1.42 trillion, thereby slashing its capital
\nadequacy ratio (CAR) from the 24.77 percent in its November
\nreport, to 4.23 percent, far below the minimum capital standard
\nof 8 percent.<\/p>\n
Herwidayatmo's statement that the agency only recognized the
\nreport submitted on Jan. 6 to Bank Lippo management by their
\nindependent auditors, also raised a lot of pertinent questions
\nabout the status of the bank, its auditing procedures and the
\nmotive behind all these financial misstatements.<\/p>\n
It is curious that the agency has so hastily decided to stop
\ncriminal investigations into the alleged dissemination of
\nmisleading information, while the finance ministry has yet to
\ncomplete its investigation into the methods used in reappraising
\nBank Lippo's assets, which resulted in such a deep value cut.<\/p>\n
The handling of the Bank Lippo case would have been more
\ncredible if the decision on the alleged dissemination of
\nmisleading information was taken after the investigations -- into
\nthe reappraisal methods and into possibly dubious transactions in
\nBank Lippo shares since early November -- had been completed.<\/p>\n
After all, the allegations that the Riady family -- the
\nfounding shareholders of Bank Lippo -- had tried to reacquire
\nmajority ownership of the bank arose because of various connected
\nissues: the controversy over the different reports, the
\nquestionable asset reappraisal, the flurry of dubious
\ntransactions to push down share prices, the bank's decision to
\nhastily dispose of its foreclosed assets, and its plan to make a
\nrights issue to raise more capital.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/lippo-anticlimax-1447893297",
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