Telkom directors may face dismissal over audit<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government is considering axing the board of directors and
\ncommissioners of state-owned telecommunications company PT
\nTelekomunikasi Indonesia (Telkom) over a reaudit of the company's
\n2002 financial report that resulted in a negative adjustment.<\/p>\n
State Minister of State Enterprises Laksamana Sukardi said on
\nWednesday that the government would include the management
\nreshuffle in the agenda of an extraordinary shareholders meeting
\non March 10.<\/p>\n
"We are planning to replace them to refresh the company, and
\nbecause of the accounting problem," said Laksamana after meeting
\nwith House of Representatives Commission IX on financial affairs.<\/p>\n
He also said public investors had the right to demand an
\naccountability report from the management over the reaudit, which
\ncaused several negative adjustments in the publicly listed
\ncompany's restated financial reports.<\/p>\n
After more than seven months of uncertainty due to the
\nreauditing, Telkom announced on Monday that the revised 2002
\nfinancial report incorporated a 3.7 percent decline in its
\nconsolidated net profit and negative adjustments to its 2002 and
\n2001 profits.<\/p>\n
Telkom is the largest telecommunications company in Indonesia
\nand the largest counter on the Jakarta Stock Exchange, with a 17
\npercent market capitalization.<\/p>\n
At an investors meeting on Wednesday, Telkom president
\nKristiono said: "It is the shareholders' right to replace us. We
\nwill simply follow their decision."<\/p>\n
The government owns 51 percent of Telkom, with the remaining
\n49 percent held by public investors.<\/p>\n
Telkom shares dropped from its intraday high of Rp 7,750 and
\nended trading on Wednesday at Rp 7,600, unchanged from Tuesday's
\nclosing price.<\/p>\n
Problems with Telkom's 2002 financial report emerged when the
\nU.S. Securities and Exchange Commission (SEC) rejected an initial
\nreport audited by Indonesian accounting firm KAP Eddy Pianto,
\nwhich is not approved by the SEC.<\/p>\n
KAP was appointed by the Telkom audit committee, headed by
\nindependent commissioner Arief Arryman, following the sudden
\nresignation of Ernst & Young in November 2002.<\/p>\n
The SEC demanded that Telkom, listed on both the Jakarta and
\nNew York bourses, resubmit the 2002 accounts as soon as possible
\nor risk being delisted from the New York Stock Exchange. Telkom
\nappointed PricewaterhouseCoopers (PwC) in June for the reaudit.<\/p>\n
However, the process took longer than expected, as PwC decided
\nto reaudit Telkom's 2001 and 2000 financial reports as well.<\/p>\n
During the investors meeting, Arief claimed that Telkom had no
\nother choice but to appoint KAP because the remaining "big four"
\nauditors PwC, Deloitte Touche Tohmatsu and KPMG could not audit
\nTelkom's books due to a conflict of interest.<\/p>\n
Eddy Pianto told The Jakarta Post that his firm planned to sue
\nTelkom and the Capital Market Supervisory Agency for defamation.<\/p>\n
As reported in several media, Eddy's lawyer Wawan Iriawan said
\nhis client would file for Rp 8.3 trillion in damages at the South
\nJakarta District Court.<\/p>\n
Kristiono said Telkom had yet to receive the suit, but would
\nbe prepared to counter it.<\/p>\n
Meanwhile, Laksamana commented: "This is a country based on
\nlaw... Anyone can file a lawsuit, as long as it is rational.
\nThere is no problem."<\/p>",
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