Alleged BII scam a test for Bapepam, JSX

Alleged BII scam a test for Bapepam, JSX

The Jakarta Post, Jakarta

Allegations of impropriety involving the trade in Bank
Internasional Indonesia's shares have put on the line once again
the image of the capital market authorities here -- already known
for being too lenient in the past with violators of stock market
regulations.

Without resolute action by the Capital Market Supervisory
Agency (Bapepam) and the Jakarta Stock Exchange, the local market
will remain a happy hunting ground for violators, experts said.

Institute for the Development of Economics and Finance (Indef)
economist Dradjat Wibowo and lawmaker Faisal Baasir said over the
weekend that law enforcement was the key to deterring illegal
actions and eventually improving the market's credibility.

"That's crucial because the capital markets everywhere often
fall victim to inappropriate, administrative or procedural
violations, and even crimes," said Dradjad, while also deploring
the fact that Bapepam and the JSX had seemed reluctant in the
past to impose severe penalties against violators.

He recalled the Lippo Bank case, which centered on the listed
company's controversial issuing of two different sets of
financial statements, in response to which in the end Bapepam --
after non-stop public pressure -- imposed a relatively small
fine. This was despite the fact that by international standards
the Lippo case might well be considered a massive scam.

The allegations of impropriety in the BII case revolve around
the fact that the bank's share price was declining before the
Indonesian Bank Restructuring Agency (IBRA), which controls BII,
launched a block sale of a 17.43 percent stake in the bank on
Dec. 16 last year.

The price went far above the Rp 90 peg IBRA had decided on for
the block sale. In October, it even reached Rp 145 before
hovering around Rp 95 in the last days prior to the sale.
Allegations were rife that the price had been deliberately
brought down so that certain well-known investors could purchase
BII shares at the lower price.

As the rumors continued, the JSX launched an investigation
into the affair two weeks ago, with 7 brokerage firms having been
investigated so far.

The JSX management said on Friday that 5 to 6 more firms would
also be investigated in the near future.

None of these firms have been named officially.

Elsewhere, Faisal, a legislator and member of the House's
finance and banking committee, express concern over the possible
losses the country might have suffered if the rumors turned out
to be true.

It was therefore crucial for Bapepam and the JSX to uncover
the truth behind the sale so the losses, if any, could be
recovered, Faisal said.

At the price of Rp 90 per share, IBRA collected around Rp 750
billion.

To date, IBRA has sold 71 percent of BII, having previously
sold 51 percent of the bank to the Sorak Consortium and 2.57
percent through the stock market.