Audit says no graft by JSX management

JAKARTA (JP): The chief commissioner of the Jakarta Stock Exchange (JSX), Erry Riyana Hardjapamekas, said on Friday the investigative audit on the management of the exchange has found no traces of corruption as alleged by the capital market watchdog.

"The audit has found no fraud, manipulation or corruption worth even a single rupiah by the JSX management," Erry told a press briefing after the JSX extraordinary meeting of shareholders.

The JSX board of commissioners appointed independent auditor Earnst & Young Consulting last month to conduct an investigative audit on the exchange's management following reports of breaches in operating procedures by the Capital Market Supervisory Agency (Bapepam).

In its operational audit report leaked to the media, Bapepam said it found 12 cases of inefficiency and breaches of operating procedures by the JSX management.

Erry said Earnst & Young, who charged a US$25,000 fee for the job, completed the audit in about three weeks.

The scope of work covers the 12 findings of inefficiency and possible breaches, the information technology area and JSX role in the exchange's trading surveillance, according to Erry.

JSX extraordinary meeting of shareholders also approved the "golden parachute" package for the current management.

If a member of the JSX board of directors is dismissed before his or her three-year term ends, he or she is entitled to receive a lump sum equal to the monthly salaries remaining in the term, according to the package.

Thus, if at the end of the first year a board member is dismissed, he or she would get his or her remaining two years of salaries in a lump sum, according to Intan Abdams, head of JSX communications division.

"The golden parachute package only applies in cases where dismissal is not due to corruption or wrongdoing," she said.

"It would apply only when a board member is dismissed just because they have opinions and interests different from the shareholders in implementing Good Corporate Governance," Intan added.

She said the golden parachute was proposed and approved by the shareholders to enable the management to do their work without unnecessary pressure from shareholders, all consisting of securities companies.

"In the capital market day-to-day-basis, the JSX management governs and sometimes gives sanctions to these securities companies who take roles as shareholders in the JSX shareholders' annual and extraordinary meetings," Intan said.

"So the management rules them, but is also ruled by them," she added.

Analysts have lately expressed concerns over apparent disturbances experienced by the current JSX management who have been imposing strict rules on the bourse.

"Strict rules imposed by JSX management often negatively impact the securities companies. Securities companies are also the shareholders of JSX," an analyst said.

"JSX is the country's most "reformist" public institution. This is why the management got all these disturbances," senior equity analyst Martin P.H. Panggabean said earlier. (udi)