Bapepam, BI criticized over Bank Lippo case
The Jakarta Post, Jakarta
The Capital Market Supervisory Agency (Bapepam) and Bank Indonesia received strong criticism for failing to adequately punish the board of directors and commissioners of the publicly listed Bank Lippo in an alleged financial scam.
The Indonesian Corruption Watch (ICW) said on Tuesday that there was a strong indication now that Bapepam and Bank Indonesia were trying to protect the perpetrators from being charged with heavier punishment for their crime.
ICW said it was considering a law suit against Bapepam Chairman Herwidayatmo and Bank Indonesia senior deputy governor Anwar Nasution at the State Administrative Court.
"We'll study the possibility of taking legal action because we think the chairman of Bapepam and the (senior) deputy governor of BI have not carried out their authority honestly ... It's an abuse of power," said ICW coordinator Teten Masduki.
Bapepam announced on Monday that it would hand out a fine of Rp 2.5 billion (US$280,000) to the board of directors of Bank Lippo for misleading the public in claiming an unaudited third quarter financial report as audited.
The auditor was given a Rp 3.5 million fine.
The announcement was made in a joint press conference with Bank Indonesia, the finance ministry, and the Indonesian Bank Restructuring Agency (IBRA).
In the press conference, Anwar said that Bank Indonesia could not yet find any irregularities in the Bank Lippo case.
There has been strong pressure against Bank Indonesia to bar the current board of directors and commissioners from owning a bank here because of their crime in the alleged scam.
ICW criticized the financial authorities for reducing the Bank Lippo case to a mere financial report case. The watchdog said that the case should have been seen as a serious corruption scandal which could cause the state serious financial losses.
ICW said that the administrative penalty from Bapepam was too lenient, citing Law No. 7/1992 on banking which stipulated that the penalty for such a crime was at least five years in jail with a maximum fine of up to Rp 200 billion. While according to the 1995 capital market law, the sanction is a jail term of up to 10 years and an administrative penalty of Rp 15 billion.
Bank Lippo in November issued a third quarter financial report in the mass media describing the bank as healthy. It claimed the report had been audited, but the Jakarta Stock Exchange (JSX) found out later that it had not been audited.
The bank also submitted another third quarter financial report to the JSX, but this time the report said the bank was not healthy and suffering financial losses.
The press later unveiled the case, and many analysts said that it was part of a deliberate attempt by the bank's former owner, the Riady family, to regain control of the bank from the government at a huge discount. Such an action would cause the state to suffer dearly as the government had to spend a lot of money to bailout the bank in the late 1990s. IBRA now owns a 59 percent stake in the bank.
There has also been allegations of share manipulation by brokerages linked to the bank's former owner, who have also been alleged of quietly repurchasing the bank's shares without reporting it to the authority as required by the law.
Meanwhile, State Minister for National Development Planning Kwik Kian Gie also criticized Bapepam for giving light sanctions to the Bank Lippo management and for reducing the seriousness of the scandal.
"This is a serious (scandal). But Bapepam chairman and IBRA chairman are playing it down," he said.