Bapepam considers criminal charges in Bank Lippo case

Bapepam considers criminal charges in Bank Lippo case

Zakki Hakim, The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam) is considering
filing criminal charges against alleged wrongdoers in the Bank
Lippo scam.

"Bapepam has agreed that in addition to administrative
sanctions, there will be criminal charges as well," Teten Masduki
of Indonesian Corruption Watch told reporters on Tuesday
following a closed door meeting with Bapepam chairman
Herwidayatmo.

Teten is a member of the Public Coalition on the Bank Lippo
Scam, an informal grouping that has been leading a campaign to
ensure that those involved in the Bank Lippo affair are punished
appropriately.

The grouping met Bapepam to get an update on the agency's
investigations to date.

Teten said that the capital market watchdog would announce its
official stance on whether to press charges after it had
concluded its investigation into the case on March 17.

Previous Bapepam statements in the mass media, however,
indicated that the agency would only impose administrative
sanctions against the management of Bank Lippo.

A statement by Herwidayatmo that the Bank Lippo case had yet
to cause financial losses to the state was seen by analysts as an
indication that Bapepam would eventually let the bank's top
executives and commissioners get off scot-free.

The Bank Lippo saga started when the bank published two
different third quarter financial reports late last year. While
in the first report in November the bank claimed to have made a
profit, the second report in December showed that the bank was in
the red and its capital adequacy ratio (CAR) had plunged to the
alarming level of 4 percent.

The Jakarta Stock Exchange has faulted the publicly-listed
bank's management for the dual financial reports, particularly as
the bank had initially claimed that the first report was audited,
which turned out not to be true, with the result that the
investing public had been mislead.

The bank has claimed that the financial loss and capital
deterioration were caused by a plunge in the value of foreclosed
assets (mostly property assets). This argument was challenged by
analysts as the prices of houses and other property assets were
on the rise at the time.

Since late last year, the price of the bank's shares have
tumbled. There has been allegations that certain parties linked
to the former owners of Bank Lippo had been deliberately
manipulating transactions to lower the bank's share price, with
the main intention being to allow the former owners to repurchase
the bank's shares from the government at a very low price.

This would cause great losses to the government, which
injected bailout funds into the bank in 1999. The government now
owns a 59 percent stake in Bank Lippo.

Alexander Lay, a member of the Public Coalition on the Bank
Lippo Scam, said that according to article 107 of Law No. 8/1995,
a deliberate attempt to mislead the investing public and other
parties, including Bapepam, could be punished with a maximum of
three years imprisonment and a fine of up to Rp 5 billion (US$563
thousand)