Bapepam on alert amid major accounting scams
Dadan Wijaksana, The Jakarta Post, Jakarta
The Capital Market Supervisory Agency (Bapepam) said it would closely monitor the financial reporting methods used by each of its listed companies, as part of efforts to avoid possible fraud following several accounting scandals in the U.S., which has sent negative signals to equity markets all over the world.
Bapepam Chairman Herwidayatmo said Tuesday that although he doubted such scams would occur in the country, precautionary measures were still needed to prevent that from happening.
"We'll closely watch their financial reports," Herwidayatmo told reporters on the sidelines of a seminar.
Herwidayatmo doubted, however, that such fraud could happen in the country, because corporations in Indonesia and the U.S used different accounting methods.
The statement from the capital market watchdog came at a time when the world was stunned by a series of major bookkeeping scams, with U.S.-based drug giant Merck being the latest example.
As if the high-profile scandals of WorldCom and Enron were not enough, the Wall Street Journal reported Monday that the company posted US$12.4 billion in revenue from its pharmacy-benefits unit over the past three years that the subsidiary never collected.
The WorldCom case has proven contagious, as not only did it rock U.S. markets but also shook the business world and shattered investor confidence around the world, including Indonesia.
Negative sentiment had since then rocked the Jakarta stock market in the past three weeks, which sent the Jakarta Composite Index stumbling to lose the 36 percent gain it had obtained since the beginning of the year.
And the Merck fiasco would only make it worse.
In Jakarta, shares of PT Merck Indonesia dropped 4.8 percent, or Rp 700 to Rp 13,800, on volume of 14,000 shares immediately after the Tuesday's opening due apparently to worries that the financial performance of Merck Indonesia will be hurt by the news.
According to the data from the Jakarta Stock Exchange, some 74 percent of Merck Indonesia is owned by Merck Astra Holding AG of Switzerland, while the rest is held by public investors.
Merck Astra Holding is a unit of Merck & Co.
Elsewhere, Herwidayatmo reiterated that transparency at corporate levels would be the right answer to the problems.
To get there, he said that starting next year, the agency would require listed companies to give their financial reports within 90 days, or 30 days faster than the current regulation.
"It (the financial report) has to be available in an audited financial report. This would accelerate the process to improve transparency."