Bapepam on alert amid major accounting scams
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."