Bapepam penalizes Lippo management

Dadan Wijaksana, The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam) imposed a Rp 2.5 billion (US$280,000) penalty for the management of the publicly listed Bank Lippo for misleading the public in claiming an unaudited financial report as an audited report.

"The sanction will be effective for all of the bank's board of directors who were in charge when the financial report was released," Bapepam Chairman Herwidayatmo said in a press conference jointly held with Bank Indonesia, the Ministry of Finance and the Indonesian Bank Restructuring Agency (IBRA).

The financial authorities were reporting on the progress of their probes into the Bank Lippo case. Aside from Bapepam, however, the others claimed to need more time to complete their investigation.

The financial report in question was issued on Nov. 28 and published in the mass media, reporting the bank's net profit at Rp 99 billion and a 24.8 percent capital adequacy ratio (CAR) as of September 2002.

A second report followed a month later when the bank reported to the Jakarta Stock Exchange (JSX) that it had recorded a loss of Rp 1.27 trillion and a CAR of around 4 percent over the same period as in the first report.

Lippo initially mentioned in the first report that it had been audited, but was later discovered to be untrue by JSX. Bapepam said this ran contrary to capital market regulations.

The issuance of the dual reports was seen as part of a strategy masterminded by the bank's former owner, the Riady family, to regain control of the bank from the government at a huge discount. Such a move would be at the expense of the state, since the government had injected a massive amount of bonds to bail out the bank in the late 1990s. The government via IBRA now owns a 59 percent stake in the bank.

Elsewhere, when pressed that the sanction was too lenient, Herwidayatmo replied that the findings were not yet final, which meant that there could be further sanctions if other wrongdoings were found.

"The sanction was based on what (mistakes) we had identified so far. As the probe itself is still underway, we see what will come out later; then we'll start again from there."

His statement was supported by Anwar Nasution, Bank Indonesia's senior deputy governor, who said that despite having yet to find any irregularities in the case, the central bank would not turn a blind eye if new evidence was found.

"Bank Indonesia has the right to conduct an investigation into a bank's management, commissioners and shareholders, if there is a suspicion of wrongdoings."

There has been rising pressure on the financial authorities to bring the perpetrators of the Bank Lippo scam to court for their alleged crimes, which may also include share price manipulation and violation of other capital market rulings.

There have been calls for Bank Indonesia, for instance, to bar the Riadys and other Bank Lippo top officials from owning a bank in the future because of their wrongdoings.

Meanwhile, IBRA Chairman Syafruddin Temenggung said that the agency would propose a reshuffling of Bank Lippo's board of directors and commissioners at the extraordinary shareholders meeting on April 15.