Bapepam penalizes Lippo management

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.