Bapepam probes Indofarma, shares suspended

The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam) summoned on Tuesday the management of pharmaceutical company PT Indofarma for alleged irregularities in its 2002 financial report.

Bapepam declined to disclose the results of its meeting with Indofarma, with one official saying that the meeting was only meant to seek an initial explanation from the publicly listed state-owned pharmaceutical company.

The official said that Bapepam could not yet take action as Indofarma's financial report was still being audited by Deloitte Touche Tohmatsu.

Indofarma reported to the Jakarta Stock Exchange a net loss of Rp 20 billion (US$2.3 million) for the year 2002. That disclosure stunned analysts and investors as the company had previously reported a net profit of Rp 88.6 billion through the third quarter of 2002.

The discrepancy triggered suspicions, and analysts said it was unbelievable that the company could book such a large loss in just three months.

Reports of the alleged irregularities prompted the Jakarta Stock Exchange to suspend trading in shares of Indofarma early on Tuesday. The management of the stock exchange said that the news reports had affected trading of the shares.

The Jakarta Stock Exchange urged the Indofarma management to immediately hold a press conference to clear up the issue.

Indofarma is part of the government list of state-owned companies to be sold to investors this year in a bid to raise cash to help finance the 2003 state budget deficit.

The sale of Indofarma was supposed to be completed last year, but due to various issues, including an unfavorable market condition, the government postponed the privatization program.

But the news report of irregularities in the financial report may become another hurdle for the sale of the Indofarma stake.

Indofarma's stock price was trading at Rp 230 per share when the stock exchange management suspended the shares. This price was unchanged from the closing price on Monday.