Bapepam says it needs more time to complete Lippo probe

Bapepam says it needs more time to complete Lippo probe

Dadan Wijaksana, The Jakarta Post, Jakarta

The financial authorities will be unable to complete their
investigation into the Bank Lippo affair by the Monday deadline
they have set themselves, a senior official has admitted.

Capital Market Supervisory Agency (Bapepam) chairman
Herwidayatmo said on Friday that what would be unveiled to the
public on Monday was the progress achieved so far in the
investigations being carried out separately by the agency, Bank
Indonesia and the Ministry of Finance.

"The announcement on March 17 will feature clarifications from
the relevant institutions, such as Bank Indonesia, Bapepam and
the Ministry of Finance, as to what stage they had reached in
their probes into the Lippo case," he explained.

Previously, Bapepam said that it would announce the results of
its investigation on March 17.

The agency has been investigating possible wrongdoing by the
management of Bank Lippo when it published two different third
quarter financial reports late last year. The reports have
mislead the public, analysts say, causing the bank's share price
to fall.

There has been suspicion that the bank's management had
deliberately attempted to bring the share price down to allow its
former owners, the members of the Riady family, to regain control
of the bank at a very low price. Bank Lippo has been 59 percent
owned by the government since an expensive bailout in the late
1990s.

Bank Indonesia, the central bank, has been investigating
whether the bank's management and commissioners had violated
banking regulations, while the Directorate General of Financial
Institutions at the finance ministry has been probing the bank's
auditor and appraisal firms linked to the financial reports.

As public demands rise for the authorities to sanction the
bank's management and board of commissioners for alleged fraud
intended to destroy Bank Lippo's capital base and share price,
Herwidayatmo's remarks could be seen as a potential stumbling
block to such action.

And as the relevant state agencies have been under heavy
pressure to deal with the case, this might well serve as a
justification not to impose tough sanctions on the perpetrators.

Earlier, hopes were high that it would be judgment day on
March 17 and that those involved in the Lippo affair would face
severe punishment for causing losses to the state.

Herwidayatmo argued that Bapepam needed more time because it
might widen the scope of its probe beyond the dual financial
reports into other areas, such as possible share price
manipulation and unreported share transactions.

Reports earlier said that a number of stock traders working on
behalf of the former owners of Bank Lippo were involved in
trading manipulation to push the bank's shares down.

PT Lippo E-Net, a company owned by the Riadys, had also been
accused of quietly amassing the bank's shares via the stock
market at very low prices without reporting the transactions to
the market authority as required by law. This company now owns
about 12 percent of Bank Lippo shares, up from 8.1 percent
previously.

Any such moves would be illegal as, according to capital
market regulations, an investor owning a minimum of 5 percent of
a publicly listed company who wishes to increase its ownership
has to notify the capital market watchdog.

A group of analysts and anticorruption crusaders had
previously asked Bapepam to widen the scope of the investigation.

"As for Bapepam, we're investigating the dual reports as part
of one package together with possible manipulation (involving
share transactions). But whether all will be announced at the
same time (on March 17) remains to be seen as the probes are
still underway," Herwidayatmo said.