Bapepam unchains Eddy Pianto after lawsuit threat

Bapepam unchains Eddy Pianto after lawsuit threat

Rendi A. Witular, The Jakarta Post Jakarta

The Capital Market Supervisory Agency (Bapepam) decided on
Friday that accounting firm Eddy Pianto Simon, which recently
filed a lawsuit against the agency, would no longer be suspended.

In a press statement, the capital market watchdog said that as
of Friday it had allowed the firm, which had been suspended since
June 16 last year, to resume business.

"With the completion of the probe of Eddy Pianto Simon over
the alleged violation of capital market regulations, the agency
has decided to revoke the suspension," Bapepam stated.

The suspension was imposed following an accounting problem at
publicly listed telecommunications giant PT Telekomunikasi
Indonesia (Telkom). Eddy Pianto Simon was the auditor of Telkom's
2002 financial report.

Bapepam said that after conducting a comprehensive
investigation, the agency had decided to sanction the accounting
firm by issuing it with a warning letter.

The warning was necessary because Eddy Pianto Simon had not
been "prudent" in accepting the offer to audit Telkom's report,
Bapepam said.

The agency explained that the accounting firm should have
rejected the offer as, first, the accounting firm's principal
Grant Thornton International had refused to be involved in the
auditing process and would not accept responsibility for the
result.

Second, Eddy Pianto Simon had realized that
PricewaterhouseCoopers (PwC) -- as the auditor of Telkom's
cellular subsidiary PT Telkomsel -- would not provide a consent
letter for the firm to include Telkomsel's audit result in
Telkom's 2002 financial report.

Meanwhile, the lawyer representing Eddy, the head of the firm
after whom it is named, Wawan Iriawan, said that Bapepam's
decision to lift the suspension and only give Eddy a warning
letter was a sign that the agency was worried about the Rp 7.84
trillion (US$922 million) lawsuit against Bapepam and Telkom.

The lawsuit was recently filed with the South Jakarta District
Court. The preliminary hearing began two weeks ago, although
Bapepam's and Telkom's lawyers were absent.

Telkom and Bapepam had initially declared the final result of
Eddy Pianto Simon's audit of the 2002 financial report could be
used as the legal basis for distributing dividends to investors.
But the two later determined that this was unacceptable following
rejection from the U.S. Securities and Exchange Commission (SEC)
on the grounds that the accounting firm was not registered with
the U.S. stock market regulator. Telkom's shares are also listed
on the New York Stock Exchange.

Wawan said the decision by Telkom and Bapepam to reject the
audit had tarnished the accounting firm's reputation and caused
it significant losses as Eddy Pianto Simon's other clients had
decided to use other firms.

"We are not going to revoke our lawsuit," he said.