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.