Bapepam urged to step up probe on trading scams

Bapepam urged to step up probe on trading scams

JAKARTA (JP): Analysts have called on the capital market
watchdog and stock exchange operators to step up efforts to
investigate alleged insider trading practices in the local stock
market.

Senior economist Sjahrir said the capital market regulator's
reluctance to take serious action over reported stock trading
scams would further weaken the image of the country's flagging
capital market.

"The capital market regulator's failure to improve
transparency and fully investigate any capital market scandal is
one of the dominant factors behind the continued decline of our
bourse," Sjahrir of the Institute for Economic and Financial
Research (ECFIN) said on the sidelines of a seminar on insider
trading practices on Thursday.

The bad image of the local market coupled with the worsening
of the country's economic fundamentals resulting from the
rupiah's collapse against the U.S. dollar have contributed to the
continued fall in share prices.

The Jakarta Stock Exchange (JSX) Composite Price Index has
lost more than 60 percent of its value since the crisis began in
July 1997 to fall to below 300 points from nearly 750.

The average daily transaction value has also plunged to about
Rp 125 billion (US$11.11 million) compared to the pre-crisis
level of around Rp 500 billion (then $205 million).

Sjahrir said the bearish market conditions should not be taken
as an excuse to strengthen law enforcement.

"It seems to me that Bapepam (the Capital Market Supervisory
Agency) does not have any political will to probe the stock
market scandals taking place in the market," he said.

Gresik scandal

Sigma research Institute director Jasso Winarto shared
Sjahrir's view. He said that the unwillingness of the stock
exchange operators and Bapepam to investigate trading scams was
reflected by their slow action on alleged insider trading on
Semen Gresik shares recently

"Bapepam should come in with strong action and impose
penalties on any parties involved in insider trading," he said.

In June the then Bapepam chairman I Putu Gede Ary Suta hit the
headlines after he unveiled a possible massive trading scam
involving Semen Gresik shares.

The price of Semen Gresik shares rose by more than 50 percent
in less than a week in June following unconfirmed reports that
Mexican cement producer Cemex had received the green light from
the government to take over a majority stake in the company.

Putu said he believed large transactions on Semen Gresik
shares taking place before Cemex's deal was made known to the
public were based on an insider information.

Putu made his statement only a few days before he was replaced
by current chairman Jusuf Anwar, who later promised to probe the
alleged insider trading practice. But no results of the
investigation have so far been announced to the public.

The head of Bapepam's legal bureau, I Nyoman Tjager, said
Thursday, however, that the team was still working on the case as
it had to summon more parties which were allegedly involved in
the stock scam.

"The team is still working on the case and it has not
delivered any results,' he said.

He declined to mention when the investigation would be
completed, arguing that Bapepam did not have any deadline to
investigate the case.

"You know... it is not like reporters who have deadlines in
their job, we do not have a deadline to investigate the case,' he
said.

Former JSX president Hasan Zein Mahmud, however, contended
that Bapepam should immediately wrap up the Semen Gresik scam
probe to avoid any speculation that the capital market regulator
was apathetic to the issue.

According to the Capital Market Law, people convicted of
insider trading or buying or selling shares based on insider
information, could be sentenced to a maximum of 10 years in jail
and be liable to pay a fine of up to Rp 15 billion (US$1.38
million). (aly)