'Bapepam will not pursue Cibinong's missing deposit'

'Bapepam will not pursue Cibinong's missing deposit'

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam)
said on Friday it would leave it to the shareholders of publicly
listed cement producer PT Semen Cibinong to decide whether
Bapepam should continue investigating the company's "missing"
deposit worth US$250 million.

Bapepam chairman Herwidayatmo said his office had no plans to
further investigate Semen Cibinong, after the company announced
it would seek shareholders' approval to write off the deposits.

"This is not our concern, it's up to the shareholders whether
they accept it (Semen Cibinong's write-off plan) or not," he told
The Jakarta Post.

The issue surrounding Semen Cibinong's "missing" deposit
surfaced in 1999, when it led to the company's financial report
containing a disclaimer opinion.

Semen Cibinong was reported to have lost $250 million due to
unspecific reasons. The company, owned by business tycoon Hashim
Djojohadikusumo, claimed to have deposited $250 million at the
Far East Bank in Cook Island, and the Bank of Central Pacific in
Vanuatu.

But financial difficulties at these banks made it difficult to
collect the deposits, it said.

Speculation that the funds had gone missing followed after
Semen Cibinong was unable to prove the existence of the deposits.

Last year, Bapepam penalized Semen Cibinong with a Rp 1
billion (about US$ 87,000) fine over the latter's failure to
prove the deposits' existence.

Herwidayatmo said that after imposing the fine, his office saw
no further need to pursue the whereabouts of the missing US$250
million.

But he added he would demand accountability from Semen
Cibinong if its shareholders rejected the write-off proposal.

Semen Cibinong has said that publicly disclosing copies of
the banks' deposit certificates could encourage creditors, with
which it had been in negotiation, to freeze the deposits.

The company argued that banks in Cook Island, Vanuatu, Cayman
Islands, and Virgin Islands where widely known to be safe from
attempts by creditors to freeze or take over debtors' funds.

Semen Cibinong said the $250 million in deposits were funds it
procured in unsecured loans from several banks.

Separately, analyst Goei Siouw Hong at securities firm PT
Nomura Indonesia, urged Bapepam to pick up the inquiry over the
missing deposits.

"This is a matter of accountability ... of showing good
corporate governance," Hong said.

Semen Cibinong's corporate secretary Jannus Hutapea declined
to comment on the issue other than what had already been stated
in the company's public announcement on Wednesday.

In that announcement, which appeared in the daily Harian
Ekonomi Neraca, Semen Cibinong said the write off plan was part
of its debt restructuring deal.

The company explained that Swiss-based cement group Holcim
Ltd, formerly known as Holderbank Financiere Glaris Ltd, has
agreed to help restructure Semen Cibinong's debts.

Holcim requires Semen Cibinong to first clear the issue over
the missing deposits. It also suggested that Semen Cibinong write
off the deposits.

Under the debt restructuring deal, Holcim would raise its
stake from the present 12.5 percent to 74.5 percent.

Previously, Semen Cibinong had been considering taking legal
action against the two banks, however its lawyer advised the
company not to do so.

Semen Cibinong's legal advisor Hotman Paris Hutapea warned
that a legal battle against the two banks would be too costly in
terms of time and money with the chances of winning being
considered slim.

On June 26, Semen Cibinong plans to hold an extraordinary
shareholders meeting to seek approval for the write-off and debt
restructuring proposals.(bkm)