Sat, 22 Feb 2003

Don't lose focus on Bank Lippo: Analysts

Arya Abhiseka, The Jakarta Post, Jakarta

Analysts warned on Friday that Bank Lippo's decision to report financial analyst Lin Che Wei to the police for allegedly defaming the bank in his published media article could be a move to divert public attention from alleged wrongdoings by the bank's management.

Meanwhile, Che Wei stood by his article, saying that the management was suspected of having manipulated transactions in the bank's shares to deliberately lower share prices.

He added that he was ready to meet the bank in court.

"My substantial data will show that my article (in the media) is correct. Therefore I am ready to meet them in court to prove that this is indeed a serious white-collar crime," he told a media conference, which was also attended by a number of financial analysts and anticorruption crusaders in support of Che Wei.

Teten Masduki, coordinator for the Indonesian Corruption Watch (ICW), who attended the news briefing, suggested that police should immediately investigate the possible financial fraud committed by Bank Lippo's management.

"We should not lose focus of the real issue of corruption here," he said.

Earlier on Thursday, Bank Lippo commissioner Rudy T. Bachrie filed a police report against Che Wei for defamation.

"He is too radical, that's why I reported him to the police," he told reporters.

The Bank Lippo management and its former owner, the Riady family, have been under fire, particularly after the bank published two different third quarter 2002 financial reports late last year and the continuing decline in the share price of the publicly listed bank.

In a November media report, the bank reported a profit, but in a subsequent December report to the Jakarta Stock Exchange, it reported a loss. The bank also said that its capital condition had deteriorated.

The management said that the weaker financial condition was linked to the rapid decline in the value of foreclosed assets.

However, it remains unclear why the value of the assets had dropped.

The management -- which has been accused of acting on behalf of the bank's former controlling owner -- proposed that the bank launch a rights issue to raise cash to help improve its financial condition.

But analysts said that this was merely an attempt to allow the Riady family to regain control of the bank at a huge discount as the current share price of the bank had greatly declined.

Bank Lippo was recapitalized by the government in 1999 using Rp 7.2 trillion (US$809 billion) of state funds. In turn, the government obtained a 59 percent stake in the bank.

Since the cash-strapped government is unlikely to buy into a rights issue, analysts said, it would open the door for the Riady family to regain the bank.

Since November last year, the share price of Bank Lippo has been declining. As a comparison, the bank is now only worth around Rp 600 billion.

The Capital Market Supervisory Agency (Bapepam) is currently investigating Bank Lippo. The result of the investigation is expected to be announced next month.

The Jakarta Stock Exchange earlier reprimanded Bank Lippo for claiming an unaudited third quarter financial report as audited.