Eddy Pianto sues Telkom, Bapepam for Rp 7.84t
The Jakarta Post, Jakarta
Former auditor of state-owned telecommunications company PT Telkom, accounting firm Eddy Pianto has officially filed a Rp 7.84 trillion (US$922 million) lawsuit against the company and the Capital Market Supervisory Agency (Bapepam).
Eddy's lawyer Wawan Iriawan told The Jakarta Post on Monday that his client had registered the lawsuit at the South Jakarta District Court last week and would start a preliminary hearing with the court on Tuesday.
"We have officially filed the case with the court, as Telkom and Bapepam have violated existing accounting regulations," said Wawan.
He explained that Telkom and Bapepam declared Eddy's audit of the Telkom 2002 financial report unacceptable, although the two had previously declared it contained no flaws, and endorsed it as a legal basis to distribute dividends to investors.
The decision by Telkom and Bapepam to reject the audit had tarnished Eddy's reputation and caused losses to the firm because the firm's other clients decided to move to other accounting firms, he said.
Bapepam had earlier insisted that Eddy's audit was legally acceptable. However, after the U.S. Securities and Exchange Commission (SEC) rejected Eddy's report, agency Herwidayatmo quickly responded that indeed Eddy had violated the country's accounting regulations.
But until now, it remains unclear which regulation has been violated by Eddy.
Aside from Telkom and Bapepam, Eddy is also filing a law suit against accounting firms PricewaterhouseCoopers (PwC) and Deloitte Touche Tohmatsu for their involvement in the affair, Wawan said.
The SEC rejected the initial Telkom 2002 financial report because it was considered incomplete, according to Eddy. The latter has said that this was because PwC refused to give a consent letter to Eddy to use its audit report of PT Telkomsel, Telkom's cellular subsidiary.
The SEC demanded that Telkom, listed on both the Jakarta and New York bourses, resubmit the 2002 accounts as soon as possible or risk being delisted from the New York Stock Exchange. Telkom appointed PwC in June for the reaudit work.
Many analysts and legislators have questioned Telkom's decision in appointing PwC as it might cause a conflict of interest because PwC is also an auditor of Telkomsel.
Before the audit problem occurred, head of audit committee and independent commissioner of Telkom Arief Arryman had rejected "big four" auditors including PwC, due to a conflict of interest, and appointed Eddy instead.
PwC completed the reaudit on Feb. 9, with a 3.7 percent downward revision in Telkom's consolidated net profit for 2002.
Telkom is the largest telecommunications company in Indonesia and the largest counter on the Jakarta Stock Exchange, with a 17 percent market capitalization.