Eddy Pianto sues Telkom, Bapepam for Rp 7.84t

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.