Indosat's advisers blamed for rumors on inside trading
The Jakarta Post, Jakarta
The controversy surrounding the sale of PT Indosat shares escalated on Thursday when Capital Market Supervisory Agency (Bapepam) chairman Herwidayatmo accused the company's private placement advisors for spreading rumors about insider trading in the sale process.
Herwidayatmo said he suspected the advisers were attempting to use the allegations of insider trading as an excuse for their failure to meet the sales target for private placement of Indosat's shares.
"If they're no good in the selling business just say so, without making a mess and looking for a scapegoat," he said as quoted by Antara.
The government's financial advisers for the private placement of Indosat's shares were U.S. investment firm Credit Suisse First Boston (CSFB) and local firm Danareksa Sekuritas.
The controversy over the sale of the Indosat shares began on Wednesday when State Minister of State Enterprises Laksamana Sukardi accused U.S. investment firm Merrill Lynch of possible insider trading prior to last Friday's sale by the government of 8.1 percent of its stake in Indosat.
The state minister called on Bapepam to investigate the matter.
Merrill Lynch is the financial adviser for Indosat's planned rights issue later this year.
The allegations are believed to be based on the fact that Merril Lynch was involved in the massive sell off of Indosat shares last Thursday, which resulted in an almost 5 percent fall in share value.
This prompted the Jakarta Stock Exchange to suspend trading of the shares, pending further clarification from the government on its planned sale.
On Saturday, or two days after the suspension of trade, the government announced it had sold an 8.1 percent stake in the company for US$110 million -- less than the initial sales target of 11.32 percent. The shares were sold for Rp 12,000 each -- less than the market price of Rp 12,600 when trade in Indosat shares was suspended on Thursday.
Laksamana said there was a conflict of interest when an appointed financial adviser, familiar with the company's value and market trend, was involved in the major sell off of Indosat shares.
Herwidayatmo said Bapepam had established a team to investigate any possible insider trading.
However, he noted that the controversy would not have arisen had Indosat's financial advisers not failed to meet the government's target in the private placement.
Nevertheless, he went on, Bapepam would continue the investigation into the allegations of insider trading in order to maintain the market's confidence.
The sale marked the government's first privatization program this year, from which it expects to raise Rp 6.5 trillion to cover the gaping state budget deficit.
As for Indosat, the government plans to sell 45 percent of its shares in the company this year, with the second phase of the process, a strategic sale, expected to be completed in October.
Following last week's private placement, the government now owns 56.9 percent of Indosat.
Indosat also plans a rights issue to help finance the $325 million buyout of Deutsche Telekom's 25 percent stake in its key unit, PT Satelindo.
The buyout will give Indosat full control of Satelindo, the country's second largest mobile phone firm.