JP/13/Bapepa
JP/13/Bapepa
Bapepam to probe securities firms linked to Global
Rendi A. Witular
The Jakarta Post/Jakarta
The Capital Market Supervisory Agency (Bapepam) is planning to
investigate five securities houses over their involvement in
helping executives of troubled Bank Global Internasional to
falsely inflate the bank's assets, an official said.
Bapepam head of inspection and investigation Abraham Bastari
said the agency would soon summon the five securities over strong
indications that they were involved in giving false statements to
the central bank over the amount of securities papers owned by
Bank Global.
"We have inspected the five securities firms in June, and now
we are planning to investigate them over an indication of their
involvement in fraud," said Abraham at his office on Monday.
Abraham refused to disclose the name of the five securities
firms.
According to a source at Bapepam, the firms had been giving
false reports to Bank Indonesia by confirming that Bank Global
securities papers could be financially verified. The securities
certificates are used by the bank to increase its capital
adequacy ratio (CAR) beyond the central bank's 8 percent minimum
requirement.
The central bank later requested the Bapepam to verify their
reports with a result that the securities papers were fictitious.
Due partly to this problem, Bank Indonesia announced last week
a one-month suspension of the operations of the bank as its
financial condition deteriorated -- the CAR level plunged from 44
percent in September to below the 8 percent level in October.
Elsewhere, rating agency PT Kasnic Credit Rating Indonesia
regretted the decision by both Bank Indonesia and the Bapepam for
being too slow in taking necessary action against the ailing
bank, even though irregularities in its management had been
apparent for several months.
"We are concerned that the central bank and Bapepam have
refused to give an early warning signal about the irregularities,
so we could have revalued our ratings on Bank Global and helped
investors avoid losses," said Kasnic president director Jazid
Adam.
In June 2003, Kasnic gave Bank Global Rp 400 billion (US$44.4
million) in subordinated bonds with an A-minus rating due to
convincing reports from the central bank and the Bapepam over the
bank's operation and performance.
"We gave the favorable rating based on reliable reports from
Bank Indonesia and the Bapepam. We regret that the two
institutions failed to provide us with sufficient data on the
bank so that we could warn investors of any irregularities," said
Jazid.
After the central bank announced on December 8 that it had
decided to put Bank Global under its special surveillance unit on
Oct. 27, Kasnic immediately lowered the bank's rating to BBB-,
and later to D (default) after the central bank decided to
suspend the bank's operations.
Over a dozen of the bank's bond holders, many of them pension
funds, may lose the money they have invested if the central bank
finally decides to liquidate the scandal-ridden bank.
Under the existing blanket guarantee program, the government
will guarantee time deposits and savings of all liquidated banks.
It will not, however, reimburse bond investors.
Subordinated bonds mean are unsecured and will be the last to
get their hands on Bank Global's assets if it is to be
liquidated.