JSX being audited after reports of breaches

JAKARTA (JP): The board of commissioners of the Jakarta Stock Exchange (JSX) has appointed Earnst & Young Consulting to carry out an investigative audit on the JSX management following reports of alleged breaches in the exchange.

"The scope of work covers the 12 findings of inefficiency and possible breaches, the information technology area and JSX role in the exchange's trading surveillance," member of the boards of commissioner Erry Riyana Hardjapamekas said on Wednesday.

Erry said Earnst & Young, who charged a US$25,000 fee for the job, started the auditing work on Wednesday.

The Capital Market Supervisory Agency (Bapepam), in its operational audit report leaked to the media last week, said it found 12 cases of inefficiency and breaches of operating procedures by the management of JSX.

The annual shareholders' meeting held on Monday approved the commission's proposal to hire an independent auditor to follow up the above 12 findings.

The meeting also agreed to install a five-member team, representing shareholders' interests, to closely assist the work of the independent auditor throughout its three-week auditing process.

The idea of the five-member team was proposed by Syahrir, a prominent economist representing PT Syahrir Securities, who is also member of JSX shareholders, .

Some equity analysts saw the investigative audit as part of a bigger conspiracy by certain parties to get rid of the current JSX management team who have been imposing strict rules on the bourse.

"This is hard-core politics. There are many parties who are unpleasant with the strict JSX rules and want to make a move," senior equity analyst Martin P.H. Panggabean said

"JSX is the country's most "reformist" public institution. This is why the current management got all these disturbances," he said.

Martin said the independent auditor should find out if the 12 findings by Bapepam were merely "honest" mistakes by JSX management which might have been committed without any bad faith.

M.S. Sembiring, from Mitra Investdana Sekurindo, played down the existence of any conspiracy, saying that there were pluses and of course minuses about the performance of the current management of JSX.

"The current management of JSX has to be responsible if the minuses are beyond toleration," he said.

He said that there were significant projects carried out by the management that had not passed proper approval procedures through the commissioners or Bapepam.

Meanwhile, Intan Abdams, the JSX corporate communications division head, clarified media reports that said there were over 20 listed firms implicated in possible wrongdoing.

"It is our trading system that automatically halts the trading of any shares whose price fluctuates more than 30 percent within a day," she said adding that in such occurrences a regular and standard investigation takes place.

"It is a very normal procedure, nothing special. The system is implemented to improve market surveillance and to get rid of any unusual trading activity on the market," she said. (udi)