KPPU to investigate Indomobil sale

KPPU to investigate Indomobil sale

The Jakarta Post, Jakarta

The Business Competition Supervisory Commission (KPPU) has
announced plans to launch an investigation into the sale of
government stakes in the country's second-largest automaker, PT
Indomobil Sukses Internasional, next month amid allegations of
fraud, officials said.

Commission Chairman Mohammad Iqbal said on Thursday that the
investigation process could lead to either the cancellation of
the deal, or a fine of between Rp 1 billion (or US$100,000) and
Rp 25 billion against the buyer, a consortium led by PT Trimegah
Securities, if there is proof that the law was broken.

Speaking to reporters on the sidelines of a hearing at the
House of Representatives commission IX on state budget and
finance, he added that the commission may also recommend that the
House or the President dismiss any Indonesian Bank Restructuring
Agency (IBRA) officials responsible for an illicit transaction,
including chairman I Putu Gede Ary Suta.

"We have strong suspicions that there has been a violation of
the law, so we'll launch a preliminary investigation starting on
February 1, 2002," he told reporters.

He added that the initial stage of the investigation could
take up to 30 days, and added that the conclusion of the
investigation, in turn, could last up to 60 days.

According to Article 22 of Antimonopoly Law No. 5/1999,
businesses are prohibited from conspiring with other parties to
win a tender; this is underlined in the article as being an
unfair business practice.

KPPU is the agency established by the government to enforce
this law.

The government, via IBRA, sold more than 72 percent of its
stake in Indomobil to the Tri Megah-led consortium in December.

But the hurried deal was roundly criticized by experts,
particularly due to its low price and lack of transparency; this
raised suspicions that company founder, the Salim Group, was
behind the deal.

The IBRA only sold the shares at Rp 625 each, far lower than
the Rp 2,500 per share that the government paid when it acquired
the company in 1998.

The relatively short period for due diligence process had also
raised speculation that only investors linked to the Salim Group
were willing to submit bids as other investors would be in no
position to make a proper assessment of Indomobil.

Indomobil was part of the assets transferred by Salim to IBRA
to repay debts to the government. Salim, however, has been banned
from re-purchasing the publicly-owned company.

Reports also said earlier that IBRA officials had violated
existing regulations in the sale process, as it had not sought
the approval of the Financial Sector Policy Committee (FSPC),
which groups top economic ministers.

The controversy surrounding the Indomobil sale only added to
the various questionable asset sales and restructuring deals
implemented by IBRA.

The Institute for Development of Economics and Finance
(INDEF), a prominent independent think tank, earlier had even
asked President Megawati to suspend Ary Suta from his post to
facilitate the probe into the allegedly shoddy deals.

KPPU is also watching closely the sale process of government
51 percent stake in Bank Central Asia (BCA) by IBRA.

There has been speculation that Salim was also trying to
reenter the country's largest retail bank.