Lawyer downplays BPK probe into Semen Gresik

Sari P. Setiogi, The Jakarta Post, Jakarta

A lawyer representing publicly listed cement giant PT Semen Gresik downplayed on Monday the probe being conducted by the Supreme Audit Agency (BPK) into the company's past acquisition of PT Semen Padang and PT Semen Tonasa.

"All the papers we have on the acquisition process is legal. Moreover, it is not within BPK's authority to decide whether the process is legal or not," Todung Mulya Lubis from Lubis, Santosa & Maulana Law Office told The Jakarta Post.

He said only a court could make a decision regarding the legality of the acquisition process.

The three firms are state-owned cement companies. The acquisitions were made in 1995 to make Semen Gresik the country's largest cement producer.

Last Friday, BPK senior auditor Amrin Siregar said the agency was conducting an investigation into the acquisition process on the grounds that the transaction might have not been legal, because it was not supported by a government regulation.

He said according to Law No. 9/1969 and Government Regulation No. 12/1969, every allocation of an asset in a state-owned company should be supported by a government regulation.

"If the process was illegal, how it could get listed on the Jakarta Stock Exchange? The firm got in there (JSX) after a due diligent process," said Todung.

Amrin said the BPK had sought clarification from the independent accountant who had audited Semen Gresik's 1995 financial accounts, Sarwoko & Sandjaja Public Accountants, as to why the absence of the required government regulation was not explained in the audit report.

This is not the first time that the BPK has launched a probe into this issue. In 2001 and 2002, the agency sent an official letter to the Ministry of Finance and the Office of the State Minister of State Enterprises requesting an explanation on the absence of the government regulation.

As of today, there has been no response from either office.

In 1995, Semen Gresik acquired Rp 1.1 trillion shares in Semen Padang, West Sumatra, and Semen Tonasa, South Sulawesi, which were consolidated into Semen Gresik.

In 1998, Mexican cement giant Cemex SA de CV, the world's third-largest cement maker, acquired more than 25 percent of shares in Semen Gresik, which went public in 1991.

The government still owns a 51 percent stake in Semen Gresik, while the remainder is held by the public.