More stringent capital market law needed: Bapepam
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) is preparing a draft law to provide sterner sanctions against law violators, according to the agency's chairman, Herwidayatmo.
"We have a target of completing the draft law for the amendments to the existing 1995 Capital Market Law by September," Herwidayatmo said on Monday.
He said the draft law would also contain clauses which allowed the country's stock exchanges to raise funds from the public by floating their shares on the stock exchange.
"In preparing the draft law, Bapepam, so far, has been working with the Jakarta Stock Exchange (JSX)," he added.
Herwidayatmo also said he had met with members of the House of Representatives Commission IX for the budget and finance, adding that they discussed further issues about improving the existing Law.
Basically, the Capital Market Law should apply clearer, fairer and sterner sanctions on the violators, according to Herwidayatmo.
Herwidayatmo gave an example of an administrative penalty of only Rp 500 million imposed on a listed company which in bad faith used public money for purposes other than intended.
Earlier reports said there were nine companies that had loaned funds to external companies owned by the companies' majority and/or founding shareholder without the consent of the minority shareholders.
The nine companies were fined Rp 4.2 billion, cumulatively, for their actions that hurt the interests of the minority shareholders, according to Herwidayatmo.
The companies are PT Surya Dumai Industri, PT Wania Indah Busana (previously PT Indosteel), PT Dharmala Agrifood, PT Dharmindo Adhiduta, PT Aster Dharma Industry, PT Anwar Sierad, PT London Sumatera Plantations, PT Sekar Laut and PT Sekar Bumi.
"A maximum penalty of Rp 500 million for each of these companies is just not enough," Herwidayatmo said.
Asked whether any of these companies had paid the penalty fees charged by Bapepam, Herwidayatmo said, "None of them have paid. But if a tolerable time limit is passed, we will hand over the case to BUPLN (the National Body for Asset Recovery and Auctions).
Herwidayatmo admitted, however, that there was a dilemma in the above case in that when the companies finally paid the fees, it would also mean the interests of the minority shareholders of the respective companies would be hurt once again.
"The company, which is still owned by the minority shareholders, bears the burden of the penalty. So when the company is charged, the bill effectively also goes to the minority shareholders," he said.
He said the breach of the law by the above companies occurred in 1998, and that it was the mistake of the then management to bow to the controlling shareholders and loan money to a third party at the expense of the minority shareholders.
"Maybe there have to be some improvements in this particular area as well," he said.
JSX president Achmad Daniri said that good punishment alone was not the whole of the story.
"The main concern is not actually in meting out punishment to violators; are our efforts in making our stock market work better is more important," he said.
Meanwhile, regarding PT Lippo e-Net, Herwidayatmo denied Bapepam would end an investigation into the company for alleged market manipulation after the firm made public on Tuesday the clarification of its inconsistent statements previously made to the public.
"Lippo e-Net's public clarification may emphasize the evidence of the company's inconsistency," Herwidayatmo said.
PT Lippo e-Net was required by Bapepam last week to provide the public with explanations of its inconsistent statements contained in one-page advertisements in two national newspapers. (udi)