Privatization to go ahead despite legal investigation
Privatization to go ahead despite legal investigation
YOGYAKARTA (JP): State Minister of the Empowerment of State
Enterprises Tanri Abeng said Saturday the partial divestment of
the government's 65 percent stake in publicly listed PT Semen
Gresik would continue despite alleged insider trading of the
company's shares.
"The divestment process of Semen Gresik will proceed, we have
already made the arrangements and we must be disciplined with it
(the timetable)," he said at a seminar organized by Gajah Mada
University.
Several economists and members of the House of Representatives
(DPR) earlier urged for the divestment of the government's stake
in the cement company to be halted until an investigation into
insider trading allegations had been completed.
Tanri said the ongoing privatization process of Semen Gresik
would soon be completed.
Semen Gresik is one of 12 state-owned companies to be
privatized during the 1998/1999 fiscal year. The move is expected
to raise Rp 15 trillion (US$1.5 billion) to help finance the huge
budget deficit which may reach 8.5 percent of Gross Domestic
Product in the fiscal year ending March 1999.
On June 19, two international cementmakers, Switzerland's
Holderbank Financiere and Mexico's Cemex CA, submitted bids to
purchase part of the government's 65 percent stake in Semen
Gresik.
On June 22, former chairman of Indonesia's Capital Market
Supervisory Agency (Bapepam) I Putu Ary Suta told the media that
he suspected illegal transactions of Semen Gresik stock after its
stock prices surged over 50 percent since early May to June 18.
He made the announcement a few hours before he was replaced by
Jusuf Anwar in a major reshuffle in the finance ministry.
Putu said that if the allegation was true, the insider trading
of Semen Gresik would be the biggest scandal in the history of
Indonesia's capital market.
Semen Gresik stock prices increased 64 percent to Rp 8,900 on
June 18 from Rp 5,450 on May 1.
Jusuf said an investigation into possible insider trading was
still going on, and that top executives of PT Jardine Fleming
Nusantara, and state-owned PT Danareksa Sekuritas and PT Bahana
Securities had been summoned.
The three investment bank, which are the government's
financial advisors for Semen Gresik's privatization, are
suspected of buying huge amounts of the company's stocks between
early May to June 18 to benefit from inside information that
several foreign investors would purchase part of the government's
stake in the cement company.
Tanri said he would take strict action against officials of
state-owned companies which were proven guilty of insider
trading.
Article 104 of the 1995 Capital Market Law states that people
convicted of insider trading could be sentenced to a maximum of
10 years in jail and fined a maximum of Rp 15 billion (US$1.07
million).
Tanri appealed to the public to wait for the results of
Bapepam's investigation before jumping to conclusions.
"Insider trading may not have occurred, so it's best to wait
for Bapepam's investigation," he said.
He explained that if strict punishment given to the culprits
was not based on legal procedure, the overall privatization
program would be jeopardized.
"This (the privatization program) is long term, so there
mustn't be any mistake in the process or system," he said.
Tanri's privatization program was earlier lambasted by several
quarters in the country's political and business communities,
prompted by the alleged lack of transparency in the privatization
process of steelmaker PT Krakatau Steel.
He was criticized for a memorandum of understanding signed
with Netherlands-based Ispat International, which was appointed
as an unsolicited investor for Krakatau.
Ispat latter decided to cancel the memorandum and participate
in biding to purchase Krakatau. (44/rei)