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)