Sanctions imposed on Lippo's appraisers, auditor

Sanctions imposed on Lippo's appraisers, auditor

Dadan Wijaksana, The Jakarta Post, Jakarta

The Ministry of Finance has imposed sanctions on three
appraisers and an auditor who conducted an appraisal of Bank
Lippo's assets and an audit of its financial report issued late
last year, for failing to comply with existing procedures.

Darmin Nasution, the ministry's director general for financial
institutions, said that the sanctions ranged from written
warnings to a temporary revocation of their working licenses.

"Based on their level of mistakes, we have decided to suspend
the licenses of two appraisers for a year and issue written
warnings to the other appraiser and the auditor," Darmin told a
media briefing.

Those who have lost their licenses are Andang Kosasih and
Bagus Wiyono from the appraisal firms of PT Provalindo Nusa and
PT Pronilai Konsulis Indonesia, respectively.

Firman Sagaf, the other appraiser, from PT Satyatama Graha
Tara, and Ruchjat Kosasih an auditor from Prasetyo, Sarwoko and
Sandjaja, only received written warnings as their assessments
were deemed as having little impact on Lippo's financial reports.

The four were put under investigation last month with the aim
of finding out if they were involved in the recent uproar over
the issuance of Lippo's financial reports.

Public outcry broke out when Lippo issued two different
financial reports last year. In its November version, the bank
reported a net profit of Rp 99 billion as of September and 24.8
percent of the bank's capital adequacy ratio (CAR). But a month
later, the bank reported Rp 1.27 trillion in losses, pushing its
CAR down to about 4 percent.

The management has said that the difference was caused by a
subsequent event -- that is, the sharp decline in value of its
foreclosed assets. This, Lippo said, dragged the bank's CAR down
as it had to set aside about Rp 1 trillion in provisions to back
up the lost value.

Lippo's claims were said to have been based on the appraisals
conducted by the three companies, which were later audited by
Ruchjat.

Darmin's office's findings may confirm allegations that the
claims were only part of the management's maneuvers to regain
control of the bank with the aim of justifying its plans for a
rights issue, a move which would dilute the government's
ownership in the bank.

The government, through the Indonesian Bank Restructuring
Agency (IBRA), holds a 59 percent stake in the bank in return for
injecting Rp 6 trillion into the bank in 1999.

Elsewhere, the findings would also put more pressure on
Lippo's management, which was earlier penalized.

The Capital Market Supervisory Agency (Bapepam) recently fined
the management Rp 2.5 billion ($280,000) for providing the public
with misleading information.

Anwar Nasution, Bank Indonesia's senior deputy governor, said
that the central bank would use the results as additional facts
for its own investigation.

"We will center our probe on whether the appraisers and the
auditor had certain motives, and whether or not there was any
collaboration (with Lippo's management)," Anwar, who was also
present at the briefing, said, adding that the central bank would
complete its probe before the bank's extraordinary shareholders'
meeting.

The shareholders' meeting is scheduled for April 15, where it
is widely expected that IBRA will make a massive reshuffle of the
bank's boards of management and commissioners.