Sat, 29 Mar 2003

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.