Shareholders hold off on Gresik accounts

Shareholders hold off on Gresik accounts

Rendi A. Witular, Jakarta

Shareholders of publicly listed PT Semen Gresik (SG), the
country's largest cement producer, declined to approve the
company's financial accounts, pending the completion of an
ongoing forensic audit into subsidiary PT Semen Padang.

"We cannot approve something that is incomplete. We just have
to wait for the company to restate its financial accounts after
finishing the audit of Semen Padang," said a deputy at the Office
of the State Minister for State Enterprises, Roes Aryawidjaya,
after SG's annual shareholders meeting on Wednesday.

Roes is representing the government as the majority
shareholder in the company during the meeting. The government
controls 51 percent of SG, Mexican cement giant Cemex SA owns a
25.5 percent stake and the remaining 23.5 percent is held by the
public.

Semen Padang assets and net profit account for 26.77 percent
and 16.75 percent of SG's total assets and net profit,
respectively.

The Jakarta Stock Exchange (JSX) suspended trading in shares
of SG on Monday after auditor PricewaterhouseCoopers (PwC) issued
a disclaimer for SG's 2002 and 2003 consolidated financial
accounts due to the unaudited financial figures from Semen
Padang.

Roes said that because SG's financial accounts were
incomplete, the government had also decided to delay its plan to
change the composition of the company's current management until
the next shareholders meeting, which is scheduled for November.

"We are giving the current management a chance to finish its
job. It is feared that replacing them during this bad time would
disturb efforts to settle the audit problem," he said.

SG president Satriyo said the company's auditor, PwC, was in
the process of conducting a forensic audit of Semen Padang to
ensure there were no irregularities committed by the rebellious
previous management of Semen Padang, which was replaced last
year.

"The delay in completing the audit of Semen Padang is due to
this forensic audit. We need such an audit because of poor
document filing by Semen Padang's former management ... several
documents have gone missing," said Satriyo.

But some analysts believe the forensic audit was launched in
response to rumors that about Rp 550 million (US$58.5 million) of
Semen Padang's assets, which are valued in total at about Rp 2
trillion, was pillaged by the previous management, which had
demanded that the West Sumatra-based unit be separated from SG.
That demand received the support of some local politicians.

Satriyo said there were no reports yet from PwC on the rumored
"lost" Semen Padang assets.

"If there was a loss, the amount would be less than the
rumored Rp 550 billion," said Satriyo.

The forensic audit is expected to be concluded in October.

The East Java-based SG has been facing difficulties in
finalizing its 2002 financial report, which in turn has affected
the completion of its 2003 report, due to problems at Semen
Padang.

For months the new management team at Semen Padang could not
enter the company's headquarters because of a blockade by the old
management team. It was only in September last year that the new
management was finally able to gain access to headquarters.

Many believe that during the blockade, the old management
destroyed or stole some of the company's asset records.

"That is what the forensic audit is for. We will see whether
there were any irregularities on the part of the old management
during the blockade," said Satriyo.

Also during the meeting, SG shareholders voted to allocate Rp
103 billion, or Rp 174.68 per share, for dividend payments.

The dividend accounts for 30 percent of the combined net
profit of SG and its South Sulawesi-based subsidiary PT Semen
Tonasa. Their combined net profit reached Rp 345 billion last
year.