SMF denies accusations of fraudulence

JAKARTA (JP): The publicly listed multifinance firm PT Sinar Mas Multifinance (SMF) has denied allegations that its president, and the vice president of brokerage firm PT Layang Mega Securities (LMS), were involved in a massive fictitious share transaction totaling Rp 51 billion (US$3.65 million).

"The allegation made by LMS has twisted the facts and harmed the reputation of SMF," SMF president Francisca Iskandar told journalists at the weekend.

SMF is controlled by the publicly listed Bank Internasional Indonesia, the financial arm of Indonesia's second-largest conglomerate.

She said the allegation started on June 4 when SMF demanded LMS return its stocks bought through the brokerage firm after previous orders to sell them were not executed by LMS.

LMS is controlled by the owners of the publicly listed marine and agriculture products exporter PT Sekar Bumi and confectionery manufacturer PT Sekar Laut.

"As a result, SMF suffered a financial loss of Rp 28.5 billion because we couldn't sell the shares when the prices were high," she said, adding that SMF had used the service of LMS since 1997 and started to experience the trouble in February.

She said that because SMF's demand wasn't responded to by LMS, the company reported the incident to police on June 9.

But she said she was surprised to find out that LMS had asked the police to arrest her for a fictitious share transaction arranged together with LMS vice president Trijono Sugandhi, who allegedly admitted to the crime.

Francisca said that because of the false allegation, she filed a suit with the South Jakarta Court, which then confiscated the assets belonging to LMS and the Sekar Group, including a golf course and a hotel and other properties in Surabaya, East Java.

The incident became public when LMS and its legal consultants Rudy Lontoh, Denny Kailimang & Associates held a press conference on Thursday accusing that Francisca and Trijono had arranged the Rp 51 billion fictitious share transaction between January and May by establishing an investment vehicle called Idah Fund.

Their action resulted in a fictitious Rp 51 billion claim on LMS, said company legal adviser Bambang Hartono, reported the Media Indonesia daily.

"We admit that there had been a supervision failure at LMS. The fictitious transaction has tarnished the image of LMS," said company president Harry Fong Jaya, pointing out that the problem had caused a failure to honor obligations to customers, which according to the daily, totaled Rp 35.7 billion.

Francisca, however, said that Trijono was forced by Harry and other LMS top executives to confess to the alleged crime on June 4 in a meeting which was also attended by "four bullies".

"To clarify this incident by law, a court hearing is being scheduled," she said.

BII

In a separate development, Bank Internasional Indonesia (BII) has slashed its housing mortgage interest rate from 50 percent to 30 percent following a demonstration last week by customers demanding the bank return the rate to the precrisis level of between 18 percent and 19 percent.

"After considering the difficulties faced by our customers, and the current economic situation, we decided to subsidize the interest rate," BII managing director Doddy Susanto said over the weekend.

He stressed, however, that for the time being, BII couldn't fulfill the demand to lower rates to between 18 percent and 19 percent.

Interest rates in Indonesia have soared sky high with Bank Indonesia's one-month benchmark rate now standing at 58 percent aimed to curb inflation and stabilize the rupiah exchange rate against the U.S. dollar.

Demonstrations were staged at BII's headquarters on Tuesday and Thursday by 50 customers claiming to represent 400 colleagues demanding the lowering of the rates.

On Wednesday, BII shares dropped and some brokers said the demonstration caused fears that the country's fourth-largest private bank might have a similar fate to giant Bank Central Asia, which was recently rushed by depositors who got nervous with its links to the family of former president Soeharto.

"There has been no indication of a run on the bank," said Doddy, adding that BII had enough cash reserves to cover any problem loans and that its housing loans only represented 15 percent of its lending activities. (rei)