Mulyani, SBY at odds over Bumi trading

The Jakarta Post ,  Jakarta   |  Fri, 11/07/2008 10:57 AM  |  Headlines

The Indonesia Stock Exchange (IDX) on Thursday lifted its trading suspension on PT Bumi Resources, the Bakrie Group's most valuable firm, amid speculation the finance minister had protested to President Susilo Bambang Yudhoyono.

Finance Minister Sri Mulyani reportedly protested against the move overturning her decision to end the one-month halt on trading in Bumi, allegedly to help protect the interests of the Bakrie family.

Bumi shares plunged by 9.2 percent to Rp 1,975 after trading resumed, as investors sold to meet margin calls on the stock.

A margin call is an act in which brokers force the investor to either sell the stock or add more cash to their account.

As the drop neared the 10 percent threshold, Bumi's hammering was automatically paused by the IDX.

The queue of investors wanting to sell their shares in Bumi was the largest in IDX history, with some 1.91 billion shares, or 10.11 percent of Bumi's entire stake, being offered for sale.

A source at the Finance Ministry said the decision to lift the trading suspension was made after Mulyani met with the President at the Presidential Palace late Wednesday to protest against his decision to put the Bakrie firms' interest above that of the public.

"Mulyani was devastated by the interference of her bosses in the Bakrie problem," the source said.

Presidential spokesman Andi Mallarangeng on Wednesday denied Yudhoyono had intervened.

Mulyani refused to comment on the incident, including on speculation she had tendered her resignation that same night.

The IDX said Wednesday it would lift the Bumi suspension after hearing the explanation from parent firm PT Bakrie & Brothers about a deal to sell its 35 percent stake in Bumi to Northstar Pacific.

This decision is supported by Mulyani, whose ministry regulates the capital market.

However, an hour later the IDX reversed the decision following a request from the government. The bourse refused to identify which office demanded the suspension be maintained.

Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) chairman Fuad Rahmani said the government had to reverse the decision to lift the suspension to protect the market.

"The lifting of the suspension was canceled because there was important information that we needed to clarify, or else it could have created a systemic adverse effect," Fuad said.

The IDX suspended trading in shares of Bakrie & Brothers, Bumi and PT Energi Mega Persada -- all part of the Bakrie Group of companies -- on Oct. 7, after their value fell sharply following reports Bakrie was having trouble paying debts.

Bakrie & Brothers, the nation's largest publicly listed investment firm, announced on Nov. 1 that Northstar, a local unit of U.S. buyout giant Texas Pacific Group, had agreed to pay US$1.3 billion for its 35 percent stake in Bumi.

Northstar, believed to be teaming up with state mining firms, must wrap up the deal within 28 days.

Analysts say lifting the suspension would have harmed the deal, with the Bumi stake expected to be heavily devalued as investors promptly sold their shares over worries their value could drop further because of continuing uncertainty over Bakrie's debt arrangements.

Help from the government will mean a lot for the Bakrie family, headed by Coordinating Minister for the People's Welfare Aburizal Bakrie, given its role as a key financier of Yudhoyono's 2004 presidential campaign.

Aburizal Bakrie's spokesman Lalu Mara Satriawangsa denied allegations the minister had asked the President, as a special favor, to cancel the decision to continue trading or grant any other protection for the family's business empire.

"Pak Ical (Aburizal Bakrie) is part of the government. He is focusing on his job. Anything related to Bumi is a corporate affair which has nothing to do with him," he said. (hwa)

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