Sofyan draws fire over Bumi stake

Alfian and Desy Nurhayati ,  The Jakarta Post ,  Jakarta   |  Thu, 11/13/2008 10:34 AM  |  Headlines

He might not have broken any regulations, but for State Minister for State Enterprises Sofyan A. Djalil to own shares in coal mining company PT Bumi Resources is ethically questionable at best and creates a conflict of interest at worst, experts say.

Sofyan has admitted to owning around 1.1 million shares in Bumi, the jewel in the business empire controlled by the family of the people's welfare minister Aburizal Bakrie, whose stake in the company is in the process of being acquired by a consortium led by Northstar Equity Partners.

Sofyan's office oversees state firms including three mining companies -- PT Aneka Tambang, PT Tambang Batubara Bukit Asam and PT Timah -- that are exploring the possibility of joining the Northstar consortium in a move expected to help boost the recently battered Bumi share price.

That alone poses a clear risk of a conflict of interest, University of Indonesia economist Faisal Basri said Wednesday.

"Despite the small size of the portion, his ownership creates the potential for a conflict of interest," Faisal said.

Moreover, Sofyan is currently the acting finance minister, temporarily standing in for Sri Mulyani Indrawati who is traveling abroad on official duty.

"As acting finance minister, he could intervene, for instance, to extend the suspension of trading in Bumi's shares," Faisal said.

PT Bakrie & Brothers is selling its 35 percent stake in Bumi to raise funds to accelerate the payment of debts after shares in the company and its units plummeted in last month's local and regional market hammering.

According to Faisal, Sofyan should have declared his ownership of Bumi shares to President Susilo Bambang Yudhoyono before his appointment as the acting finance minister.

"I think had the President known that Sofyan owns shares in Bumi, he would not have appointed him as the acting finance minister."

Faisal further said all members of Cabinet should declare all their assets, including their shareholdings, before being appointed as ministers in order to help prevent conflicts of interest.

Another expert, Aviliani of the Institute for the Development of Economics and Finance (Indef), called for greater transparency and even a restriction on share ownership by officials.

"I think in the future we need a regulation to restrict officials owning shares. Otherwise, the public will always be suspicious even for normal business activities," she said.

In his defense, Sofyan rejected claims his ownership of shares in Bumi would compromise the integrity of his policies and his ministerial positions.

"There is no such thing (conflict of interest) in this case. It has never influenced anything. What's forbidden is for me to make a policy that benefits me personally, something that I have never done," he said.

In 2003, Sofyan bought nearly 1 million shares in Bumi at a price of Rp 75 per share. In early 2008, when the price reached Rp 8,300, he sold his entire holding.

In July, Sofyan again bought 1 million shares, at the price of Rp 7,300, and then another 100,000 shares at Rp 5,300. He still owns the shares, despite the company's falling prices.

On Wednesday, Bumi shares closed at Rp 1,310.

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