The stock market regulator put itself under the spotlight again after it decided to attend an event and present a good governance award to publicly listed coal giant PT Bumi Resources — the same company it had placed under investigation regarding recent acquisition deals.

At a ceremony in Tabanan, Bali on Monday evening, Fuad A. Rahmani, chairman of stock market and financial institutions supervisory agency (Bapepam-LK), presented the Good Corporate Governance award from the Indonesian Institute for Corporate Directorship (IIDC) to Bumi.

The award was given to Bumi’s representative Eddy J. Soabari.  Also attending the event was the Indonesia Stock Exchange (IDX) president director Erry Firmansyah.

Bapepam’s move can be seen as having made a mockery of the ongoing investigation being carried out by Bapepam and IDX over Bumi’s recent acquisition deals, that some analysts saw as being overpriced and lacking in transparency.

Transparency however was not a problem for Bumi, according to the IICD, which used 5 indicators consisting of 117 questions to select the winner of the award.

Upholding the principle of transparency is apparently one of the key indicators to qualify to win.

“It is evidence of how close the two are. No wonder, the investigation takes ages (to complete),” stock market analyst Yanuar Rizky said.

Bapepam launched the investigation in February over Bumi’s acquisition deals worth Rp 6.18 trillion (US$525.3 million) in January, involving the purchase of three local mining companies — Dharma Henwa, Fajar Bumi Sakti and Pendopo Energy.

Not long after the acquisition announcement, Bapepam alleged that the deals might be overpriced and possibly between linked companies, eventually leading to the setting up of an investigation team.

The IDX also set up an independent auditing team to determine the appropriateness of the acquisition deals.

The examination by the auditing team is still ongoing and no result has been announced so far.

The acquisition deals and the investigation that followed was the latest high profile case involving Bumi, the most prized subsidiary of PT Bakrie and Brothers, an investment flagship of the powerful family of Aburizal Bakrie, the Coordinating Minister for People’s Welfare.

The collapse of prices in the shares of Bakrie’s subsidiaries, most notably Bumi, contributed to the sudden local stock market collapse last October, which was triggered by a combination of bearish regional sentiment and widespread concerns in the domestic market that Bakrie  might not be able to pay debts of about $1.2 billion.

Before the October battering, Bumi was the company with the largest market capitalization in the IDX, having overtaken the long-time occupier of this position, the country’s largest telecommunications company, PT Telkom.

Commenting on the good governance award, Bapepam chairman Fuad said that the award did not represent a Bapepam viewpoint.

“The event is organized by IICD which also did the evaluation.

To be honest I don’t even know what criteria and methods were being used,” Fuad said in a text message on Tuesday.

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