The chairman of the House’s Commission VI, Airlangga Hartato, said Thursday that the committee was established Wednesday evening and would start working right away.

“The decision to establish the working committee on Krakatau Steel was made by acclamation during a recent Commission VI meeting,” he said.

He said the committee, which consisted of between 26 and 30 legislators, all from Commission VI, would first gather information on the share allotment during the steel company’s recent IPO from a public accountant that was appointed to audit the share distribution.

Airlangga said the committee would find out if the low pricing of Krakatau Steel shares during the IPO was intentional or based on market demand.

“Krakatau Steel’s share prices only soared on the first day and there was high selling pressure in the following days,” he added, indicating that most of the investors who bought shares during the IPO sold their shares during the first day of the company’s listing on the Indonesia Stock Exchange (IDX).

Krakatau shares (KRAS) soared 49.4 percent to Rp 1,270 at the close of its debut on the nation’s bourse on Nov. 10, which analysts consider an indication that the shares were indeed undervalued.

They traded, however, at Rp 1,250 on Thursday, and had been trading between that and Rp 1,340 since
the IPO.

The controversy began at the end of October when the State-Owned Enterprises Ministry set the price of the company’s shares at Rp 850, which many analysts said was undervalued.

The ministry had set a price range of between Rp 800 and Rp 1,150, but instead fixed it at Rp 850 despite high demand.

The pricing drew controversy, with many analysts and politicians accusing the ministry of intentionally setting a low price due to pressure from politically connected businessmen who wanted to use the company’s shares to generate funds either for personal or political interests.

State-Owned Enterprises  Minister Mustafa Abubakar strongly denied the allegation.

Both the ministry and company admitted that they previously set the price at Rp 950, but said that according to the bookbuilding results, demand from quality and long-term investors would decline if the price was set at that level.

 The underwriters involved in the offering said the ideal price should have been between Rp 600 and Rp 800.

The IPO underwriters were state-owned securities firms Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities.

The House’s Commission VI has summoned Mustafa and executives of the steel company as well as its IPO underwriters earlier this week, but no new developments emerged.

The media has also been dragged into the Krakatau fiasco, with journalists from news portal detik.com, television news channel Metro TV and Kompas and Seputar Indonesia newspapers being accused of asking for special favors from the company to obtain shares.

The IDX Journalist Forum denied the allegations, but the Press Council found three of the four journalists guilty.

Reinhard Nainggolan of Kompas objected to the council’s decision in the name of “freedom of press”, insisting on his innocence.

In a public statement he said the Press Council had failed to confirm allegations against him and his colleagues, that they had “extorted” the  steel firm’s management as accused by its public relations consultant.

The detik.com journalist resigned from his post, while the Seputar Indonesia reporter has reportedly not worked in the paper’s newsroom since early November. (est)

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