Bapepam-LK to revoke Bakrie Life’s license upon completion of obligations

The Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) will revoke the working license of troubled insurance firm Asuransi Jiwa Bakrie after it completes its obligations to refund customer money, officials say. 

Bapepam-LK insurance bureau head Isa Rachmatarwata recently said that the insurance firm, widely known as Bakrie Life, still has about Rp 260 billion (US$29 million) in customer obligations to be addressed by 2012. 

“Don’t think that we will not take the license away. Once the payments to the customers have been 
completed, God willing Bakrie Life will no longer have a license to operate,” he told a press briefing at the Bapepam-LK office over the weekend.

Isa explained that for the time being, the financial watchdog decided not to revoke Bakrie Life’s license because it saw the importance of keeping the firm within its reach.

“We have all the requirements to revoke its license. But if so, Bapepam-LK will no longer have access to Bakrie Life. So it’s not that we’re not being tough. We want to assist Bakrie Life’s customers in demanding their rights. If we revoke the license now, the customers will have to fight without our assistance,” Isa said. 

Bapepam-LK chief Fuad Rahmany suggested Bakrie Life’s customers file a lawsuit, while “the customers are still hoping for the firm’s good intentions”.

“Just sue [Bakrie Life]. They have broken their promise. It’s the best solution. Bapepam-LK cannot do it as we could only revoke its license, which is not favorable and will not solve the present problem,” he said.

Yoseph, a representative of Bakrie Life customers, told news portal detikfinance.com that customers still hoped for timely repayment because the insurance firm was under the Bakrie Group.

The politically-connected group is owned by the family of Indonesia’s tenth richest person, according to Forbes Indonesia’s latest wealth report. The Bakrie Group controls several other large firms, including Indonesia’s leading coal producer, Bumi Resources.

“There is no way that people would believe that the Bakrie Group does not have money to repay its obligations to the customers,” Yoseph said.

Bapepam-LK had asked Bakrie Life’s shareholders to help the insurance firm in paying out its customer obligations, but “legally, we could not force them,” Fuad said.

Bakrie Life is 94 percent owned by Bakrie Capital Indonesia.

According to Isa, Bapepam-LK had tried asking Bakrie Capital to lend money to its subsidiary to complete its obligations.

“We have tried hard. We have pushed Bakrie Capital and they are resisting efforts seeking funds to be lent to Bakrie Life,” he added.

Bakrie Life defaulted on its obligations to hundreds of customers in early 2009 for its Diamond Investa product, which had promised high returns through a supposed 90 percent investment in bonds.

When the stock market tanked in October 2008, Bakrie Life customers were unable to cash in on their funds and it was unveiled that their money was mostly invested in equities, not bonds. 

“They bought failing shares, such as those of Bakrie 7 and others. This was part of the impact of the global financial crisis,” Isa said.

Bapepam-LK had frozen the operating license for Bakrie Life, although it could not revoke the firm’s business license despite complaints from customers after the firm failed to pay out the scheduled quarterly payment to customers.

Bakrie Life has promised to make repayments in installments, with 25 percent payments in 2010 and 2011, and the remaining 50 percent at the beginning of 2012. (est)