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Jakarta Post

‘This is a conspiracy’, lawmaker says as House scrutinizes Jiwasraya mismanagement

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Tue, February 11, 2020   /   07:08 am
‘This is a conspiracy’, lawmaker says as House scrutinizes Jiwasraya mismanagement A pedestrian walks in front of the Jiwasraya Building in Jakarta on Jan. 15. (JP/Wendra Ajistyatama)

A lawmaker has accused state-owned insurance company PT Asuransi Jiwasraya, and several investment management firms, of alleged investment mismanagement that has led the insurer into financial difficulties.

The allegation was raised during a hearing of House of Representatives Commission XI overseeing financial affairs in Jakarta on Monday, in which a senior official with the Indonesian Central Securities Depository (KSEI) made allegations that several mutual funds owned by Jiwasraya were not transparent.

“It’s possible that the asset management firms tailored the products for Jiwasraya,” KSEI president director Uriep Budhi Prasetyo said.

Despite the fact that the mutual funds were open-ended—meaning that the products are available for all investors to buy – around 70 to 90 percent of the products’ assets under management (AUM) came from Jiwasraya, he added.

Such an effort, he went on to say, was carried out to cover up the losses the ailing insurer had suffered following steep drops in the value of shares owned by Jiwasraya.

Some of the stocks included in the insurer's portfolio were those of property developer PT Hanson International (MYRX) and coal miner PT Trada Alam Minera (TRAM). These stocks were known to be low quality and were often used for pump-and-dump schemes. The trading of the stocks was halted by the bourse, as a result of the Jiwasraya case.

Jiwasraya failed to pay out customers policies, worth up to Rp 16 trillion (US$1.2 billion), that fell due in December, prompting the Attorney General’s Office (AGO) to launch a corruption investigation.

The AGO has summoned several investment management and securities firms’ officials during the investigation and has detained holding company PT Maxima Integra director, Joko Hartono Tirto, after arresting five people in January.

Uriep, however, refused to reveal the name of the products or the investment management firms.

“If the products were tailor-made, I think we can conclude that this was a conspiracy,” Commission XI member and Golkar Party politician Mukhamad Misbakhun said.

Two parties outside the government coalition, the Prosperous Justice Party (PKS) and the Democratic Party, have submitted a proposal for the establishment of a special committee or Pansus to launch an inquiry into the case. The lawmakers want to inquire where the money went following an allegation that Jiwasraya’s financial shortfall was a result of misappropriation in order to fund President Joko "Jokowi" Widodo's campaign in the 2019 presidential election.

However, four of the six progovernment parties have backtracked on their commitment to set up the committee following disapproval from the government and reportedly a request not to allow such a probe to be set in motion.