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View all search resultsFraud hurts retail investors
Such blatant lax in law enforcement breeds poor governance, low accountability standards and moral hazard.
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ublic accountancy and fund management firms, the Financial Services Authority (OJK) and Indonesia Stock Exchange (IDX) comprise the basic infrastructure of the financial market. But they have been increasingly complicit in the shenanigans and outright fraud at financial services companies at the expense of thousands of investors. Left unchecked, this flurry of crimes will damage investor confidence in the financial market.
The Attorney General’s Office (AGO) recently named 13 fund management firms, an OJK executive in charge of capital market monitoring and the directors of two publicly listed companies as suspects in the Jiwasraya fraud case, which alleges that the state-owned insurer failed to repay claims worth Rp 16 trillion (US$1.1 billion) to policyholders.
The results of the AGO’s preliminary investigation indicate that multinational consultancy PricewaterhouseCoopers (PwC) has also been implicated through the questionable, unqualified opinions it provided Jiwasraya in 2016-2017.
In May, the Supreme Audit Agency (BPK) revealed in its 2019 second semester audit report that the OJK did not comply with the prudent banking rules in its supervision of seven banks.
In mid-2019, publicly listed flag carrier Garuda Indonesia was found to have committed major accounting misconduct that required making a massive material correction to the company’s bottom line, from a profit of $870,000 in the “cooked report” to total losses of $175 million.
In mid-2018, accounting misconduct at financial services firm PT Sunprima Nusantara Pembiayaan misled investors and creditors to cause Rp 1.8 trillion in losses to banks and investors.
And in July 2010, four large public companies affiliated with the Bakrie Group simply admitted to erroneous bookkeeping entries that generated discrepancies amounting to Rp 9.3 trillion (almost $1 billion) in their assets as published in their separate financial reports for the first quarter of that year.
