As public demand for better legal protection in capital market increased, Bapepam has been proactive towards indications of violation and criminal acts in capital market by conducting investigations and formal investigations of any alleged infringements. The investigations are based on data, analysis results, reports from market participants and or investors, mass media, and or Bapepam findings.
 

In 2002, Bapepam has conducted investigations on 44 cases which consist of 40 new cases and 4 unfinished cases from last year. Out of those 47 cases, 33 (75%) cases have been accomplished by Bapepam and the rest are still being proceeded.
During year 2002, two cases have been upgraded to formal investigations. A milestone in capital market law enforcement in was noted in year 2002, for formal investigation purpose, Bapepam arrested two persons involved in capital market criminal acts of PT PrimarindoAsia Infrastruktur Tbk shares trading.
 

One case that attracted national and international interest was a case involving  the share divestment  of PT Indonesian Satellite Corporation (Indosat) Tbk.
 

During the offering of divestment of Indosat shares owned by the government, the shares fluctuated irregularly. This incident was suspected related to the announcement published by the management of PT Indosat Tbk on May 15 followed by government announcement on May 16. Based on this suspicion, Bapepam conducted an investigation to find out whether or not any violation of capital market law and its implementing regulations exits.
 

Based on investigation results, there were indications of violation against capital market law and its regulations as well as criminal acts in capital market. The criminal acts involved included market manipulation, misleading information, and insider trading. Bapepam has upgraded the investigation related to misleading information to formal investigation. Meanwhile for insider trading, Bapepam has decided to conduct further investigation. However, Bapepam has closed the investigation with regard to market manipulation since no sufficient evidence confirming the  suspected case obtained.
 

In connection with this case, Bapepam also found that some Persons registered with Bapepam did not perform their business activities in accordance with rules and regulations. Therefore, Bapepam imposed those Persons with administrative sanctions in the form of fine and written admonition.
Another interesting case occuring in year 2002 was market manipulation in the transaction of PT Primarindo Asia Infrastruktur Tbk (BIMA) shares and PT Dharma Samudera Fishing Tbk (DSFI) shares.

The case started when there was payment default of BIMA shares transaction by PT Usaha Bersama Sekuritas (UBS) and DSFI shares by PT Jasabanda Garta (JG) and PT Ficor Securities Indonesia (FSI). PT UBS was suspected for creating a false or misleading trading by conducting buy and sell transactions of BIMA shares through other Securities Companies and abusing T+0 facility to gather funds. This case has been upgraded to formal investigation. Collaborating with National Police and the Attorney General, Bapepam investigation team have been conducting formal investigation to  unfold this case.

Through this case, Bapepam has made an momentous step in capital market law enforcement by arresting two directors of PT UBS suspected for performing a trading manipulation of BIMA shares. The arrest  was executed to prevent the suspects to escape and or ruin evidences.
 

In the market manipulation of DSFI shares, two investors were suspected for creating a false or misleading trading through a number of Securities Companies by misusing the T+0 facility provided by the Securities Companies. Those two persons conducted a huge buying transaction of DSFI shares through PT JG and PT FSI and conducted selling transaction of DSFI shares through 20 Securities Companies.

Different from BIMA case where the involved persons who had the obligation to pay IDR40 billion to PT KPEI did not have a good will  to pay their liabilities, persons who performed market manipulation of PT DSFI shares had paid all their liabilities with regard to the transaction conducted to PT KPEI. At the moment, Bapepam Investigation Team is still conducting further investigation of this case.

In addition to those three cases, PT Kimia Farma Tbk (PT KAEF) case also attracted serious attention from capital market participants. The case emerged when the accountant,responsible for financial report audit of PT KAEF with respect to company restructuring, found and reported to Bapepam, an error in end-product stock evaluation and sales recording for the fiscal year ended on December 31, 2001.Then it was followed by information of Kontan weekly news stating that the State Ministry of State-owned Enterprise decided to cease the divestment process of goverment shares in PT KAEF after the indication of overstated profit recorded in its first emester financial report of year 2002.
 

Based on Bapepam inspection, it was concluded that  there was a mistake in PT KAEF financial report presentation. Upon the violation, Bapepam imposed fine to the company, the former directors of the company for the period of 1998-2002, and auditors of PT KAEF.

Sanction Determination

As part of law enforcement, Bapepam has imposed administrative sanctions in the form of fine as stated in Article 102 of the Capital Market Law Year 1995.

In Year 2002, Bapepam has imposed administrative sanctions in the form of fine to issuers amounting IDR11.38 billion. The amount increased Rp 315,32% compared to that of last year which was IDR2.74 billion. Meanwhile, fines that were imposed to Securities Companies which was only Rp8 million in 2001 increased enormously to IDR2.60 million in year 2002. This significant increase were contributed by four Securities Companies involved in trading case of PT Handjaya Mandala Sampoerna Tbk (HMSP) whose total fines were Rp300 billion, as well as  three Securities Companies involved in violation against regulation concerning mutual funds whose total fines were IDR143.2 million. Meanwhile, the manipulative trading of PT Dharma Samudera Fishing Industries Tbk involving 14 Securities companies were fined IDR2.15 million.
 

Beside that, Bapepam has also imposed fines to Securities Administration Agency in the amount of IDR 7 million (last year’s fine was IDR 6 million), Custodian Banks in the amount of IDR100 thousands, Trustees in the amount of IDR500 thousands, and Appraisers in the amount of IDR300 thousands, five representative broker dealer in the amount of IDR 225 million and 15 persons in the amount of IDR 6 billion.
 

Bapepam has imposed fines to three representatives of Securities Companies and one Person involved in PT Indosat share divestment case with the total amount of IDR250 million. Also, in PT Kimia Farma Tbk case, BApepam has imposed administration sanction in the form of fine in the amount of IDR500 million and required Mr. Ludovicus Sensi W., partner of KAP Hans Tuanakota and Mustofa, the auditor of PT Kimia Farma Tbk to pay IDR 100 million. Bapepam also ordered the former Directors of the company for the period of 1998-June 2002 to pay IDR  1 billion

During 2002, Bapepam was reported to have imposed administrative sanctions in the form of fine to 246 Persons with the total fine amounting IDR 20,578 billion. This number increasing 21,11% compared to that of last year which amounted IDR 16.990 billion.

Besides administrative sanction in the form of fine, in Year 2002, Bapepam has revoked  six business licenses of Securities Companies that operated as Investment Managers, one Broker Dealer and one Underwriter, and two Broker Dealer Representatives

Additionally, Bapepam has also suspended  29 Securities Companies, one Invesment Manager Representative, three Broker-Dealer Representatives, and four Public Accountants. Furthermore, in year 2002, Written Admonition were imposed to four Issuers, one Public Accountant, 22 Securities Companies, and eight Broker Dealer Representatives.

Violation against capital market law and its implementing regulations seems to increase quantitatively and qualitatively. This tendency has encouraged Bapepam to always make continuous efforts to enhance its competence in capital market law enforcement.

One attempt that has been performed was adding the number of Bapepam investigators and sending those investigators to participate in various training and education concerning enforcement, either domestically or internationally. Besides that, Bapepam always coordinates with the National Police, General Attorney, and SROs in handling capital market violations.

Administration Sanction Imposed During Year of 2002

Table of Contents Bapepam Annual Report 2002

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