ESTABLISHED 40 years ago Askrindo was intended to be the debt guarantee agency for micro-, small-, and medium-sized businesses. However, Askrindo may invest its clients’ premiums in products that are not forbidden by Bapepam-LK regulation.

However, Suprapto says, Askrindo seems to have a negative record on guaranteeing letters of credit issued by Bank Mandiri. Seven companies holding certificates of indebtedness defaulted in the amount of US$51.011 million up until January 31, 2007. Consequently, Askrindo’s deposit of Rp122 billion that was used as credit collateral became Bank Mandiri’s.

Askrindo is yet to resolve the issue, says Suprapto. The ministry did not grant Askrindo management the right to relinquish its responsibilities for the case. “That is why the case continues to be recorded in the financial reports until today,” Suprapto says.

The case, said Tempo source, resulted in the SOEs Ministry firing the company’s board of directors in July 2007. However, the new board could not solve the problem either. On the contrary, says the source, they created new problems. It is suspected that they came up with various financial machinations, such as entering into fund management contracts with investment managers.

The SOEs Ministry, says the source, asked Bapepam-LK whether or not Askrindo’s deeds were correct. Based on the report, Bapepam-LK started to look into it.

Based on a compliance examination by Bapepam-LK in 2009-2010, investment practices that were not in accordance with regulation were discovered. They, said Nurhaida, involved investment placements in the form of repurchase agreement or repo, fund management contracts, bonds, and mutual funds.

Fund management contracts, Nurhaida says, are not forbidden investment practices. However, insurance companies may not invest in them. With regard to repo, insurance companies are forbidden from investing in them. On the other hand, bonds and mutual funds are investment instruments that are allowed. “However, Askrindo’s investments in bonds and mutual funds are fictitious. They exist in the books, but it’s not clear who they belong to,” said Nurhaida.

From Bapepam-LK’s investigations, Askrindo was discovered to have entered into fund management contracts with PT Harvestindo Asset Management, PT Jakarta Investment, PT Reliance Asset Management, and two non-investment managing companies, namely PT Batavia Prosperindo Financial Services and PT Jakarta Securities.

The practice, said Nurhaida, started with Askrindo attempting since 2002 to prevent having to pay guarantee claims. Askrindo’s modus operandi was to prepare a funding support scheme so that debtors whose loans were guaranteed by Askrindo could pay their debts.

In 2004, Askrindo began to involve investment managers and brokers or share-trader middlemen for the funding support scheme. “This was where they made things up,” said Tempo source. An investment manager issued promissory notes, Askrindo bought them, the manager pretended to loan the money from Askrindo to the debtor. When the debtor could not return the money to the investment manager, the investment manager could not return Askrindo’s money to Askrindo.

Nurhaida says that the majority of Askrindo’s money was given for safekeeping to PT Jakarta Investment in the form of repos worth Rp132.75 billion and fund management contracts worth Rp41 billion. Second was PT Harvestindo with fund management contracts of Rp80 billion; third, PT Reliance, repos and fund management contracts of Rp93.32 billion; fourth was PT Batavia, repos of Rp6.5 billion; finally, PT Jakarta Securities with state bonds of Rp66.11 billion and repos of Rp20 billion.

Askrindo Legal Division Head and Corporate Secretary Singgih Hardjanto confirmed the investment data presented by Nurhaida. “All are correct because they refer to the results of an investigation done three months ago,” he said. He added that the investment instruments chosen by Askrindo were actually safe, in line with the regulation, and not fictitious. But he refused to explain further. “Just wait for the results of investigation by the authorities,” he said.

With regard to the suspicions of deviations by Askrindo, according to the Head of Insurance Bureau at Bapepam-LK, Isa Rachmatarwata, the authority to impose penalties is in the hands of the shareholder, namely the SOEs Ministry. “We don’t even have the authority to examine,” he said. Bapepam-LK, says Isa, can only ask Askrindo to stop the investments that are not in line with regulation.

As for the three investment managers and the two non-investment manager institutions, Nurhaida confirmed that they had been penalized. “We’ve frozen the business activities of four companies. Batavia Prosperindo is the only one that’s still in the preliminary analysis process,” she said.

Based on Tempo’s visit to the 15th floor of Plaza Semanggi, it seemed like business as usual as far as PT Harvestindo’s staff were concerned. “We’ve not been frozen, Bapepam-LK is currently summoning people,” said Kiki, a Harvestindo employee. A similar sight could be seen at PT Reliance’s office. “We’re working as usual, no disruptions,” said Dewi, staff member of the finance administration office.

The same goes for the offices of PT Jakarta Investment in Wisma Nusantara, 26th floor. Employees carried on with their business. The company, according to Bapepam-LK’s website, is related to PT Jakarta Securities. A shareholder of PT Jakarta Investment, Benny Andreas, is CEO of PT Jakarta Securities.

What the Indonesia Stock Exchange did was to suspend trading of PT Jakarta Securities shares since November 2010. The reason was because its adjusted net working capital (MKBD) was below Bapepam-LK’s regulation of Rp25 billion.

Bapepam-LK, according to the Tempo source, does not have the authority to examine Askrindo’s investment violations. The agency only has the authority to examine and investigate suspicions of violations in the capital market. In other words, what the investment managers did, said the source, should have been noticed a long time ago and they should have been penalized. “There’s the impression that Bapepam-LK chooses not to do anything about the imprudent practices of the investment managers,” the source said.

Nurhaida denied the charge. She even welcomed any investigations by the police on officials or staff of her office. “We did not allow things to go without notice in the case of this investment by Askrindo,” she said. She said she was ready to give any statements.

While Bapepam-LK was running its investigations, the Finance Development Controller (BPKP) also audited Askrindo at the request of the SOEs Ministry. Two audits were conducted: an audit with a specific purpose, and an investigative audit. The first has been concluded. On the result, said Suprapto, “It was decided to continue with an investigative audit.”

From the investigative audit, says Suprapto, the crimes that the Askrindo board of directors are suspected of having committed will become clearer. “As for the corruption and money laundering, we’re still waiting the results of an investigative audit by BPKP,” he said.

Suprapto says that in the near future there will be changes to the directors’ board. Bapepam-LK has conducted a fit-and-proper test on the candidates. “Right now we’re just waiting for a decision letter from the minister,” he said.