Attorney General Sanitiar Burhanuddin speaks in a press conference in Jakarta, on Monday. (JG Photo/Nur Yasmin)

AGO Senses Graft Scandal Inside Jiwasraya, as the House Gunning For PwC

BY :NUR YASMIN

DECEMBER 30, 2019

Jakarta. The Attorney General’s Office began on Monday the questionings on witnesses and potential suspects of foul play in troubled life insurer Asuransi Jiwasraya, while the House of Representatives sought to open inquiry on the insurer's auditors, which include global accounting firm PricewaterhouseCooper.

The life insurer is on the verge of collapsing without a Rp 33 trillion ($2.4 billion) government's bailout -- which could be the largest since a massive state funding to rescue the country’s banking sector during the 1998 Asian Financial Crisis -- following decades of mismanagement.

Jiwasraya's dire condition was becoming apparent in recent months after its new board of directors announced that it would postpone payment on some policies that due that time, revealing how the company has taken excessive risks. 

The AGO thought the case was more than clever financial acrobatics and suspected foul play, but rather a major corruption scandal with a potential loss to the state of at least Rp 13 trillion. 

“We will question two people today, two more tomorrow, and about 20 people more on Jan. 6-8,” Adi Toegarisman, the deputy attorney general for special crimes, said in Jakarta on Monday.

He didn’t reveal the names of the people. The office mentioned previously that there are 10 potential suspects of the case -- identified only by their initials H.R., D.Y.A., H.P., M.Z., D.W., G.L., E.R., H.D., B.T., and A.S. Two of them were summoned to the office on Monday.

“We are looking for the evidence and we will solve it according to the existing procedure and law,” Adi said.

The deputy said his team would not let anyone involved escape from the investigation.

“No one is fleeing [abroad], we have informed the immigration office to prevent [such efforts],” he said.

On Friday, the immigration office banned the insurer's former president director Hendrisman Rahim, its former finance director Hary Prasetyo, and eight others from traveling abroad.

Trillions of Blowout

Jiwasraya was behind in paying its customer’s insurance claims, totaling Rp 802 billion due in October 2018. However, despite having enough money to pay it off, the company stalled the payment that had soared to Rp 12.4 trillion.

Jiwasraya held Rp 5.7 trillion, or more than 22 percent of its financial assets in stocks. The state company tried to gain revenues by investing in high-risked, third-tier stocks. Only 5 percent of it was invested in safe stocks that produced revenues. 

Jiwasraya also placed Rp 14.9 trillion or 59 percent in a mutual fund. They performed even worse than their stock holdings. A total of 98 percent of Jiwasraya's mutual fund holdings were managed by underperforming investment managers.

The investments were poorly managed that in August the company suffered a loss of Rp 13.7 trillion. Jiwasraya needs an estimated Rp 33 trillion in capital injection to survive.

PwC

Separately, Andre Rosiade, a member of House of Representatives' Commission VI that observes industry, investment, and business competition will call in January the auditors who have worked on Jiwasraya's financial reports.

He said that the accounting firms, including PwC, Soejatna-Mulyana and Partners, Hertanto-Sidik and Partners, and Djoko, Sidik, and Indra, did their job poorly.

“How could they not see the problem, and only sees it after the 2018 directors board is shuffled,” Andre said.

Andre said Jiwasraya has prepared Rp 5 trillion to pay overdue debts for their priority customers.

Attorney General Sanitiar Burhanuddin said that his office is committed to solving the suspected corruption case. He formed a special investigating task force on Dec. 17.

“This is an obligation for us, we will call in many witnesses," Burhanuddin said on Monday.
 

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