BPK Audits Back Up Criminal Investigation Into Jiwasraya

Diana Mariska
January 8, 2020 | 7:49 pm
SHARE
Supreme Audit Agency BPK has found indications of fraud in Jiwasraya's bancassurance product and manipulations in the insurer's financial report. (Antara Photo/Puspa Perwitasari)
Supreme Audit Agency BPK has found indications of fraud in Jiwasraya's bancassurance product and manipulations in the insurer's financial report. (Antara Photo/Puspa Perwitasari)

Jakarta. State-owned life insurer Asuransi Jiwasraya's recent financial strife has been years in the making, fed by deceits, recklessness and greed, according to audit results announced by the Supreme Audit Agency on Wednesday. 

The audit agency (BPK) found many indications of fraud in Jiwasraya's bancassurance product and manipulations in the insurer's financial report, BPK head Agung Firman Sampurna said in a press conference in Jakarta.

The BPK has carried out two investigations in the past four years. The first one, a special purpose audit in 2016, had looked into Jiwasraya's management, investment, revenue and operational costs in 2014 and 2015.

The 2016 audit found 16 anomalies, most of them involving investment in several risky stocks – loss-making mobile phone retailer Trikomsel Oke, scandal-ridden oil and gas firm Sugih Energy and real estate developer Eureka Prima Jakarta – that was not supported by sufficient studies. 

Advertisement

The audit also found Jiwasraya did not monitor their mutual fund investments sufficiently. As it turned out, the insurer also invested in products that had never performed well in the market.

Based on these findings, the BPK then launched a preliminary investigative, aka forensic, audit last year, which led to further findings that have since led to a criminal investigation.

Agung said the BPK found several instances of financial report engineering, indications of possible fraud in the insurer's bancassurance product – Jiwasraya Saving Plan – and collusion in the insurer's investment management.  

"For example, in 2017 Jiwasraya announced a profit of Rp 360 billion [$26 million]. But [the statement] attracted adverse opinion for its inaccuracies, including omitting Rp 7.7 trillion in reserve funds," Agung said.

According to Agung, Jiwasraya should have been in the red if the reverse funds were calculated according to the rule. 

In 2018, Jiwasraya booked an unaudited loss of up to Rp 15.3 trillion, and by September last year the insurer had accumulated losses of Rp 13.7 trillion.

Jiwasraya Saving Plan was the main culprit for the insurer's loss, Agung said. The company offered the bancassurance product on a high interest – higher than bank deposit or government bond interest – that at first attracted many customers and improved its cash flow but later swelled the insurer's cost of fund.

Jiwasraya then invested the proceeds from the bancassurance product in stocks and mutual funds, whose value depreciated drastically in the past few years. 

The BPK also found that Jiwasraya's board of directors bypassed the proper procedures in determining the interest for the saving plan without any consideration of potential returns from the company's investments or paying the interests to customers.

"Also, we suspected conflicts of interest in the marketing of the saving plan product, since certain parties within Asuransi Jiwasraya would have benefited from the sale fees," Agung said.

The preliminary forensic audit also led the BPK to suspect collusion in Jiwasraya's investment in loss-making stocks and mutual funds. The audit concluded that those investments were not based on valid or objective analyses.

Agung said transactions related to Jiwasraya's investments were done between affiliated parties. Such transactions often indicate market manipulation. 

Agung said the BPK continues to work on calculating potential state losses from this case as requested by the Attorney General Office.

Attorney General Burhanuddin said his team has already interrogated 98 witnesses and will continue to collect evidence. Burhanuddin said the people responsible would be announced to the public, along with the total state losses, within the next two months.

"[The investigation] has uncovered actions that are against the law. We already have the evidence for them," Burhanuddin said. 

Systemic Damage

BPK's Agung hoped the case would do little damage to the investment climate in Indonesia, saying that investors should know they are always under the protection of the law.

Agung said his team would work hard to prevent Jiwasraya's slip-up from causing lasting damage to the system. 

"In the [Bank] Century case, the initial loss [to the state] was only Rp 678 billion, but it ballooned to Rp 6.7 trillion [after settlement]. We don't want this case to go that far," Agung said.

Agung was referring to the government's decision to bail out Bank Century more than a decade ago to avoid the collapse of the domestic banking system during the financial crisis of 2008.

Agung nevertheless admitted that failure in an insurer as large as Jiwasraya could erode public trust in Indonesia's financial system and harm investment climate in the country.

Tags: Keywords:
SHARE

Related Articles


Business May 27, 2025 | 2:09 pm

BPK Helps Indonesia Avoid Rp 43 Trillion in Losses

BPK saved Rp 43.43 trillion in state losses in H2 2024 through audits and oversight; also awarded top rating to 2024 government budget.

The Latest


Lifestyle 41 minutes ago

Bezos’ Lavish Venice Wedding Sparks Protests Over Inequality

Jeff Bezos’ Venice wedding sparks protests by locals and activists who say it highlights inequality and tourism-driven displacement.
News 1 hours ago

Prabowo Already Has His US Envoy Candidate, Aide Claims

Sufmi Dasco Ahmad, a close aide to Prabowo Subianto, refuses to reveal the name of the US envoy candidate.
Lifestyle 1 hours ago

Fatal Accidents Reveal the Perils Behind Mount Rinjani’s Beauty

A Brazilian climber is the latest victim on Mount Rinjani, as a string of fatal falls reminds tourists of the mountain’s hidden dangers.
News 2 hours ago

75 Men Arrested in Gay Party Raid, 30 Test Positive for HIV/Syphilis

Test results showed that 30 of the 75 party participants were exposed to the Human Immunodeficiency Virus (HIV) and syphilis infection.
News 3 hours ago

Indonesia to Rehabilitate 10,000+ Schools, Smart Classrooms in Pipeline

Indonesia to revamp 10,440 schools starting July, with plans for smart classrooms and court-ordered free basic education under review.
COPYRIGHT © 2025 JAKARTA GLOBE. ALL RIGHTS RESERVED