PGN facing fine of Rp 500m over disclosure breach

Andi Haswidi, The Jakarta Post, Jakarta

After two weeks of investigation, the Capital Market Supervisory Agency (Bapepam) has found state-owned gas company PT Perusahaan Gas Negara (PGN) guilty of violating disclosure regulations, and may fine it up to Rp 500 million (about US$55,000).

"PGN has violated the administrative procedures. The sanction for such violations is a fine. According to the regulations, an administrative sanction can amount to up to Rp 500 million," the head of the Bapepam legal department, Robinson Simbolon, said in Jakarta as quoted Friday by Detik.com.

The investigation into PGN started after its shares slumped by 23.3 percent from Rp 9,650 to Rp 7,400 on Jan. 12 following an admission by PGN that its South Sumatra-West Java (SSWJ) pipeline project would be delayed.

The admission not only knocked PGN's shares for six, but also affected the shares of other state-owned companies, which in turn precipitated a sharp drop in the Jakarta Stock Exchange (JSX) Composite Index.

The assumption that PGN officials had failed to report the delay to the public was apparently true, Robinson said, indicating that the Bapepam investigating committee had concluded that PGN management had been aware of the possible delay since Jan. 3.

According to capital market regulations, a public company has to report any occurrence that could affect the price of the company's shares to the capital market regulator no later than two days after it takes place.

Bapepam chairman A. Fuad Rahmany said in a press release received by The Jakarta Post on Feb. 1 that the conclusion had been reached after a review of the relevant documents and the interviewing of PGN directors, accountants and SSWJ project managers.

"We have gathered enough evidence to prove that PGN violated regulation number X.K.1 on public disclosure," Fuad said.

He also said that further probes were being carried out as the investigators had found prima facie evidence of other violations, besides the disclosure violation.

Previously, PGN director Sutikno denied that the company had violated the disclosure regulation.

"There was no time lag in reporting the information. We became aware of the possibility of a delay on Dec. 16, 2006. We needed to look into the details further before we could say that the project would definitely be delayed, and inform the public to this effect," he argued.

A PGN official said the firm had yet to receive a notification from Bapepam about the capital market watchdog's decision.

"As of today, we have yet to receive an official notification from Bapepam on the results of the investigation," PGN corporate secretary Widyatmoko Wapang said Friday as quoted by Antara.