Pseudo Profit And All The Deterioration Of Jiwasraya's Financial Management

BPK and AGO press conference related to Jiwasraya. (Mery Handayani / VOI)

JAKARTA - Chairman of the Supreme Audit Agency (BPK) Agung Firman Sampurna revealed that PT Asuransi Jiwasraya was in a state of vulnerability from 2006 to 2019. According to BPK findings, in the 2006 period, Jiwasraya had recorded false profits.

"Since 2006 the company has still booked profit. However, this profit is an apparent profit, as a result of accounting engineering or window dressing in which the company has actually suffered losses," said Agung, during a press conference, at the BPK office, Gatot Subroto, Central Jakarta, Wednesday, January 8th.

Not only that, Agung said, in 2017 Jiwasraya also posted a profit of IDR 360.3 billion. However, Jiwasraya also received an adverse opinion due to the provision for fraud of Rp.7.7 trillion.

Agung said, if the backup was carried out in accordance with the provisions, the company should have suffered a loss. In 2018, the BPK found that Jiwasraya recorded a loss of IDR 11.3 trillion. Based on the findings up to September 2019, an indication of a loss of IDR 13.7 trillion.

"In November 2019, Jiwasraya was estimated to have had a negative equity [position of liabilities greater than assets] of Rp. 27.2 trillion," he said.

According to Agung, this loss occurred because Jiwasraya sold its product, namely a saving plan with a very high cost of funds above deposit and bond interest, which has been carried out massively since 2015. Funds from the saving plan are invested in low-quality stocks and mutual funds.

"This resulted in a negative spread. In the end, this resulted in liquidity pressure on Jiwasraya which led to default," he explained.

In the period 2010 to 2019, said Agung, the BPK had twice conducted an examination of Jiwasraya, namely an investigation with a specific purpose in 2016 and a preliminary investigative examination in 2018.

In 2019, according to Agung, the BPK received a request from Commission XI of the DPR to investigate this case. In an examination with specific objectives in 2016, the BPK revealed 16 findings related to Jiwasraya's business management, investment, income and operating costs from 2014 to 2015.

These findings include, among others, investments in shares of TRIO, SUGI and LCGP in 2014 and 2015 were not supported by an adequate review of the share placement proposal. Jiwasraya has the potential to risk default on investment transactions to purchase medium term notes and PT Hanson Internasional.

However, according to Agung, Jiwasraya is not optimal in overseeing the mutual funds it owns and there is an indirect placement of shares in a company that is underperforming.

"The results of the investigation show that there are irregularities that indicate fraud in the management of saving plans and investments," he explained.

Agung explained, Jiwasraya was recorded to be carrying out buying and selling of shares in the near future to avoid recording unrealized losses, which is suspected of being window dressing. Then, buying and selling is carried out with certain parties in a negotiation manner in order to get a certain desired price.

In addition, certain share ownership exceeds the maximum limit, which is above 2.5 percent, direct investment in illiquid stocks at illegal prices, which Jiwasraya management and investment managers suspect is hidden in several mutual funds with underlines.

"The indication of temporary losses due to the transaction is estimated at around Rp. 4 trillion. The parties involved are internal Jiwasraya parties at the board of directors and general manager level as well as other parties outside Jiwasraya," he said.

In mutual fund investment, BPK found irregularities, namely the analysis of the investment manager or MI from Jiwasraya in the mutual fund subscription plan was not carried out adequately. This is allegedly made up so that in terms of performance, the investment manager looks as if he is performing well. So that it can be chosen by Jiwasraya to place an investment.

"Indication of temporary losses due to the decline in value of shares in mutual funds is estimated at around Rp 6.4 trillion," he explained.