PGN directors, commissioner fined total of Rp 5 billion

Andi Haswidi, The Jakarta Post, Jakarta

Following the sanctions imposed on PT Perusahaan Gas Negara (PGN) last month, the Capital Market Supervisory Agency (Bapepam) handed total fines worth Rp 5 billion (some US$545,000) to four PGN directors and a commissioner Tuesday for breach of the duty to disclose information to the public.

Bapepam found the directors guilty of delaying for 35 days the disclosure of essential information on problems with a pipeline project, said a Bapepam press statement.

Bapepam chairman Fuad Rahmany said in the statement that there had also been a misleading report on a plan to transmit gas through the South Sumatra-West Java pipeline (SSWJ), which the directors should have noticed.

Accordingly, Bapepam ordered PGN to pay an additional Rp 35 million. Four PGN directors -- including president director Sutikno -- and a commissioner were also ordered to pay total fines worth Rp 5 billion.

Besides president director Sutikno, those sanctioned were directors Adil Abas, Djoko Pramono and Nursubagjo Prijono, and commissioner W.M.P Simanjuntak.

Last month, the company was also found guilty of an administrative violation related to the SSWJ disclosure breach, and was fined Rp 500 million.

Fuad said that the sanctions were designed to send a message to other senior corporate executives to be more responsible in disclosing information to the public, given the effect that this could have on share prices.

According to the 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 working days after it takes place.

The investigation into PGN was launched 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 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 firms, which in turn precipitated a sharp drop in the Jakarta Stock Exchange (JSX) Composite Index.

The widespread belief that PGN management had deliberately failed to report the delay to the public turned out to be true. The Bapepam investigating committee concluded that PGN executives had been aware of the possibility of a delay since Jan. 3.

Fuad said that the investigation was still continuing, adding that there may have been people inside PGN who unlawfully provided information to traders, thereby leading to insider trading.

After nearly four months of delay, PGN finally launched its $1.1 billion pipeline linking Sumatra and Java last Sunday.

During the initial stages, the pipeline is expected to supply 30 million cubic feet per day from a Pertamina gas field in Pagardewa, South Sumatra, to industrial areas in Cilegon, West Java.

One of the biggest customers for the gas will be the power plant owned by the country's largest steelmaker, PT Krakatau Steel, in Cilegon.

A second PGN pipeline is also being built to supply gas from the ConocoPhillips gas field in Grissik, South Sumatra, through Pagardewa and Labuhan Meringgai to Muara Bekasi and Ra Maju in Bekasi, West Java.