OJK to Review Rule on Ratings Agencies

TEMPO.CO, Jakarta - The Financial Services Authority (OJK) said it would review the regulations on the role of rating agencies. OJK chairman of the board, Muliaman Hadad, said the decision was made following rampant allegations over practices of ratings sales.

The regulation aims to prevent rating agencies from falsely grading companies and bonds, thus helping consumers and investors from suffering losses. Another rule is for ratings agencies to meet OJK's criteria and requirements.

Ronald Andi Kasim, president director of securities ratings agency, Pemeringkat Efek Indonesia (Pefindo), previously said there are indications that companies pay agencies money to get high credit rates prior to issuing bonds.

Pefindo is one of Indonesia's three ratings agencies along with Fitch Ratings Indonesia and India Credit Rating Agency (ICRA) Indonesia.

According to Ronald, one indication of the bribing practice is the testimonies from several corporate representatives claiming that one ratings agency vouched to give their companies a good score.

Ronald claimed he also received an offer from one particular company in order to give it a good rating. "[The company] threatened that if Pefindo could not give them a good assessment they will find another agency that is willing to do so," he said.

Ronald said that, not only is the practice creates an unhealthy competition, it is also detrimental to investors—who supposedly make their bond-purchase decisions based on ratings. "If the rating is forged, they are doomed," he said.

Responding to the issue, ICRA Indonesia president director Minon Almasyhur asserted that his agency issues ranks based on the ranking committee's decisions. The committee comprises of analysts from both ICRA Indonesia and ICRA Limited—the holding company based in New Delhi, India.

"Or issued ranks reflect the opinions that are independent and impartial," he said.

Meanwhile, Fitch Ratings Indonesia president director Baradita Katoppo, ensured that his agency does not sell ratings. When assessing a company, he said, Fitch adheres and refers to OJK's rules as well as regulations that apply in the United States and Europe. "You can rest assure there is no such practice at Fitch. We are a very strict company," he said.

OJK's deputy commissioner for capital market supervisory, Sarjito, said the OJK will learn about the report Pefindo submitted. Any company found guilty of such practices will be subjected to administrative sanctions, starting from a written warning to the revocation of its licenses.

FAIZ NASHRILLAH