TEMPO.CO, Jakarta - THE House of Representatives’ (DPR) initiative to establish a committee of inquiry into the Asuransi Jiwasraya scandal looks at first glance to be a good one. The DPR, which has appeared weak, could exercise its function of control over the government. However, closer examination reveals that the political process at the DPR could do more harm than good.
This political maneuver has the potential to disrupt the legal process and the endeavor to overcome Jiwasraya’s financial crisis.
The resolution of this matter should not be treated lightly because it concerns investor trust in the financial sector. Jiwasraya’s problem is very serious because, since December 2019, it has failed to pay out policy obligations totaling Rp12.4 trillion. The problems in the state-owned enterprise will have an impact on 17,000 investors and 7.7 million clients.
Jiwasraya’s problems are the result of improper practices in the management of investments. The income from the sale of insurance products, especially the JS Saving Plan, which promised sky-high returns, were invested inappropriately. The Supreme Audit Agency (BPK) found questionable investments made by Jiwasraya in 2017 consisting of Rp19.17 trillion in bonds, Rp6.63 trillion in shares and Rp6.55 trillion in property. Problems arose because the value of the investments in the bonds and the shares fell.
The BPK had previously warned that Jiwasraya’s investment policy was very high-risk. The company’s assets appeared to increase in value because the value of the shares it had procured rose sharply. As soon as the share price collapsed, the insurance company found itself with large losses. Jiwasraya had used the same methods since 2014 by investing in low-priced shares.
Without establishing a committee of inquiry, the DPR could still oversee the legal process related to the scandal. The Attorney General’s Office (AGO) has already detained senior Jiwasraya staff, namely Hendrisman Rahim, Hary Prasetyo and Syahmirwan. The AGO has also detained the CEO of Hanson International, Benny Tjokrosaputro, and the president commissioner of Trada Alam Mineral, Heru Hidayat, who are also alleged to have been involved in the investment practices of the insurance company.
Investigators need to uncover the mastermind behind the scandal by following the flow of money resulting from the share purchases. The AGO also needs to prosecute them under the Money Laundering Law in order to retrieve clients’ funds. This scandal has damaged the image of Indonesia’s insurance business. If the investigation is not carried out in a transparent way, public trust in the insurance sector will continue to be eroded.
The Jiwasraya case also shows poor oversight by the Financial Services Authority. It is this body that bears the most responsibility for the investment practices that cost Jiwasraya so much money. The government was also negligent in monitoring these dubious practices at Jiwasraya, which had long been detailed in BPK reports.
Now the state-owned enterprise's minister must not simply put together a scheme to save Jiwasraya. Demands from a number of people for a state bailout of the company should be rejected. Policyholders should understand that the guarantee that their investments in the JS Saving Plan will be returned is the responsibility of the company.
The DPR could still use its right to establish an inquiry if it turns out that the resolution of the business and the legal process against Jiwasraya is not complete or lacks transparency. But for now, the best thing to do is to give the government the opportunity to solve Jiwasraya’s financial crisis. Political quarreling will only hamper efforts to restore public trust in the financial sector.
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