OJK Screaming, Is There Anyone Listening?

KNews.id- History records that the transfer of financial service sector oversight authority from Bank Indonesia and the Ministry of Finance to OJK must be through a steep and winding road so that it takes more than 10 years for the OJK to stand on November 2011 as of the date of promulgation of Law No. 21/2011 concerning OJK. OJK was established in the spirit of realizing an integrated authority both in overseeing the banking sector, non-bank financial industry and capital markets.

The spirit of integrated supervision in the Indonesian style cannot be easily compared to what happens in other parts of the country that have a separate supervisory function from the central bank so that the central bank functions as a lender of the last resort for liquidity providers both for the financial services industry and for driving the national economy. Like the song Dewa half-breathed band, the loss of authority of banking supervision at Bank Indonesia and the supervision of the IKNB and the capital market in Bapepam LK caused great injuries and a sense of loss for the two institutions.

Supervision of the financial services sector is a task that is full of prestige. Revocation of the supervisory authority clearly raises the perception of the inability of the two institutions. Moreover, it was later discovered that the legacy of their supervision left a lot of rotten goods which had only been uncovered after the FSA worked. One by one the problems of the companies left over by the supervision of the old authority began to surface as the supervision reforms carried out by the FSA rigorously. Back like the Bengawan Solo song, various financial service sector cases that emerged that turned out to have become a long history that then flowed far.

One that exploded was the Jiwasraya insurance case. The Attorney General’s Office has dismantled the corruption case in this state-owned insurance and has entered the trial stage at the Central Jakarta Corruption Court.

The Attorney General’s Office has named a number of suspects in this case such as the former Managing Director of Jiwasraya in the 2008 – 2018 period and Hendrisman, the former Jiwasraya finance director, Hary Prasetyo for the 2013 – 2018 period and the former Head of the Jiwasraya Investment and Finance Division, Syahmirwan. Finally, the Attorney General’s Office also appointed an OJK official allegedly involved with 13 other Investment Management. In one case trial, a witness stated that the company had experienced insolvency or was unable to pay obligations to policyholders since 2008 and was covered up so that the company could continue to run.

An online news media wrote that Jiwasraya’s financial problems had occurred in 2004. At that time insolvency reached Rp 2.769 trillion. In the following years, Jiwasraya’s condition worsened. Even in 2006 the financial report showed Jiwasraya’s equity value was negative Rp 3.29 trillion because the assets owned were far smaller than the liabilities. BPK even gave a disclaimer opinion for the 2006 and 2007 financial statements because the presentation of reserve information could not be trusted. While in 2008 the Jiwasraya deficit widened to Rp 5.7 trillion in 2008 and Rp 6.3 trillion in 2009.

The big question arises, why when Jiwasraya has experienced insolvency or a very large deficit, the insurance supervisory authority at that time Bapepam LK and the Government as the owner seemed to close his eyes and still let Jiwasraya continue to operate with various financial engineering.

In 2011, Bapepam LK gave permission for Jiwasraya to use up its financial statements by conducting a re-insurance scheme so that the company recorded a surplus of Rp1.3 trillion at the end of 2011. Then in 2012, Bapepam-LK granted a permit for the JS Protection Plan product (18 December 2012 – Bancassurance products with Bank BTN, KEB Hana Bank, Central Java BPD, East Java BPD, and DIY BPD). It was this JS Plan product that then sparked and triggered a public uproar because Jiwasraya failed to pay in October 2018.

The moment of transition of supervision from Bapepam LK to OJK in 2013 would be crucial. Did the new OJK supervisors get complete and honest information about the real conditions in Jiwasraya. Or there is an attempt to hide the fact of Jiwasraya’s poor financial condition by only submitting financial reports that have been through an engineering process through re-insurance and JS Plan sales. The effort to cover up Jiwasraya’s condition seems to be successful because the newly established OJK with a condition that lacks facilities is still busy with providing work infrastructure including compiling a new supervision work procedure.

Practically Jiwasraya’s operations were left untouched until the explosion of this case in 2018, although in 2015 and 2016 OJK had asked Jiwasraya to improve its JS Plan products that were not in line with its investment management capabilities. Even in 2017, the FSA gave the First Warning Sanction for being late in submitting an actuary report in 2017. Like a movie, the Jiwasraya case is a big scenario to hide the severe ulcers of the state-owned company so that it continues to operate and even sell ‘beautiful’ products that anesthetize investors and insurance to trillions of rupiahs. Managing Director and Finance Director of Jiwasraya, who has become a suspect, may be the only actors in this long drama film.

However, the old supervisory authority who allowed him since 2004 to even give Jiwasraya permission to manipulate his finances is the director and main producer of this film which must also be revealed to the public. OJK as a new supervisory authority established with many “weaknesses” up to now certainly cannot refuse when Jiwasraya’s supervision is also transferred to OJK, which then also drags an official. OJK also cannot avoid public criticism of its performance because it is considered negligent and weak due to the Jiwasraya case. Stigma is even more formed after OJK officials are suspected of being involved.

Of course this is a great historical record on the journey of the authority of the supervisory sector in this country whose reputation is bad because many have inherited foul companies from the previous supervisory authority.

According to our records, there are still a number of bad companies that will still become PRs for the OJK and have a great potential to exacerbate the community’s assessment of the performance of OJK supervision. OJK certainly works hard to be able to make healthy companies that have been sick for a long time, because OJK is not a hospital that can reject patients who are terminally ill and dying. Moreover, the public thinks that the supervisors at the OJK were also previously employees of Bapepam-LK and Bank Indonesia who should have also known the patient’s condition beforehand.

The Jiwasraya case must be a big lesson for decision makers in the country’s financial sector. Whatever the reason, the implementation of good corporate governance must not be ignored or bargained. Authority is not an institution that can legitimize the existence of financial engineering to cover up a crime especially evil.

Later, the OJK, which has been carrying out strict supervision reforms in the financial services sector, has been continuously shaken by various parties whose business interests have begun to be disrupted by OJK’s supervision. Information circulating, many OJK officials whose lives have been threatened by irresponsible parties.

The financial services sector is the heart of the national economy, which must be guarded together in the interests of the country’s progress. Efforts to maintain the financial services industry to remain stable, contribute to the national economy and improve community welfare are common interests that must be supported and strengthened by all parties.

At the very beginning when the OJK had to ensure that the integration supervision process was running, it might not be inconceivable that this new supervisory authority would receive thousands of trillions of financial assets with the infrastructure of buildings and furnishings not provided by the state.

The officials also did not imagine that they would have to work very hard to solve the restructuring of bad companies and even to the point of threatening their souls. Complaining, of course not the attitude of a knight, but this patient actually remains ill. Reinsurance is not permitted to be extended by OJK because this is actually a temporary solution.

Ask the owner again! (FHD)