Catch Me If You Can
The police named Sadikin Aksa, former Bosowa Corporindo CEO, as a suspect in a banking fraud case. It is regarded as a backlash against Bosowa's victory in court.
BANK Bukopin’s (IDX: BBKP) stock performance is a signal that it had regained market trust. On Friday, March 19, BBKP closed at Rp520 per share, an increase of nearly fivefold compared to exactly one year ago.
Bukopin’s grim story slowly faded after its control completely shifted from Bosowa Corporindo to KB Kookmin Bank, a South Korean financial institution with Rp4,745 trillion worth of assets, at the end of last August. The bank, which changed its name to Bank KB Bukopin, no longer saw massive fund withdrawals by customers, like what happened at the beginning of last year. Most importantly, Kookmin’s entry was not done only by raising ownership in Bukopin, but also by giving two liquidity disbursements for a total of Rp11.2 trillion.
But the trouble surrounding the bank is not over. A new case comes up after the National Police’s Criminal Investigation Department (Bareskrim) named Sadikin Aksa, former chief executive officer (CEO) of Bosowa Corporindo, a suspect in a banking crime case. The case began when the Financial Services Authority (OJK) issued a written order on July 9 last year, ordering Bosowa to hand over its voting rights to the technical assistance team of Bank Rakyat Indonesia (BRI) during a plan to hold an extraordinary general meeting of shareholders for Bukopin. “But Bosowa Corporindo did not execute the order,” said Bareskrim’s Director of Special Economic Crimes, Brig. Gen. Helmy Santika, on Thursday, March 11.
Sadikin is suspected of violating Article 54 of the OJK Law, facing a jail sentence of two to six years. The police investigation will go hand in hand with the court hearing on Bosowa’s lawsuit at the Jakarta Administrative Court, which could become a new hurdle in the transfer of Bukopin’s controlling shareholder.
THE lawsuit that Bosowa Corporindo filed to court was about a decree by the OJK’s Board of Commissioners No. 64/KDK.02/2020, issued on August 24, 2020. The letter contains the result of OJK’s re-review of Bosowa’s status as the majority shareholder in Bukopin.
The OJK decided that Bosowa did not qualify as a shareholder of a financial services institution, and it forbade Bosowa from becoming one. The company’s voting rights in the general meeting of Bukopin shareholders was revoked. Bosowa is also ordered to let go all of its stake in Bukopin by no later than one year since the OJK decision was issued.
On January 18, the Jakarta State Administrative Court granted Bosowa’s lawsuit. The judges ordered the OJK to postpone the implementation of the decree until the case verdict has permanent legal force. The OJK has filed an appeal against the decision. During the trial, Bosowa, a group established by Muhammad Aksa Mahmud—the brother in-law of former Vice President Jusuf Kalla—should have had the ball on its court.
But Bosowa’s early victory had little meaning. The naming of Sadikin Aksa as a suspect is only seen as a move to hit Bosowa back, using the hands of the Bareskrim.
The Aksa family showed little reaction over the situation. Sadikin’s older brother, Erwin Aksa, the President Commissioner at Bosowa Corporindo, was quiet. This is a contrast to how he reacted last year when the OJK relentlessly pushed for changes in the share ownership at Bukopin due to equity problems. “(Please ask) the National Police Headquarters for all information related to Sadikin,” said Erwin via WhatsApp on March 18.
But the family did talk about Sadikin’s status as a suspect. Someone with close ties to the family said that they saw it coming way before, since the police began investigating Sadikin at the same time that Bosowa filed its lawsuit against the OJK. “When asked, they seemed unaffected (by the situation),” said the source. “Here we go again.”
The National Police Headquarters confirmed that they had taken statements from 22 individuals in the case implicating Sadikin. The witnesses are from the OJK, Bukopin, BRI’s technical assistance team, and Bosowa Corporindo. There are also witnesses from Kookmin Bank and the Indonesian Bulog Employee Cooperative (Kopelindo), which are also shareholders of Bukopin.
Sadikin failed to appear at his initial questioning as a suspect on Monday, March 15. Sadikin, the nephew of Jusuf Kalla, finally showed up for the second summon on Thursday, March 18. National Police Public Relations Division Chief, Insp. Gen. Argo Yuwono, said that investigators asked Sadikin 53 questions in the course of 10 hours.
Two officials with knowledge of the case said that the OJK actually did not want to criminalize neither Sadikin nor Bosowa. However, OJK’s higher-ups changed their minds after Bosowa sued the OJK’s Board of Commissioners Decree No. 64/KDK.02/2020. The regulator immediately sent the documents that they had prepared to the Bareskrim.
OJK’s Deputy Commissioner for Public Relations and Logistics, Anto Prabowo, did not say much when asked why the agency changed its mind. “All parties have the same rights in the eye of the law,” he said via WhatsApp on March 19. “The considerations for proposing this process have gone through several stages.”
THE trouble in Bukopin started in 2020. Operating without a controlling shareholder since 2018, the bank—founded by a number of cooperatives in 1970—had to face mass saving withdrawals by customers. The bank’s liquidity declined further during the Covid-19 pandemic, prompting Bank Indonesia to impose Bukopin with a sanction; preventing it from taking part in clearing services in mid-May last year.
The long discussion about Bukopin’s rescue plan involved all its shareholders: Bosowa, Kookmin, the Indonesian government, and Kopelindo. In the process led by the OJK, Kookmin was the only one committed to injecting additional capital and liquidity. Meanwhile, Bosowa was only able to inject Rp193 billion, part of the bank’s fifth rights issue (PUT V).
After some games of tug-of-war, Bosowa finally approved the bailout scheme, by implementing the OJK warrant dated June 10, 2020. The main point was that the OJK ordered Bosowa to hand over its voting rights to BRI’s technical assistance team for the shareholders general meeting on June 18.
The rights offering with pre-emptive rights to subscribe securities (HMETD) took place on June 30. Kookmin Bank, who at the time had 22 percent of shares in Bukopin, bought 2.97 billion new shares for US$45 million—part of the company’s US$200 million commitment. Meanwhile, Bosowa took on 1.09 billion shares for Rp193 billion.
The transaction puts Kookmin as the new controller of Bukopin with 33.90 percent stake. Meanwhile, the portion of Bosowa is unchanged at 23.40 percent. The rights issue also generated additional capital for Bukopin, amounting to Rp838 billion.
But the transaction is only a part of the first phase of Bukopin’s bailout scheme, one that Kookmin proposed and the OJK approved. The next step was to actualize a plan of private placement in the sixth rights offering (PUT VI), in a bid to increase Bukopin’s liquidity. The goal is to give Kookmin control over 67 percent stakes. As it turned out, a private placement requires shareholders’ approval. For this reason, the OJK issued a warrant dated July 9, 2020, ordering Bosowa to hand over its voting power to BRI as the technical assistance team.
Two sources followed the details of the Bukopin bailout process said that Sadikin Aksa, as CEO of Bosowa, initially agreed to the transfer of power. On July 27, Sadikin sent a photo of the power of attorney to Rivan Achmad Purwantono, the CEO of Bukopin. In the letter, Sadikin agreed under one condition: Kookmin must deposit an additional US$200 million to Bukopin by August 7, 2020.
Rivan forwarded the conditional power of attorney to Kookmin. The bank, part of South Korea’s KB Financial Group Inc. with a total assets of Rp9,462 trillion, agreed. An initial transfer from Kookmin to Bukopin was deposited on July 28, 2020, the amount was US$100 million. The rest of the money was transferred on August 4.
After Kookmin’s money was in, Bosowa sent another letter to Rivan. Rudyantho, the CEO of Bosowa Corporindo signed this letter. In it, Rudyantho said that Sadikin Aksa was no longer the CEO since July 23, 2020. He said that he was appointed as Sadikin’s successor during a general meeting of company shareholders. This change was registered to the ministry of justice and human rights on the beginning of August 2020. In the beginning of August, Rudyantho also told Rivan about the change.
According to a source with knowledge of those letters, Rudyantho did not explicitly said Sadikin’s power of attorney was invalid. But the change of Bosowa CEO which is alleged backdated is an indication of the rejection to the July 27, 2020 power of attorney. “In essence, they refused private placement,” said the source.
Rivan was reluctant to answer when Tempo contacted him. “Ask the investigators at the Bareskrim. We respect the legal process,” said Rivan in a video conference on March 18.
Sadikin did not respond to Tempo’s requests for clarification when contacted on Thursday, March 18. Meanwhile, Erwin Aksa said that Rudyantho would answer clarifications in writing.
When Tempo called him Saturday morning, March 20, Rudyantho denied sending a letter to Rivan stating that the power of attorney from Sadikin was invalid. “I can’t give a statement yet if the question doesn’t match the facts. How can I cancel Sadikin’s letter? Where does that information come from?” asked Rudyantho. “I don't remember ever sending a letter to Rivan. Let’s meet and have a talk so that things become ‘concrete’, “ said Rudyantho before hanging up, saying that he was attending a wedding, and promised to call back.
As it turned out, on July 24, 2020—the day after Rudyantho supposed to replace him—Sadikin was still active as CEO of Bosowa Corporindo. Brig. Gen. Helmy Santika, when announcing Sadikin had been named a suspect on March 11, said that on July 24 Sadikin attended the meeting of shareholders with the OJK. “He did not announce his resignation,” said Helmy.
The act of ignoring the July 9 written order almost blew the Bukopin bailout scenario. At that time, the bank’s liquidity was still in a dire situation, even though Kookmin has become the controlling shareholder. Bukopin, reportedly, also lost several clearings.
While the bailout process was still running, Bukopin had already owed money, more than Rp9 trillion of customers’ savings withdrew. More than 10 trillion rupiah of government agency deposits were also in pending transactions, including the money belonging to the State Asset Management Institute and the Education Fund Management Institution.
Concerned that Bukopin would end up in bankruptcy and become a patient of the Deposit Insurance Corporation, the OJK used its final weapon: assessing whether Bosowa was fit and proper as Bukopin’s shareholder. The process led to the issuance of the OJK’s Board of Commissioners Decree No. 64/KDK.02/2020 on August 24, 2020. Bosowa then challenged the letter, filing a lawsuit with the Jakarta State Administrative Court.
With that decision in hand, Bukopin held its extraordinary shareholders meeting the day after, under close guard by the police. Kookmin’s stake in Bukopin jumped to 67 percent. Meanwhile, Bosowa’s shares were diluted to just 11.68 percent.
Today, Bukopin is alive and operating. But the two problems of shareholders conflict—one in court and another involving the police—are hurdles that the bank can easily stumble upon in the future.