Government must compensate Jiwasraya Savings Plan Customers

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Anthony Budiawan Managing Director of Political Economy and Policy Studies (PEPS)

IO – The Jiwasraya JS Saving Plan was offered to the public at the end of 2013. This investment product offering looked very attractive, with returns of up to 13 percent. Very high and guaranteed. The investment period was only 5 years and can be disbursed every year If you want.

After five years, precisely in October 2018, the maturing JS Saving Plan apparently failed to be disbursed: there was no payoff. Over time, the problem of failing to pay the JS Saving Plan loomed larger, with no solution in sight.

Jiwasraya’s total loss reached IDR13.7 trillion. Of course, the losers are the customers or the JS Saving Plan policyholders whose funds cannot be disbursed. Those who tirelessly continue to seek justice to this day, without being certain their money can be returned.

Many policyholders are just ordinary families, not super-rich speculators. There are even housewives and retirees who buy policies with savings to earn extra income.

Losing these deposits can cause them to plunge into financial difficulties. Not surprisingly, many cried, asking for justice for these innocent people, who had handed over their savings to a 100 percent state-owned company.

Problems with failing to pay for JS Saving Plan products should have been acknowledged and anticipated early on. This product is not a normal life insurance product, but rather one offering and guaranteeing very high returns.

As a result, Jiwasraya placed its funds in high-risk securities, including “fried” shares, a term for manipulated stocks. The share price can zig-zag up and down above 30 percent in an instant, without any reason. So far, the manipulators are safe, even though it is detrimental to many small investors who are just following along. Financial authorities do not seem to see, or may also pretend not to see.

As a result, Jiwasraya’s investment in fried shares evaporated. Those invested in the securities of “naughty” companies through a repurchase scheme or repo also evaporated.

For this loss, the government, as Jiwasraya’s shareholder, must be responsible for the losses of JS Saving Plan customers. The government is obliged to replace all their investment money. There is no reason whatsoever that it can refuse this compensation. And the Parliament must approve it immediately.

Those responsible for this loss must be investigated. Is it just because of investment mistakes, such as violating the principle of prudence in managing public funds? Or is there an element of corruption? For example, the collaboration of Jiwasraya officials with other parties in investment, benefiting the other party? Let this be the realm of law that must be upheld.

The government must take full responsibility in the Jiwasraya case because, first, the government, as a shareholder, has the authority to appoint or dismiss Jiwasraya directors, so that public losses due to speculative practices of company directors are also the responsibility of the government.

Secondly, the government knows that this problematic JS Saving Plan product is not very commonly offered to the public because it offers very high returns, up to 13 percent, so it should be monitored or canceled early on.

Third, the government knows, through a general meeting of shareholders (at least) once a year, that JS Saving Plan funds are invested in high-risk securities, fried stocks, or problematic repos, so they should be able to intervene or cancel out early on. However, this problem was ignored until it failed to pay.

Fourth, Jiwasraya has a Board of Commissioners, also appointed by the government, to oversee and advise the directors. The Board of Commissioners should be aware of the unusual JS saving Plan products and problematic investments.

According to regulations, the Board of Commissioners and the Board of Directors are required to meet at least four times a year, discussing the company’s performance and financial statements in detail. The failure of Jiwasraya’s Board of Commissioners in carrying out their duties also became the government’s failure in appointing company supervisors.

Fifth, the Financial Services Authority (OJK) which oversees insurance companies, should have been able to detect these unusual things from the beginning, because the mode is very clear. JS Saving Plan offers to the public can be stopped early.

Finally, there is the Supreme Audit Agency (BPK) or other public accountants, who examine Jiwasraya’s annual financial statements. JS Saving Plan risks and investments placed in high-risk securities should be reported, or even influence opinions in the financial statements.

However, none of these precautions were applied, causing JS Saving Plan customers to lose tens of trillions of rupiah. The main cause is the failure of the government, in this case, the Ministry of State-Owned Companies (BUMN), OJK, and BPK in carrying out their respective duties.

For this negligence, the government is obliged to take full responsibility and must compensate all losses of JS Saving Plan customers, not later than one month.

Hopefully, this Jiwasraya failure case will be a lesson for the government to carry out its functions and duties seriously and correctly.