Kamis, 01 Juli 2010

Frustrated Bakrie Life Customers Waiting to Get Their Savings Back

Jakarta Post : Juli 01,2010

Retired Jakarta resident Wahjudi is getting tired of waiting to get his money back.


The ex-auditor, who worked at the Development Finance Comptroller for 26 years, invested his life savings of more than Rp 200 million ($22,000) in Diamond Investa, an investment-cum-life insurance product offered by PT Asuransi Jiwa Bakrie.

Better known as Bakrie Life, the company is controlled by the family of powerful businessman and politician Aburizal Bakrie.

Diamond Investa was set up in 2005 and promised investors returns of 12 percent to 13 percent annually, as providing them with life insurance coverage of up to Rp 1 billion in the case of accidental death.

Everything went well while the Indonesian stock market enjoyed a bull run, but after the financial crisis struck in 2008 things quickly turned sour.

At the end of that year, Bakrie Life suspended interest payments and prevented customers from getting their initial capital back.

“The money was supposed to be for my retirement,” Wahjudi, who is in his 60s, said on Wednesday. “But my situation is better than that of some customers. I know of one person who had a heart attack and another who is now unable to put his children through college.”

A total of 600 customers nationwide invested in Diamond Investa and Wahjudi was chosen as the coordinator for the around 300 unpaid investors in Jakarta.

“I joined in 2005, when the product was launched,” Wahjudi said, adding, perhaps naively, that he had confidence in it because it was a company owned by the Bakries, one of the wealthiest families in Indonesia. “Most of the other customers thought the same thing.”

Wahjudi still has a Diamond Investa brochure that proclaims that Bakrie Life has the full backing of the Bakrie group.

Another thing that Wahjudi said convinced him the product was safe was the fact that the prospectus said that 90 percent of customers’ money would be put into bonds, rather than more risky stocks.

But he said that he later found out that about 80 percent of investors’ money was actually invested in equities, around half of which were Bakrie group stocks.

When payments were stopped in late 2008 investors demanded an explanation from Bakrie Life. “Because there was no satisfying outcome, in mid-2009 we sent a letter to the House of Representatives and to Bapepam-LK [Capital Markets and Financial Institutions Supervisory Agency],” Wahjudi said. “But soon after the Bank Century case emerged, so our case looked insignificant.”

It was only in March 2010 that Bakrie Life released a statement saying it was committed to paying back customers their initial investments as well as the interest accrued.

However, instead of the promised 12 percent to 13 percent returns, Bakrie Life said it could only now pay 9 percent to 10 percent.

The company said it would pay investors who had put less than Rp 200 million into Diamond Investa by April, while larger investors would receive their money in nine installments with the last being paid in January 2012.

Bakrie Life paid its first installment to wealthier customers in March, which represented 6.25 percent of the money it owed them. However, on Wednesday Bakrie Life failed to pay its promised second installment. “I can say there has been no payment this week,” Wahjudi said.

He said that Bakrie Life had also been late in paying the first installment and while smaller customers (under Rp 200 million) had now received most of their money back they were still waiting for a final installment.

Bakrie Life’s president director, Timoer Sutanto, said that he sympathized with the frustrated Diamond Investa customers.

“But we remain committed [to paying them back] and are making efforts to settle the process, amid the current difficulties in funding,” he said. Bakrie Life still owes Diamond Investa customers a total of Rp 300 billion, which it will pay back by January 2012, Timoer said.

Isa Rachmatarwata, head of insurance at Bapepam-LK, told local media on June 24 that Diamond Investa customers should be patient. “Or take another option by filing a lawsuit in court seeking to have the company declared bankrupt,” he said.

But Wahjudi said trying to have Bakrie Life declared bankrupt would not help the investors get their money back.

He said Aburizal Bakrie, or his brother, Nirwan Bakrie, should take more responsibility for the problem.

“Bakrie Life as a company will not be able to pay its debt to us. I’m sure of that,” he said. “But Bakrie as a group, is more than capable. I think one word from Aburizal or Nirwan and this problem would be solved in seconds. This has been a major burden on many people.”