CORPORATE GOVERNANCE PAPER

CASE: PT Perusahaan Gas Negara (PERSERO) Tbk : Insider

Trading

BY:

GERASIMOS WIDI P. S. (1206245550)

REINE ENDIKA JUWITA (1206249145)

M. PAHLEVI ZAHRIE (1206266542)

AHMAD RIFQI (1206266864)

DEBRINA ROSALYN (1206366302)

UNIVERSITY OF INDONESIA

FACULTY OF ECONOMICS AND BUSINESS

DEPOK, 2016

STATEMENT OF AUTHORSHIP

We the undersigned declare that the paper / assignment attached is purely the

result of our own work. There is no work of other people that we use without citing

sources.

This material is not / has not been served / is used as a material for papers /

assignments in other subjects unless we state it clearly that we use it.

We understand that the paper/assignment attached below can be copied and/or

be communicated in purpose to detect plagiarism.

Paper Title : Case: PT Perusahaan Gas Negara (PERSERO) Tbk : Insider

Trading

Subject : Corporate Governance

Lecturer : Dr. Ratna Wardhani, S.E., M.Si.

Date : April 13th, 2016

Authors : Gerasimos Widi P. S.

Reine Endika Juwita

M. Pahlevi Zahrie

Ahmad Rifqi

Debrina Rosalyn

Signature :

(M. Pahlevi Zahrie) (Debrina Rosalyn)

(Gerasimos Widi) (Ahmad Rifqi) (Reine Endika J.)

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CASE ANSWER

1. Berdasarkan informasi mengenai kasus PGN yang anda miliki,

indentifikasikan pelanggaran atas prinsip dan aturan pengungkapan dan

transparansi yang dilakukan oleh PGN!

The first violation that PGAS did was the lateness to disclose information to public

regarding to the delay in the completion of SSWJ natural gas pipeline construction.

This lateness to disclose the information caused a significant effect tothe decreasing

of PGAS’ stock prices. The information regarding the completion of SSWJ natural

gas pipeline construction was released to the public on 14 th of January 2007, which

were 6 days after the stock price crash phenomenon happened.

Even management said that the lateness of the completion of the SSWJ natural gas

pipeline construction would not significantly influence the performance of the

company, as it can be seen in PGAS’ Annual Report of 2007, this mistake gave a

negative effect to the investors’ trust to the company. This happened because

information that is disclosed to the public holds a significant influence to the investors

whether to invest in this company.

Rules regarding to the disclosure and the transparency of information was stated in

UU No 8 tahun 1995 tentang Pasar Modal article 86 which says:

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As it is written, Company has an obligation to disclose every material information to

the public in two days after the occurrence of the event. This means thatthe

information regarding to lateness of the completion of the SSWJ natural gas pipeline

construction had to be disclosed in December 2006 as Company had already knew

this information since December 2006 otherwise we can say that company abandoned

one of its liabilities as a listed company.

PGAS also broke two of corporate government principles in OECD which this has to

be followed by public and listed company so the company can implement a good

corporate government principle. The first principle in OECD that was not followed by

PGAS regarding the lateness to disclose about the information is principle number 5

about disclosure and transparency. This principle says

The company also violated the OECD Principle number 2 about the right and

equitable treatment of shareholders and key ownership functions. This principle says

that basic shareholder right should include the right to obtain relevant and material

information on the corporation on a timely and regular basis.

When PGAS did not release the information about the delay of completion of SSWJ

natural gas pipeline construction the public, we can conclude that PGAS did not fulfill

shareholders right to obtain the relevant information about the company.

The second violation that has a connection to the first violation was the misleading

information that was given by the company. Asthe delay in the completion of SSWJ

natural gas pipeline construction occurred, the volume of gas distributed and the delay

of ‘gas in’ were also different than had been told to the public. This misleading

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information made PGAS breaking the regulation, which is UU No 8 tahun 1995,

article 93 and 104.

PGAS also broke OECD Principle number 5 about the disclosure and transparency.

The third violation that PGAS did was insider trading that few PGAS’ board of

directors, board of commissioners and corporate secretary did. As Bursa Efek

Indonesia declared about the unusual market activity following to the PGAS’ stock

price crash in 8 and 9 January of 2007, Bursa Efek Indonesia did an investigation to

the company and found that few board of directors and board of commissioners and

its corporate secretary did insider trading.

Insider trading was forbidden while employee of the company still may acquire and

have company’s stock. To control about the insider trading, UU No 8 Tahun 1995,

article 95, 96 and 99 says:

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As we can see, employee might still hold its company stock. However, if a person that

is an employee of the company, has information that is not yet released to the public,

which might also benefit them from doing a transaction in the market, is not allowed

to sell or buy its company stocks or other company’s stock that relates to their

company.

Also, by doing an insider trading, PGAS has also broken one of OECD principles that

is OECD principle number 3, point E which says:

2. PGN is a state-owned that was supposed to be the frontline for the

implementation of good governance. What is your opinion about that statement?

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The statement above is what actually it is supposed to do, because the state-owned

company that in fact belongs to the state should become the frontline to give an

example of the implementation of good governance. This is supposed to be done in

line with the regulations and policies issued by the state, so that it does not only

regulate, but also exemplifies significantly in SOEs held by the government itself.

With the issuance of policies and regulations accompanied by examples of good

implementation, it will result a good governance integration and strengthen the

resilience of socio-economic conditions of the country. But in reality, few SOEs are

doing it. Private firms tend to be better in the implementation of good governance. It

can be caused by a culture of government institutions are still dominated by a very

rigid bureaucracy and filled with various forms of corruption, collusion, and

nepotism. These conditions can be a parameter or comparative that state-owned

companies still have much to learn to apply good governance.

3. Kasus PGN ini bermula dari terjadinya penurunan secara signifikan harga

saham PGN di BEJ sebesar 23,36 persen dari Rp 9.650 pada 11 Januari 2006

menjadi Rp 7.400 per lembar saham pada 12 Januari 2007. Menurut anda

bagaimana pengungkapan dan transparansi yang baik yang harus dilakukan

untuk menghindari hal tersebut?

As stated in UU No 8 Tahun 1995 No 86, every significant event that has a material

impact to the stock price has to be disclosed to OJK and to the public, at least 2 days

after the occurrence of the event. This can be done by releasing a formal document

with the information stated inside and send it to the OJK and Bursa Efek Indonesia.

Also, company needs to release this information by having a press release section in

their website so every important information can be disclosed within two days after

the occurrence. Company can also tell the media about the information so they can

publish the article to the public.

Company also needs to state all relevant information in their annual report. This can

be done by having a “Material Information” section in their annual report. By having

this section, company can disclose all significant and material information that occurs

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during the particular financial year. This has to be done by the company in order to,

not only give the information to the shareholders, but also to the potential

shareholders in the future.

Information that has to be disclosed is:

1. The event that occurs

2. Reasons behind the occurrence of the event

3. The impact of the occurrence of the event

4. Company’s action regarding to the occurrence of the event

5. The statement of going concern of the company and subsidiaries regarding to the

occurrence of the event

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REFERENCES

Republik Indonesia, 1995 Undang Undang Pasar Modal, Jakarta: Sekretariat

Negara

http://www.oecd-ilibrary.org/docserver/download/2615021e.pdf?

expires=1460502681&id=id&accname=guest&checksum=FFCE40F54A46724A

14B1F5C7BBEB5580

http://citeseerx.ist.psu.edu/viewdoc/download?

doi=10.1.1.202.2200&rep=rep1&type=pdf

http://www.af.polyu.edu.hk/files/cafr2015/21_Whose%20interests%20do

%20independent%20directors%20represent.pdf

https://core.ac.uk/download/files/153/6379628.pdf

http://remote-lib.ui.ac.id:2086/S0304387811000058/1-s2.0-S0304387811000058-

main.pdf?_tid=c618e950-eab0-11e5-a253-

00000aab0f27&acdnat=1458048246_305c18ed3e9d95117ba6cba039e8c9b1

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