Case 2 (40%)

PT. Sunprima Nusantara Pembiayaan (SNP Finance) management board members have been named as suspects in the credit fraud worth Rp 14 trillion in 14 banks. This case became the pinnacle of the problem that hit SNP and drag Columbia Group owner Leo Chandra. It also threatens the ongoing credit restructuring process.

The National Polices Criminal Investigation Department (Bareskrim) disclosed this case on Wednesday (9/26). According to Deputy Director for Economic Crimes Sr. Comr. Daniel Silitonga, eight people have been named as suspects in the case that started from a report of PT Bank Pan Indonesia Tbk (Panin).

Columbia Group founder Leo Chandra was named as a suspect, along with LD (allegedly Leos son who is also Chief Operating Officer in SNP) and SL. They became fugitives and have been put on the polices search list. Meanwhile, five other suspects have been arrested, consisting of DS (SNP Finance President Director), AP (Operational Director), RA (Finance Director), CDS (Accounting Manager), and US (Finance Manager).

We have asked the Immigration Directorate General to prevent the three fugitives from escaping abroad, Daniel said in an official statement.

Receivables List Manipulation

The case started from a report submitted by Bank Panin last August. Panin had provided a bank statement and working capital loan worth Rp 425 billion to SNP from May 2016 to September 2017. As a collateral, the subsidiary of the Columbia Group guaranteed receivables to its customers. As of May 2018, instalment and interest payments began to falter. Later, it was discovered that the receivables list as the collateral had been manipulated. According to Daniel, the suspects had added, changed, or repeatedly used the same receivables list to apply for new loans to some banks. The receivables list was obtained from PT Cipta Mandiri Prima (CMP), the parent company of Columbia Group engaged in retail business of electronic products, furniture, and household appliances.

According to the Financial Services Authority (OJK), the problem at SNP Finance has been detected since July 2017. OJK Deputy Commissioner of Banking Supervision Slamet Edy Purnomo said the OJK supervisors last year found an unsynchronized data on credit that was channelled to SNP from PT Bank Mandiri Tbk. They then asked Mandiris internal supervisors to examine it. The internal supervisors then submitted the results of the examination to the OJKs Non-Bank Financial Industry (IKNB) supervisors. During the examination, SNP defaulted on paying interest on its MTN Phase I worth Rp 5.25 billion due on 9 May 2018 and MTN III B Series worth Rp 1.5 billion due on 14 May 2018. The principal value of MTN V Phase II was Rp 200 billion, while the MTN III Series B hit Rp 50 billion. The OJK found that SNP had provided false information, which was detrimental to creditors. After reviewing its financial reports, the results were not as good as the original reports, said OJK Deputy Commissioner for NonBanking Financial Industry Moch. Ihsanuddin. The financial authority then suspended the companys operations as of 14 May 2018.

Retail Financing Legend

The SNP case tarnished Leo Candras reputation as the founder of Columbia Group. For middleand lower-class consumers, Columbia is very popular as a retail store providing solutions for the needs of electronic products, furniture, and household appliances. This business group was founded in 1982 and has more than 500 showrooms in 300 cities with various principal producers, including Olympic, Nozomi, Yanmar, Modena, Fujitec, and Sanken. Aside from selling in cash, Columbia also offers credit instalment for the purchase of goods. In 2002, Leo acquired SNP Finance to support the groups credit financing services. Columbia consumers are also the main customers of SNP that has 72 branch offices. On 14 December 2017, APPI awarded Leo with Lifetime Achievement Award in Multi finance Industry 2017 for his success in developing the retail financing business. According to the APPI Director Suwandi Wiratno, the award was revoked after the MTN default case emerged.

Investigation by the police also complicates the debt postponement petition (PKPU) for SNP at the Jakarta Commercial Court. The reason is that the three SNP directors have been arrested. PKPU is a process of settlement and debt restructuring if the debtor or creditor assesses that the debtor can no longer continue the payment of maturing debts. SNP Finance Corporate Secretary Ongko Purba Dasuha previously stated that the total bill to SNP was not Rp 14 trillion, but only Rp 4.07 trillion. It consists of the bills of separatist creditors (creditors with guarantees) worth Rp 2.2 trillion derived from loans given by 14 banks. They are Bank Mandiri with a principal debt of Rp 1.40 trillion, BCA (Rp 209 billion), Bank Panin (Rp 140 billion), Bank J Trust (Rp 55 billion), Bank Resona Perdania (Rp 73 billion), Bank Nusantara Parahyangan (Rp 46 billion), Bank Victoria International (Rp 55 billion), Bank Ganesha (Rp 75 billion), Bank National Nobu (Rp 33 billion), Bank Woori Saudara (Rp 16 billion), Bank BJB (Rp 25 billion), Bank CTBC (Rp 50 billion), Bank Sinarmas (Rp 9 billion), and Bank Capital Indonesia (Rp 30 billion). After being added with an interest debt of Rp 9.75 billion and a fine of Rp 124 million, the total of SNP separatist bill will be Rp 2.22 trillion. The rest is a bill of 336 MTN holders worth Rp 1.85 trillion.

Public Accountants

This case also dragged public accountants who have audited SNPs financial reports. The problems in the reports should have been found during the audit process. The Minister of Finance Sri Mulyani imposed administrative sanction on public accounting firms known to have audited the companys financial reports from 2012 to 2016. They are Marlinna Public Accountant, Merliyana Syamsul Public Accountant, and Public Accountant Office (KAP) of Satrio Bing, Eny & Partners (Deloitte Indonesia). Administrative sanctions were given after the Finance Ministrys Financial Profession Development Center (PPPK) received a complaint report from the OJK. Bank Mandiri plans to prosecute the public accounting firms for doing improper audit. According to Bank Mandiri Corporate Secretary Rohan Hafas, the problem was discovered after Mandiri audited SNPs financial reports. After the Public Accountants Association (IAI) issued the examination results, Bank Mandiri will file a lawsuit against the auditors.

A. Write a chronology of the phenomena from all parties that existed above and explain why the event are occurred, the management system running within the company, the impact of the risk on the company, auditors, and the community in the future after the event occurred.

B. Analysis of the deficiencies in the activities that are being executed within the company and what the leadership must do to prevent uncertain things that would happen in the future. Make judgments and decisions to reduce these uncontrollable factors.

C. Explain the fraudulent actions that occurred using the theory of fraud hexagon. Analyze the internal control based on risk prevention that have been running in the company and improve internal control within the company based on the theory of the fraud hexagon, to be an evaluation of the company's performance in the future.