CORPORATE GOVERNANCE PROBLEM: JIWASRAYA CASE

Group 8
Kartika Dewi 1610532048
Adilla Ikhsani 1610533041
Widya Lestari 1610533037
 Case Description

PT Asuransi Jiwasraya (Persero) is facing a serious problem. The

company failed to pay the JS Saving Plan policy owned by the customer
up to trillions of rupiah and the liabilities of the company were
increasingly swollen. PT Asuransi Jiwasraya is suspected of fraud and
Pengamat Badan Usaha Milik Negara (BUMN) assesses the problems
that occur at PT Asuransi Jiwasraya (Persero) due to poor
implementation of good corporate governance (GCG) make company a
collapse and failure of strategies and fraudulent practices that take place
at the top management undetected for a long time due to the lack of
independent supervision by corporate boards.
 Problem Identification
Jiwasraya is bad in applying the principles of Good Corporate Governance (GCG) to the
implementation practices in the company. The principles of good corporate governance
(GCG) include principles of transparency, accountability, responsibility, independence and
fairness.
 Background
• Good Corporate Governance(GCG) is a company's internal control system that has the objective of company performance and
gives added value to all parties related to the company. The implementation of GCG is felt to be able to provide progress towards
the performance of a company, especially in improving the quality of financial statements and reducing the actions of managers in
manipulating financial statements.
• Not yet implemented a good GCG mechanism in the company, this can be the cause of the company or management to provide
information that has a positive impact on stock prices and can encourage companies to tend to manipulate accounting by
presenting certain information to avoid falling stock prices (Susiana and Herawaty, 2007). But this causes the public as users of
accounting data or financial reports to feel disadvantaged, because they do not provide information in the truth.
• By bringing forth some general principles in Corporate Governance such as fairness, transparency, accountability, and
indenpedancy, it can be concluded that the application of GCG is believed to help companies and the country's economy that are
being hit by a crisis rise towards a healthier way to be managed dynamically and professionally.

Transparency Accountability Responsibility Fairness

1. Transparentcy

a) The occurrence of corruption in PT Jiwasraya's company has Case Analysis

been known to many public. Many assumptions are not
transparent so that it can indicate detrimental to the country's
finances of up to 13.7 trillion rupiah.
b) Jiwasraya Insurance did not disclose information in a timely
manner as it was proven that the company had not published the
2018 financial statements until now. The information presented
is also inaccurate because BPK Chairperson Agung Firman
Sampurna revealed that in 2017 Jiwasraya recorded a profit of
Rp2.4 trillion. However, the financial statements received an
adverse opinion because there were fraudulent reserves
amounting to IDR7.7 trillion. Because the audit results of the
Public Accounting Firm (KAP) PricewaterhouseCoopers (PwC)
for the 2017 financial statements corrected the interim financial
statements from a profit of Rp2.4 trillion to only Rp428 billion.
2.Accountability

a)Jiwasraya Insurance is still poor in clear job descriptions, Case Analysis

according to their respective functions and positions. Based on
limited company law that the financial statements prepared are
the responsibility and authority of the directors and supervision
of the commissioner then ratified in the Rapat Umum Pemegang
saham (RUPS). But directors and commissioners did not do their
responsibilities properly, the manipulated financial statements
were validated and late in the issuance of financial statements.
b)The Board of Commissioners and the board of directors do not
carry out their duties with full responsibility and neglect in
carrying out their work. imprudent directors' decisions in making
insurance products and weak protocol standards in investing
customer funds. The company offers high fixed returns to
customers and Jiwasraya invests in long-term equity instruments
and mutual funds. the principles of professionalism, efficiency,
responsibility and fairness are not fully implemented.
3.Responsibility

a)Jiwasraya Insurance does not consider social responsibility in Case Analysis

every company program and procedure, it is proven that PT
Jiwasraya is unable to pay a premium of 12.4 trillion rupiah.

b)The Head of the Investment Coordinating Board (BKPM) Bahlil

Lahadalia stated that the Jiwasraya committed criminal acts
related to the fundraising which was carried out by certain
elements.
4.Fairness

a)Any information is not disclosed and published appropriately to Case Analysis

stakeholders, due to manipulation and delays in the publication
of financial statements so that stakeholders do not know the
condition of the company clearly.
Solution and Recommendation
In implementing Good Corporate Governance at PT. Jiwasraya,
there are several obstacles, therefore Jiwasraya should provide all
information regarding the company, which can be accessed quickly
by the public, one of which relates to customer data that is
confidential, or other important data such as Annual report. Next
obstacle is that not all decisions of the board of commissioners or
board of directors are fair and equal because not all decisions can
accommodate the interests of all sections or individuals in PT.
Jiwasraya.
Jiwasraya Company must pay more attention to the implementation
of good governance, and implement the principles of good corporate
governance and the principle of investment prudence.