PT GREAT RIVER INTERNATIONAL TBK (GRIV): THE GREAT INDONESIAN CORPORATE COLLAPSE?

This case provided students an open forum to discuss and analyze the factors and reasons why senior management at a major corporation and a public accountant firm gave false or manipulated financial statements. The case gave an interesting human interest aspect to be considered and values, belief and integrity that leaders and public auditors must have.

The real story asked and provoked students to investigate and questions what were the motives and attitudes that professionals and leaders had around this publicly listed company. The case could be used as a debate forum to find out what are the factors and reasons that lead to the collapse of this corporation or more specifically was there an accounting and/or financial “fraud” involved in the case? What were the causes of this major catastrophic corporate collapse? The failures usually arise from the cumulative effects of many small failures, any of one of which, if detected in time, could have been prevented. Were the many small failures of this corporation being ignored or swept under the “blankets”? Is it correct to judge that in this case, there was a failure of leadership, culture, internal controls, internal audits, and corporate governance?  Was the board of directors lying? What types of controls or safeguards that a public listed company or a regulator like Indonesian Capital Market Supervisory Agency (Bapepam: Badan Pengawas Pasar Modal) must have to prevent similar case(s) to happen again?

In our class discussion, many say that the fraud was due solely to bad individuals who have decided to cheat the public and the top management was so brave to issue bonds (to raise public fund) in hind sight of the performance of the corporation. Another proposition could be that the culprit was the economic crisis that happened to this country. Or was it “mis-managed” or it was all about the “greed” or “conspicuous” character of the leaders/professionals.

While many of us think that senior executives always act ethically, legally, and honorably, and market economies must be able to function even when personal greed and ambition motivate executive to step across legal and ethical lines. Greed and ambition are not new phenomena in this country. Is it being too idealist to believe that all senior executives will act to a sainthood or godliness standard? Public corporations and regulators need control mechanisms /laws/regulations that ideally dissuade executives from acting down to their animal instincts, and can also detect as well as prevent rapidly when actual illegal behavior/activities were initiated. If there is no economic crisis in Indonesia, may GRIV still have existed and grown well? If proper and strict organizational and government control systems were in place and also their vital roles and functions were installed, could this not happen?