The SEC and DOJ are both circling PT Telekomunikasi Indonesia, the Indonesian state-owned telecom with U.S.-traded ADRs, after the company disclosed 140 transactions that lacked economic substance in a recent SEC filing.
The probe started narrower. In October 2023, the SEC issued document requests tied to Telkom Infra’s work with BAKTI Kominfo, the Ministry of Communication and Informatics agency overseeing Indonesia’s 4G base transceiver station rollout. The inquiry didn’t stay contained for long: the SEC has since expanded into revenue recognition, financial reporting practices, internal controls over financial reporting, and public disclosures tied to Indonesian legal proceedings involving the group, its subsidiaries and affiliates, and certain clients and suppliers.
The DOJ joined in May 2024, focused on FCPA compliance. Telkom retained outside counsel and a forensic accounting firm. The company’s internal investigation is now “substantially complete.” The government’s isn’t.
The 140 flagged transactions concentrate in Telkom’s enterprise segment, clustered primarily between 2016 and 2019, and resulted in an overstatement of financial results. Telkom has also self-reported to Indonesian law enforcement on potential anti-corruption violations, alleged fraud, embezzlement, and trade receivables problems, some of which overlap with what the SEC and DOJ are already investigating.
The company says it’s cooperating with U.S. authorities and has tightened internal controls and its compliance function. What it hasn’t said: when either agency expects to conclude, or what any resolution might cost.
— Marcus Webb