IFC ends legal dispute with POF<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
The World Bank's commercial financing arm, the International
\nFinance Corporation (IFC), said it had reached a deal with
\nwayward debtor PT Panca Overseas Finance (POF), ending a legal
\ndispute that had turned into an indictment of Indonesia's
\nunpredictable legal system.<\/p>\n
The IFC said POF's majority shareholder had agreed to repay
\nthe US$13 million it owed IFC in a decision that marked an
\nunexpected end to three years of legal battles between the two.<\/p>\n
\"The settlement puts to an end a dispute that had attracted
\nthe keen attention of both domestic and overseas creditors of
\nIndonesian companies,\" the foreign institution said in a
\nstatement received on Wednesday.<\/p>\n
The IFC filed a bankruptcy petition against POF in 2000, after
\ntwo years of trying to recoup some $13 million in debts from POF.<\/p>\n
A court ruling last year turned down the petition on the
\ngrounds that other POF creditors had voted against it, but the
\nIFC alleged that some of these creditors were fictitious, which
\nallowed the voting to swing in favor of POF.<\/p>\n
POF, which claimed it owed creditors $40 million, won the vote
\nto repay its debt over a three-year period. The IFC's appeal to
\nthe Supreme Court ended in vain.<\/p>\n
The IFC did not say whether its recent deal with POF was part
\nof a court-approved debt restructuring scheme.<\/p>\n
Its resident manager here Amitava Banerjee told Reuters he did
\nnot know why POF's shareholders had agreed to repay the debt.<\/p>\n
The case turned high profile when the World Bank took issue on
\nIFC's plight, and as another foreign investor got into trouble
\nover a similar legal dispute.<\/p>\n
Canada-based insurance firm Manufacturer's Life Insurance
\n(Manulife) entered became embroiled in a court battle with the
\nowners of the now defunct PT Dharmala Sakti, its former partner
\nin insurance firm PT Asuransi Jiwa Manulife Indonesia.<\/p>\n
Manulife charged the former owners with blocking the sale of
\nDharmala's shares to Manulife, using paper companies to suddenly
\nproduce backdated deals and to claim the shares were already
\nsold.<\/p>\n
Separate investigations by the IFC and Manulife led to
\nsuspicions of there being one mastermind, as a number of the same
\nnames appear in both cases.<\/p>\n
The IFC and Manulife cases underscored the weak protection
\nlocal bankruptcy courts afforded creditors against errant
\ndebtors.<\/p>\n
As a result, foreign lenders stepped up pressure against the
\ngovernment to shake up the country's corruption prone courts.<\/p>\n
\"Increased protection for investors through the courts or
\notherwise will act as an important catalyst of the further
\nrecovery of the Indonesian economy,\" Banerjee said.<\/p>\n
The latest deal with POF could pave the way for IFC to resume
\nits lending program to Indonesia, which had been suspended
\nfollowing its dispute with POF.<\/p>\n
The institution has an exposure of some $720 million in
\nIndonesia, its seventh largest country portfolio.<\/p>\n
The IFC's investment activities are aimed at promoting
\ninvestment in developing countries, but the ongoing suspension
\nhere could have the effect of deterring purely commercial foreign
\ninvestors from entering Indonesia.<\/p>\n
The IFC also said it would drop legal action against POF over
\nthe irregularities it believed had occurred during its earlier
\ncourt battle.<\/p>\n
POF explained to the IFC that \"these irregularities have been
\nthe unintended result of an overambitious pursuit by management
\nof POF of its commercial objectives when IFC filed for
\nbankruptcy, and have also been the direct results of important
\nerrors in judgment.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ifc-ends-legal-dispute-with-pof-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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