'Manulife verdict ludicrous, unjustifiable'<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The bankruptcy verdict handed down by the Central Jakarta
\nCommercial Court on Canadian insurance firm PT Asuransi Manulife
\nIndonesia (AJMI) has raised concern among experts, who say the
\nverdict is absurd and unjustifiable from the legal point of view.<\/p>\n
They also say the verdict will not only further damage the
\nalready bad reputation of the country's legal system but will
\nalso jeopardize the government's efforts to lure foreign
\ninvestors into the country.<\/p>\n
\"This is the most absurd decision that I have seen at the
\nCommercial Court.<\/p>\n
\"According to Bankruptcy Law No. 4\/1998, a company can only be
\ndeclared bankrupt if it fails to repay a matured debt. In the
\nAJMI case, the company does not have any debt obligation,\"
\nprominent lawyer Amir Syamsuddin told The Jakarta Post over the
\nweekend.<\/p>\n
The bankruptcy ruling was made after a receiver of the now
\ndefunct PT Dharmala Sakti Sejahtera (DSS), the one-time partner
\nof Manulife in AJMI, filed a bankruptcy petition on May 14 on the
\ngrounds that AJMI had refused to pay Rp 22.4 billion (about
\nUS$2.5 million) in dividends for 1999 to DSS.<\/p>\n
But AJMI said there was no dividend declared for the year as
\nshareholders meeting in February 2000 decided to retain the 1999
\nprofit.<\/p>\n
The court, however, concluded that AJMI should have paid the
\ndividend since it had booked a profit amounting to Rp 183 billion
\nthat year. AJMI has filed an appeal with the Supreme Court.<\/p>\n
Amir added that the panel of judges should rule out the
\npetition since it was clear that the shareholders meeting, as the
\nhighest institution of the company, had decided not to pay
\ndividend. AJMI, therefore, no debt obligation.<\/p>\n
\"I see irregularities in this case. This can further tarnish
\nthe image of our judicial system, especially in the eyes of
\nforeign investors,\" said Amir.<\/p>\n
Amir noted the legal battle could be protracted and would not
\nimmediately end once the Supreme Court decides on the case.
\nShould the Supreme Court uphold the Central Jakarta Court's
\ndecision, AJMI's creditors, including policyholders, who are not
\ninvolved in the legal dispute, could still file a petition with
\nthe Supreme Court for a review of the decision.<\/p>\n
Director of Insurance Affairs at the Ministry of Finance
\nFirdaus Djaelani also regretted that in making their decision,
\nthe panel of judges failed to see the broader impact of the
\ndecision.<\/p>\n
\"By just seeing the case of a matter of debt obligation, the
\njudges seems to underestimate the impact of the case. They should
\nhave considered how it would hurt the faith of hundreds of
\nthousands of policy holders in the company, and the confidence of
\nforeign investors in our country,\" said Firdaus.<\/p>\n
Firdaus explained that unlike cases involving banks and
\nsecurities firms, the commercial court did not need to seek
\nadvice from the government's financial authorities for its
\ndecision on bankruptcy of insurance firms. Under the bankruptcy
\nlaw, the court has to seek advice from the central bank before
\ndeciding on the bankruptcy of a bank and consult with the Capital
\nMarket Supervisory Agency or Bapepam before ruling on the fate of
\na security firm.<\/p>\n
Chairman of the Indonesian Insurance Council, Hotbonar Sinaga,
\ndismissed the verdict as ludicrous.<\/p>\n
\"The decision is unacceptable given that just because of Rp
\n22.4 billion, which is a small sum of money, the judge declared a
\nbig company bankrupt. It is just insane,\" said Hotbonar.<\/p>\n
Hotbonar pointed out that the current Insurance Law was weak
\nin protecting insurance firms and thus should be amended.<\/p>\n
\"Actually the proposed amendment to the Insurance Law, which
\nis still being discussed at the House of Representatives, will
\nprotect insurance companies. One of the clauses of the proposed
\namendment states there must an approval from the Ministry of
\nFinance before a company can be brought to court,\" he said.<\/p>\n
The amendment was submitted by the government two years ago.
\nHowever, the House apparently has not given much attention to it,
\nconsidering it not urgent, Hotbonar said.<\/p>",
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"sponsor_url": "https:\/\/okusiassociates.com"
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