Dharmala sues IFC and Manulife for US$520m

Dharmala sues IFC and Manulife for US$520m

Bloomberg, Jakarta

International Finance Corp. and Manulife Financial Corp. are being sued for US$520 million by Indonesia's Dharmala group over claims they caused one of its units to fail, a move that may delay repayment to its creditors.

Dharmala claims the World Bank's investments arm and the Canadian insurer caused a cash crunch at its financial services unit, PT Dharmala Sakti Sejahtera, contributing to its June 2000 bankruptcy. IFC, Manulife and Dharmala Sakti were partners in insurance company PT Asuransi Jiwa Manulife (AJM).

"The lawsuit has no basis," said Chris Bendl, managing director of Manulife's Indonesian unit. "It's all just to block the disbursement of the creditors' fund."

Dharmala, a diversified company with interests from financial services to property, accused IFC and Manulife of withholding a Rp 195 billion dividend payment, 40 percent of which should have been distributed to Dharmala Sakti to help the company repay debt, said O.C. Kaligis, the group's lawyer.

"The bankruptcy damaged Dharmala's reputation and caused a loss of potential income from the group's otherwise still viable companies," Kaligis said.

The claim for Rp 5.2 trillion was filed in the Central Jakarta Court.

The latest suit comes a month after the Indonesian attorney- general rejected another claim against Manulife over who owns AJM. The Canadian insurer paid Rp 170 billion for Dharmala's 40 percent stake in the venture on Oct. 26, 2000.

Roman Gold Assets Ltd., a British Virgin Islands-registered company, claimed it bought the AJM shares from another company before Manulife. That claim foundered on evidence it was based on forged documents.