Gunung Agung sues Jagata for $612m

Gunung Agung sues Jagata for $612m

JAKARTA (JP): The Gunung Agung group is suing PT Jagata
Primabumi for US$612 million over a dispute over a purchase
agreement for debt-ridden Bank Arta Prima.

Gunung Agung's president, Lego Nirwhono, announced yesterday
that the company had filed a lawsuit at the South Jakarta
District Court last week.

Gunung Agung is also demanding the court return Bank Arta
Prima to it because Jagata breached their contract of sale.

"The Gunung Agung group, as the original owner of Bank Arta
Prima, has suffered material and other losses. It has lost not
only the bank but also its reputation in the business community,"
Lego said.

The Gunung Agung group, founded by the late H. Masagung in
1953, was taken over by PT Kosgoro and PT Trimuda in 1994 when it
ran into financial trouble which later forced it to sell Bank
Arta Prima.

Gunung Agung said Jagata Primabumi bought Bank Arta Prima from
it in July 1995 under the condition that Jagata took over Gunung
Agung's debts to Bank Arta Prima amounting to Rp 187 billion
(US$76.4 million at current rate) and to other financial
institutions amounting to Rp 174 billion.

Afterward Jagata asked Gunung Agung to issue promissory notes
worth Rp 174 billion to pay off Gunung Agung's debts to various
financial institutions and another series of promissory notes
worth Rp 150 billion, all underwritten by Bank Arta Prima.

Gunung Agung's lawyer Denny Kailimang said it agreed to issue
the promissory notes because Jagata promised to settle them all.
But Jagata failed to settle them, sparking the promissory notes
scandal.

Jagata Primabumi was formed -- by Kim Johanes, Jeffie Geovanie
and Hedijanto, an executive of the Dharmais foundation who was
acting in his personal capacity -- to acquire Bank Arta Prima.

Denny said Gunung Agung had no legal ties with Bank Arta Prima
since the transfer of ownership to Jagata on July 27, 1995. He
said that for this reason, all matters related to the promissory
notes should be the sole responsibility of Jagata.

Kim Johanes and five Gunung Agung executives, including former
chairman and shareholder of Gunung Agung, Oka Masagung and former
directors and commissioners of Bank Arta Prima were arrested
recently in connection with the non-settling of the promissory
notes.

As the scam came to light, Jagata relinquished its ownership
of Bank Arta Prima and transferred it to Bank Indonesia, the
central bank, which then assigned the Artha Graha group to take
over the ailing bank.

Lego said he did not accept the central bank's move because
Jagata had failed to settle Gunung Agung's debts of Rp 361
billion, which served as the transaction value for the
acquisition of the bank by Jagata in July, 1995.

"If Jagata Primabumi failed to meet all the requirements set
by Bank Indonesia, it is not Gunung Agung's responsibility
because the acquisition of Bank Arta Prima by Jagata was
conducted legally under the supervision of Bank Indonesia," Lego
said.

He said Bank Indonesia should have returned Bank Arta Prima to
Gunung Agung. He promised that Gunung Agung, with the help of a
new investor, would inject fresh funds to Bank Arta Prima to make
it sound. (rid)

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