Hutama Karya refuses to pay promissory note

JAKARTA (JP): State-owned construction firm PT Hutama Karya said last week it was not liable to pay a promissory note issued by its former management.

"The promissory note was issued by the former directors of Hutama Karya without consent from the commissioners or approval from the shareholders, thus it is not valid," the company's lawyer said after a hearing at the Jakarta Commercial Court on Friday.

Ricardo Simanjuntak of Gani Djemat & Partners law firm said Hutama Karya's statute stipulated that any nonoperational borrowing must receive prior approval from both the commissioners and the shareholders.

"The proceeds from the promissory note were never accepted by the company. The former management illegally issued the promissory note and misused the funds," Ricardo said.

Toronto-based Canadian Imperial Bank of Commerce (CIBC) filed a suit against Hutama Karya at the commercial court earlier this month over the company's failure to pay a US$1 million promissory note which was due in May last year.

The promissory note was bought by CIBC from the secondary market.

CIBC lawyer Rahmat Bastian of Dermawan & Co law firm said graft was Hutama Karya's internal problem and did not annul its obligation to pay the matured promissory note.

"The third party showed good faith in Hutama Karya by buying the promissory note on the secondary market. As such, the buyer's interests should be protected," he said.

Hutama Karya was sued by PT Jaya Readymix and PT Primacoat Lestari at the Jakarta Commercial Court earlier this year for a similar offense. The two companies accused Hutama Karya of failing to pay them Rp 2.3 billion (about $333,000) in construction fees.

The court ruled in favor of the plaintiffs, but the Supreme Court -- in an April 6 civil review decision -- annulled the decision on the grounds that the plaintiffs could not prove Hutama Karya had at least two creditors.

The 1998 Bankruptcy Law stipulates a plaintiff is required to prove a defendant in a bankruptcy suit has at least two creditors.

Hutama Karya is one of the state construction firms under the supervision of the Ministry of Public Works.(udi)