Manulife denies wrongdoing in purchase of shares

JAKARTA (JP): Insurance company PT Asuransi Jiwa Manulife Indonesia denied on Wednesday any wrong doings in an alleged sales scam involving the now bankrupt PT Dharmala Sakti Sejahtera.

President of Manulife Indonesia Philip Hamden Smith said that the purchase of a 40 percent stake in his company by its Canadian-based parent company, Manufacturers Life Insurance Co. (Manulife Co.) was legal.

"Roman Gold Assets Limited is not and has never owned any shares in PT Asuransi Jiwa Manulife Indonesia and has no valid claim to those shares," Philip said in a press meeting.

He was referring to the Virgin Island-based firm Roman Gold Assets Limited, which claimed itself as the rightful owner of the 40 percent share in Manulife Indonesia.

Manulife Co. recently bought a 40 percent share of subsidiary Manulife Indonesia for Rp 17 billion (about US$16.4 million). The purchase raises the Canadian company's ownership to 91 percent from 51 percent.

The shares were previously owned by Dharmala, which the Jakarta Commercial Court declared bankrupt in June.

The court then held a tender on Oct. 26. to auction off Dharmala's stake in Manulife Indonesia. The proceeds to pay Dharmala's financial obligations to its creditors.

But Roman moved to stop the tender, claiming it had already purchased Dharmala's stake in Manulife Indonesia on Oct. 19.

As Roman's appeal was ignored, the firm filed its complaints to the police, prompting the detention of Manulife Indonesia's vice president Adhie Poernomo.

Adhie is held in custody on suspicion that he had duplicated the Dharmala shares in Manulife Indonesia.

Smith in return questioned the validity of Roman's transaction to acquire the 40 percent stake in Manulife Indonesia.

"It's not easy to buy a 40 percent stake in an insurance firm, especially if you're from the Virgin Island," he said, adding that the Virgin Island is known to be a tax heaven for many firms.

He said that because Roman was a foreign company, the purchase of a share in a local company, should have required a special consent from the Ministry of Finance.

No such consent was ever sought or granted, he continued.

Furthermore, he said that since Dharmala was declared bankrupt in June, Roman could not have made the purchase in October, as Dharmala's assets, including the 40 percent share, fell under the supervision of the court.

"Under the bankruptcy Law, once a company is declared bankrupt, only the curator in bankruptcy can sell its assets. No one else has the right to manage or sell the assets of a bankrupt company," he explained.

Smith also questioned the Power of Attorney under which Roman bought the shares in Manulife Indonesia.

In 1996, he said, Dharmala allegedly granted a Power of Attorney to a West Samoan company, Highmead Limited, to sell its share in Manulife Indonesia.

Through the Power of Attorney, Roman argued that it had bought the shares from Highmead Limited on Oct. 19, just two days after the court announced the tender for shares.

"Article 1813 of the Indonesian Civil Code states that in the event of the bankruptcy of a grantor, a Power of Attorney previously granted by the grantor will cease to be effective," he explained.

Again, he said, only the curator was entitled to sell the shares.

The case and the detention of Manulife's senior executive drew criticism from the Canadian Finance Minister, who has sent a letter to his Indonesian counterpart Prijadi Praptosuhardjo.

The Canadian government through its embassy in Indonesia warned that the case was hurting the country's investment climate.

Despite the international attention it received, the police said it would continue its investigation against Manulife.

It is now investigating the authenticity of the shares held by Roman and Manulife Co.

One of Dharmala's former creditors said that because of the case, they were unable to cash in the proceeds from the auction of Dharmala's stake in Manulife Indonesia.

The creditor, who requested not to be named, said that the police had frozen the account containing the Rp 156 billion.

He said that one of the creditors was the Indonesian Bank Restructuring Agency (IBRA), which should have received Rp 54 billion from the auction.

"Creditors want the police to unfreeze the account," he said.

According to him Dharmala had debts of Rp 4 trillion, but was brought to bankruptcy by various creditors representing Rp 2.4 trillion.

In a separate case, Manulife Indonesia was brought to bankruptcy for the third time after it allegedly failed to pay an individual claim for $500,000.

Manulife Indonesia said that the bankruptcy petition was groundless, as the court had already rejected it twice.(bkm)