Manulife dispute may affect RI's ties with Canada, others
Manulife dispute may affect RI's ties with Canada, others
The Jakarta Post, Jakarta
As Indonesian and Canadian top officials trade barbed comments in
the mass media over the Manulife dispute, fears are now growing
that the case could cost Indonesia more than just its relations
with Canada.
On Friday, Vice President Hamzah Haz said Canada should not
"overreact" to the Manulife bankruptcy case, urging the latter to
respect the judicial process here.
"I think Canada should not overreact. We, you know, have a
legal process which is in effect. And Canada must not try to
threaten us," Hamzah told reporters.
He was reacting to a newspaper report that quoted Canada's
Foreign Minister Bill Graham as saying his country would look at
all options, including sanctions, after Indonesia's Minister of
Finance Boediono said his government would not intervene in the
Manulife dispute.
"We will be looking at just what international steps are
available to us, particularly in terms of international financial
instruments," Graham was quoted as saying by Canada's National
Post daily.
Visiting Canadian Secretary of State for Asia Pacific David
Kilgour declined on Friday to confirm the sanctions threat, but
said that his government was not overreacting.
Kilgour is here on a four-day visit until Monday. The visit,
planned before the Manulife bankruptcy ruling erupted, was
originally aimed at celebrating 50 years of Indonesia-Canada
diplomatic relations.
The Canadian government has asked the Indonesian government to
get involved in resolving the case. But both Hamzah and Boediono
said that the government would not intervene, but allow the legal
process to take its course.
Canada is a member of Indonesia's major donor consortium, the
Consultative Group on Indonesia (CGI), which, in November last
year, pledged some US$3.14 billion in loans to help finance the
2002 state budget. Canada is also a member of the Paris Club of
creditors, which earlier agreed to reschedule Indonesia's $5.4
billion in sovereign debts maturing this year and next.
The commercial court declared last week the local insurance
unit of Canada's Manulife Financial Corp., PT Asuransi Jiwa
Manulife Indonesia (AJMI), bankrupt after a receiver of the now-
defunct PT Dharmala Sakti Sejahtera (DSS) filed a bankruptcy
petition over failure to pay dividend in 1999. AJMI has insisted
that no dividend was authorized by shareholders during that
period.
The bankruptcy ruling, which was reached in a two-to-one vote
of three judges, has become controversial because AJMI was a
solvent company, and there have been reports that the founder of
DSS, the former partner of Manulife via AJMI, has been accused of
trying to defraud Manulife, as the latter had bought DSS's 40
percent stake in AJMI in 2000 at a government auction.
Manulife has appealed to the Supreme Court.
The Canadian government and the International Finance Corp.,
the investment arm of the World Bank, have warned the Indonesian
government that the Manulife fiasco could discourage badly needed
foreign investment from returning to the country as the issue
only served to strengthen the perception of legal uncertainty
here.
The World Bank is the coordinator of CGI.
Economist Raden Pardede expected the Supreme Court to be able
to deliver a "sensible verdict," because otherwise the state
budget would be seriously affected and foreign investors would
truly stay away from the country.
"Should the CGI and other multinational donors halt their
loans, we will face budget problems," he told The Jakarta Post.
Separately, businessman Sofyan Wanandi urged the Supreme Court
to immediately deliver its decision so as to avoid any further
drop in foreign investor confidence in the country.
Meanwhile, Supreme Court Chief Justice Bagir Manan, quoted by
detik.com online news service, said he had ordered prosecutors to
investigate allegations that the judges might have been bribed in
their two-to-one bankruptcy ruling.