More evidence of fraud found in Manulife case

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) says there is growing evidence that the owner of the now defunct PT Dharmala Sakti Sejahtera (DSS), Suyanto Gondokusumo, violated capital market law with the controversial transfer of 40 percent shares in joint venture insurance firm PT Asuransi Jiwa Manulife Indonesia (AJMI) to a Hong Kong-based company.

Bapepam pointed out in a press release issued late last week that the DSS board of directors and commissioners, and other related parties, had never been informed of the transfer.

The transfer last year also had violated the venture agreement between DSS and AJMI, the agency said.

It added that the transaction was considered material, but had neither been brought to Bapepam's notice nor published in DSS financial reports.

Bapepam said it would gather more evidence and liaise with the police and the Attorney General's Office over the suspected fraud.

The so-called Manulife case has attracted international attention that threatens to damage the government's reputation and further erode investor confidence in the ailing economy.

It started when DSS sold its 40 percent stake in AJMI to Canadian insurance company Manufacturer's Life Insurance (Manulife) last year, after DSS was declared bankrupt by a Jakarta commercial court. AJMI is a joint venture between DSS and Manulife.

The proceeds were supposed to repay DSS debt to 19 international and local creditors, including the International Finance Corporation (IFC) and the Indonesian Bank Restructuring Agency (IBRA).

But the sale was disputed by British Virgin Islands-based Roman Gold Assets, which claimed to be the rightful owner of Dharmala's 40 percent stake in AJMI.

Roman said it purchased the shares from Hong Kong-based Harvest Hero International Ltd., which sold the shares based on the power of attorney it was given in a letter signed by Suyanto.

Manulife claimed Harvest was a paper company established to allow fictitious transactions to take place.

Meanwhile, Bapepam said it had imposed a Rp 141 million (US$14,000) penalty on the publicly listed PT Panca Overseas Finance for a delay in reporting a bankruptcy petition made by IFC, its creditor.

Bapepam added that it would continue investigating whether Panca had violated the capital market law.

The Panca case created controversy when the Jakarta Commercial Court rejected the bankruptcy petition made by IFC, the investment arm of the World Bank. The court instead ratified a debt restructuring program proposed by Panca.

The court made the decision after a majority of Panca's creditors backed the restructuring plan.

But IFC appealed the ruling on grounds that many of the creditors were bogus companies.

Panca owes around US$13 million to IFC out of the company's total debt of $235 million. IFC filed the bankruptcy petition in September last year after negotiations failed.

Visiting IFC executive vice president Peter Woicke said last month that the investment bank was disappointed with developments in the Manulife and Panca cases.

Coordinating Minister for the Economy Rizal Ramli has also appealed to the Supreme Court to be "wise" in resolving the cases in a bid to help revive investor confidence in the economy. (rei)