More evidence of fraud found in Manulife case

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)