Wed, 15 Nov 2000

Police insist on pursuing Manulife investigation

JAKARTA (JP): Despite the concern of foreign investors, the police said on Tuesday they would go ahead with their investigation of an alleged sales scam involving Canadian-based insurance firm Manufacturers Life Insurance Co. (Manulife).

National Police spokesman Brig. Gen. Saleh Saaf said Manulife's case was a criminal, not a civil matter. "So what has been said in the media, in particular the foreign media, which have questioned the police's right to detain people in a civil case, is not true."

The police detained on Oct. 31 the vice president of PT Asuransi Jiwa Manulife Indonesia, Adhie Poernomo Widjaya.

Adhie is suspected of having facilitated the sale of a 40 percent stake in Manulife Indonesia using duplicated shares.

Manulife Co. paid Rp 170 billion (US$16.4 million at the current exchange rate) to raise its stake in its subsidiary Manulife Indonesia to 91 percent from 51 percent.

The shares were previously held by PT Dharmala Sakti Sejahtera, which the Jakarta Commercial Court declared bankrupt in June.

The court held a tender to auction Dharmala's stake in Manulife Indonesia, in which Manulife Co. was the sole bidder.

However, the tender was disputed by PT Roman Gold Assets Ltd., which claimed it had bought the 40 percent stake from Dharmala in an earlier agreement.

According to Roman, it bought the shares from a West Samoan firm, which sold them on behalf of Dharmala.

The tender took place on Oct. 26, but Roman said it had purchased the shares on Oct. 19.

The company claimed it owned the original shares, accusing Adhie of duplicating Dharmala's shares in Manulife Indonesia.

Roman reported its suspicions to the police, who detained Adhie and named five additional suspects.

These five are Ari Ahmad Effendi, who acted as the trustee in the sale of Dharmala's assets; Mitchell David New, who was the buyer; Kusmartono, who conducted the tender; Victor Apps, the president of Manulife Indonesia; and Syamsuddin M. Sinaga, the judge in Dharmala's bankruptcy case.

The case has drawn international criticism, in particular from Canada.

Dow Jones news agency reported on Monday that the Canadian finance minister had sent a letter to his Indonesian counterpart, Prijadi Praptosuhardjo.

The agency reported the Canadian Embassy in Jakarta had emphasized to Indonesian ministers that Manulife's treatment could damage Indonesia's reputation among foreign investors.

According to a source close to the tender process, Dharmala's former creditors who filed the bankruptcy petition against the firm were also concerned by the case.

Dharmala was declared bankrupt over its inability to pay some Rp 4 trillion to various creditors, including the Indonesian Bank Restructuring Agency (IBRA), the source said.

IBRA, he said, owned some 40 percent of Dharmala's debts.

He said creditors were convinced the tender to sell off Dharmala's stake was legal and they doubted Roman's claim. (bkm/jaw)