| |
India ruffled over Indonesia's heavy
hand
NEW DELHI - A US$1.3 million
commercial dispute involving an Indian company and an
Indonesian bank linked to the military on Wednesday
showed all indications of escalating into a
fully-fledged political diplomatic row between the
countries.
Indian Information Technology
Minister Pramod Mahajan said that all-out efforts were
being made to secure the release of Arun Jain from
Indonesia. Jain, the chairman and chief executive of
India's Polaris Software Lab Ltd, was detained last
Friday on complaints of fraud by a client, Indonesia's
Bank Artha Graha, reportedly a front organization for
the army.
Mahajan said on Wednesday that Prime
Minister Atal Bihari Vajpayee would speak to Indonesian
President Megawati Sukarnoputri if Jain was not released
shortly. "To the best of our knowledge, they [Jain and
his vice president Rajiv Malhotra] have not done
anything which deserves this kind of treatment."
The charge-d'affaires at the Indian embassy in
Jakarta, Amar Sinha, is due to meet the Indonesian
Foreign Minister, Noor Hasan Werajuda, soon, while
Indian External Affairs Minister Yashwant Sinha is also
expected to speak to Werajuda to protest the arrest.
Earlier, Sinha said that since Polaris was willing to
refund US$660,000 to Bank Artha Graha, besides paying
damages, there was no need to detain the two men.
Polaris' acting chief executive office, Govind
Singhal, said in the Chennai headquarters of the company
that it had hired an international law firm, Lucas
Partners, to handle the case in Indonesia. "It's
disturbing that our chairman and a senior executive have
been subjected to humiliating treatment for a commercial
dispute," Singhal said. "The lawyers are unable to speak
with Arun Jain in detail. The police authorities aren’t
allowing a full fledged meeting," a company official
added.
According to company officials, Jain was
finding it "extremely" difficult in the national police
headquarters jail. "He is a staunch vegetarian. Food is
a major problem for him at this point of time. Second
comes the language problem."
Under Indonesian
law, police can detain Jain and Malhotra for up to 20
days while deciding whether or not to prosecute the
case.
According to Polaris, the company entered
into an agreement with Bank Artha Graha in June and
August of this year covering central processing,
disaster recovery and branch server-related work,
reportedly worth $1.3 million. The company says that in
late November the bank terminated the contract, which
was supposed to be completed by July, 2003. Polaris
replied that the grounds of termination were incorrect
and offered to resolve the issue through discussion.
Jain and Malhotra were detained when they went to the
bank's office to investigate the termination of a
contract. Bank Artha Graha is demanding $10 million in
compensation from Polaris for failure to fulfill the
contract. According to Polaris, there is a provision in
the agreement for arbitration in Singapore to settle any
dispute.
Polaris, a financial services software
firm, started as a subcontractor developing software for
Citigroup's Indian operations, which is still one of its
largest clients. Citigroup holds just over 47 percent of
Polaris following the merger of its 100 percent
subsidiary Indian software unit, Orbitech Solutions,
with Polaris.
Polaris Software provides
customized information technology solutions to
multinational clients across 20 countries. It has
recorded growth of over 100 percent consecutively for
the past six years. The company took to the primary
market in August 1999 and received a strong response
from both retail and institutional investors.
The arrests are likely to further undermine
Indonesia's efforts to make itself an attractive place
for foreign businesses. The country's corrupt legal
system remains a major deterrent to overseas investment,
which fell 39 percent on year in the first nine months
to $3.5 billion. The International Monetary Fund last
week urged Indonesia to make judicial reform a priority.
"The move shocked and dismayed us. I don't know
any other country that arrests business leaders on the
grounds of commercial disagreements," said Kiran Karnik,
president of India's National Association of Software
Companies, or NASSCOM, the apex industry group.
"Obviously, it will have implications for the industry -
there are going to be increased concerns about doing
business in Indonesia," he said. According to NASSCOM,
the Indian software business in Indonesia is worth about
Rp 200 million (US$4.2 million) a year.
Diplomatic pressure has worked in the past to
force Indonesia to reverse controversial decisions.
Earlier this year, a court ruled the Indonesian unit of
Canadian life insurer Manulife Financial Corp bankrupt
even though it had made profits. The ruling came after a
dispute between Manulife and its former joint-venture
partner. After protests from the Canadian government,
including threats to withdraw support for Indonesia's
international aid program, the Supreme Court overruled
the bankruptcy decision.
(Asia Times/Asia
Pulse)
|
| |
|
|
 |
|
