The dispute between Canada and Indonesia over the decision of a local court to declare the Indonesian subsidiary of Canada’s Manulife bankrupt, entered a new round when the receiver published a full page ad in a Jakarta newspaper stating that the company must cease doing business, and that the central bank should seize its assets.
The Manulife subsidiary has been involved in a lengthy dispute with powerful Indonesian business interests. It accused them of using the courts to try and extort money from the company, after it won a judgment in Singapore freezing $36 million in assets of PT Dharmala Sakti Sejahtera, one of its local business partners.
The bankruptcy ruling was based on Manulife’s failure to pay the same company a dividend in 1999, as had apparently been specified in their partnership agreement. Manulife actually bought back Dharmala’s 40 percent minority interest, but the sale is being contested by an offshore company located in the British Virgin Islands, which Manulife claims is a front for Dharmala.
Canadian authorities have threatened retaliation if the case against Indonesia’s fourth largest life insurer, isn’t resolved in its favor. By recognized accounting standards it isn’t bankrupt, having earned a net profit of nearly $9 million last year. It has also urged to Indonesian government to consider its responsibility to protect the approximately 400,000 policy holders.
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