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Yes, do the Indonesian way. Few years ago when Artha Graha Bank got into dispute with software supplier, they arrested their CEO.
CEO of India's Polaris Software Is Arrested by Indonesian Police
By TOM WRIGHT Dow Jones Newswires
Updated Dec. 18, 2002 12:01 a.m. ET
JAKARTA, Indonesia -- The chief executive officer of India-based Polaris Software Laboratories Ltd. and a colleague have been jailed in Indonesia on fraud charges.
Indonesian police detained Arun Jain, the CEO; Rajiv Malhotra, a company vice president; and two other Polaris employees Saturday after a dispute broke out with Indonesia's PT Bank Artha Graha over a $1.3 million software-development contract, said Zainuri Lubis, a police spokesman.
"The charges were filed by Bank Artha Graha," Mr. Lubis said.
Police have since released the two junior employees and have charged the two senior Polaris managers with fraud involving the dispute with Bank Artha Graha, which is owned by an Indonesian army foundation, Mr. Lubis said. They face maximum prison terms of five years each if found guilty, he said.
In a statement to the Bombay Stock Exchange, Polaris said it sent its senior management to Indonesia last week to resolve some technical problems involving the implementation of a new software system at the bank. Angry over problems with the system, Bank Artha Graha terminated the contract on Nov. 27 after two prior warnings and demanded immediate repayment of $660,000 it had paid to Polaris as well as a further $10 million in compensation, said the bank's president director, Anton Hudyana.
On Friday, the Indian management offered to address the bank's concerns about the system, but the bank refused, Mr. Hudyana said. After both sides summoned the police and statements were taken, the Indian executives were arrested. The bank will continue to seek compensation from Polaris through arbitration proceedings in Singapore, Mr. Hudyana said.
In its stock-exchange filing, Polaris said it is petitioning Indian government officials to secure the release of the company's management and has appointed an interim chief executive.
Polaris Vice President Raghuraman Balakrishnan said his company had worked with Bank Artha Graha for 18 months, and that under their contract, any disputes were to be settled through arbitration in Singapore. The job was the first of its kind for the company in Indonesia, Mr. Balakrishnan said. Polaris also provides software for banks in Hong Kong and Singapore, and for electronics companies Hitachi Ltd. and NEC Corp. in Japan, he said.
News of the dispute could heighten foreign concerns about how Indonesia's legal system is increasingly turning to criminal proceedings to resolve disagreements between local and foreign companies. Several disputes between Indonesian companies have resulted in brief arrests of foreign executives in recent years, although most have eventually been solved after further negotiations.
Foreign investment in Indonesia fell 35% to $3.5 billion during the first eight months of 2002 from the year-earlier period. The International Monetary Fund, which is overseeing a $5 billion program for Indonesia, said last week that reforming the judicial system is crucial to bolstering investor confidence.
-- Timothy Mapes and Rasul Bailay contributed to this article.
CEO of India's Polaris Software Is Arrested by Indonesian Police
By TOM WRIGHT Dow Jones Newswires
Updated Dec. 18, 2002 12:01 a.m. ET
JAKARTA, Indonesia -- The chief executive officer of India-based Polaris Software Laboratories Ltd. and a colleague have been jailed in Indonesia on fraud charges.
Indonesian police detained Arun Jain, the CEO; Rajiv Malhotra, a company vice president; and two other Polaris employees Saturday after a dispute broke out with Indonesia's PT Bank Artha Graha over a $1.3 million software-development contract, said Zainuri Lubis, a police spokesman.
"The charges were filed by Bank Artha Graha," Mr. Lubis said.
Police have since released the two junior employees and have charged the two senior Polaris managers with fraud involving the dispute with Bank Artha Graha, which is owned by an Indonesian army foundation, Mr. Lubis said. They face maximum prison terms of five years each if found guilty, he said.
In a statement to the Bombay Stock Exchange, Polaris said it sent its senior management to Indonesia last week to resolve some technical problems involving the implementation of a new software system at the bank. Angry over problems with the system, Bank Artha Graha terminated the contract on Nov. 27 after two prior warnings and demanded immediate repayment of $660,000 it had paid to Polaris as well as a further $10 million in compensation, said the bank's president director, Anton Hudyana.
On Friday, the Indian management offered to address the bank's concerns about the system, but the bank refused, Mr. Hudyana said. After both sides summoned the police and statements were taken, the Indian executives were arrested. The bank will continue to seek compensation from Polaris through arbitration proceedings in Singapore, Mr. Hudyana said.
In its stock-exchange filing, Polaris said it is petitioning Indian government officials to secure the release of the company's management and has appointed an interim chief executive.
Polaris Vice President Raghuraman Balakrishnan said his company had worked with Bank Artha Graha for 18 months, and that under their contract, any disputes were to be settled through arbitration in Singapore. The job was the first of its kind for the company in Indonesia, Mr. Balakrishnan said. Polaris also provides software for banks in Hong Kong and Singapore, and for electronics companies Hitachi Ltd. and NEC Corp. in Japan, he said.
News of the dispute could heighten foreign concerns about how Indonesia's legal system is increasingly turning to criminal proceedings to resolve disagreements between local and foreign companies. Several disputes between Indonesian companies have resulted in brief arrests of foreign executives in recent years, although most have eventually been solved after further negotiations.
Foreign investment in Indonesia fell 35% to $3.5 billion during the first eight months of 2002 from the year-earlier period. The International Monetary Fund, which is overseeing a $5 billion program for Indonesia, said last week that reforming the judicial system is crucial to bolstering investor confidence.
-- Timothy Mapes and Rasul Bailay contributed to this article.
