Indomobil, Indonesia's second largest car manufacturer, was acquired by the Indonesian Bank Restructuring Agency (IBRA) during the debt restructuring of the large Indonesian banks. Like all other assets acquired by the IBRA, the company did not become a state owned enterprise. Instead it remained the property of its former owners, but was eventually to be sold to new investors, with the revenue going to the Indonesian state.
In November 2001 it was announced that Indomobil would be sold to the highest bidder who could also meet all the terms set by the government. A general statement that the sale was to take place later in the year had already been issued in June. Letters containing information on Indomobil were sent to 165 potential investors, of which 16 signalled interest. Of these 16 investors, only three eventually made a bid and just one of these three bidders, CSDP, managed to deliver the bid within the December 4 2001 deadline. The other two followed, but as they fell short not only in terms of punctuality but also in the amount offered, CSDP was declared the winner for Rp625 billion. On December 11 2001 the agreements of payment were signed and were set to be completed on December 21.
In early 2002 the Indonesian Antitrust Commission launched monitoring activities, leading to preliminary examinations in February, to investigate the Indomobil sale and the actions of the participating parties. Its suspicions were aroused by irregularities in the bidding process, namely a very short due diligence span which, it was claimed, would allow only people already acquainted with Indomobil's assets and books to formulate a clear picture of the situation. This could only mean the former owner of Indomobil, the Salim group, which had been banned from participating in any bids for their former investments. During the examination the Antitrust Commission gave out press releases about possible findings at CSDP before the end of the examination period. To counter this, CSDP went to the administrative court to obtain an order that would stop the Antitrust Commission from doing so. This was an unexpected move, as Law 5 (the Indonesian law on monopolistic practices and unfair business competition) offers only the possibility of filing an objection with the district court, and then only against decisions, not actions, of the Antitrust Commission. Without waiting for a decision to be made, CSDP also lodged a complaint to the district court accusing the Antitrust Commission of conducting illegal actions. Again, the press releases ranked high among the named accusations. A final court decision has not yet been issued in either action. The district court has passed an injunction forbidding the Antitrust Commission from continuing its examinations, which the commission has ignored, denying the district court's power to intervene in its proceedings.
In June 2002 the Antitrust Commission published its decision declaring the Indomobil sale unlawful and imposing fines on most participants and their advisers. Despite these findings, however, the Antitrust Commission did not cancel the sale. This decision was made not in accordance with the defendant's arguments that the commission lacks the necessary power to cancel IBRA deals, but rather following its own unique line of reasoning. It maintained that if the sale were cancelled, the government would be obliged to repay the investors, and no money has been allocated for this purpose in the 2002 Budget.
Unsurprisingly, these decisions led to a new wave of complaints lodged by the participants and their advisers. The last complaint was lodged on June 18 2002 and should be ruled upon after six weeks. Appeals against the district court's decision will go directly to the Supreme Court, bypassing the High Court. In particular, Deloitte & Touche Tohmatsu International, adviser to the IBRA, will be eagerly awaiting the decision, as it was not only fined but also barred from taking an advisory role in any further IBRA auctions.
For further information on this topic please contact Maku Maramis at Lubis Ganie Surowidjojo by telephone (+62 21 831 5005) or by fax (+62 21 831 5015) or by email ([email protected]).