Bank Mutiara unfamiliar with threatening hedge fund

Bank Mutiara, whose sale is still in limbo, is currently facing a fresh challenge from a Luxembourg-based hedge fund threatening to launch legal action against the bank for failure to repay US$70 million in deposit loans.

Weston International Investment Ltd. claimed in a press release sent to The Jakarta Post that it and its wholly owned subsidiary, Weston International Asset Recovery (WIARCO), was “initiating legal proceedings” against the bank for the minimum repayment of deposits lent to the bank for two years, beginning in 2006.

The firm added that it had addressed a letter to Bank Mutiara chairman and CEO Maryono indicating that the “efforts to recover the sum will be unwavering and relentless”.

The letter also outlined results from a “recent forensic accounting exercise conducted on Bank Mutiara”, which found the bank “responsible for the repayment of this sum”.

“Our intensive forensic accounting exercise included an examination of communiqués with Bank Century executives in the past and present — email messages, letters, bank wire transfer information and other historical records,” the release stated, adding that some of the documents dated back to 2001.

The release goes as far as to say that, on the basis of the accounting exercise, WIARCO has “reached our own conclusions regarding the true reasons for the panicked bailout of Bank Century in 2008.”

The controversy surrounding Bank Century, later rebranded as Bank Mutiara, stems from the government’s decision to disburse Rp 6.76 trillion to bailout the troubled bank. Lawmakers have since suspected that the decision involved illicit maneuvers implicating top tier politicians.

The bank was then placed under the sole ownership of the Deposit Insurance Agency (LPS), which was tasked with selling the bank to investors. However, potential suitors have been wary of the bank’s murky past.

However, Bank Mutiara has launched counterclaims against the hedge fund.

Maryono claimed that his bank “was unfamiliar and had never established a relationship with Weston International”, adding that the letter addressed to him “was just a copy” with vague data, including the address and corporate positions of the letter’s signatories.

“The mailed letter did not indicate authenticity,” he said, adding that Weston was non-existent in the bank’s records.

“Since those under dispute are the [case] remnants of the former management, we will also be more cautions and thorough [in this case],” he told the Post.

Meanwhile, LPS corporate secretary Samsu Adi Nugroho said that he had not received information from either Bank Mutiara, with which the LPS holds monthly coordination meetings, or WIARCO on the lawsuit plans.

“I can not comment on that because the information is still unclear,” he told The Jakarta Post.