A

recent Supreme Court ruling may set a precedent for more investors to sue for funds lost after the near collapse of Bank Century, now called Bank Mutiara.

The ruling came after the Deposit Insurance Agency (LPS) twice failed to find buyers for the bank, which was rescued by a contentious Rp 6.7 trillion (US$720 million) government bailout in late 2008.

Under the ruling, Bank Mutiara was required to pay 27 investors in Surakarta, Central Java, for their funds that Bank Century invested in PT Antaboga Delta Sekuritas.

Antaboga, now defunct, was an investment firm managed by the top executives of Bank Century, who touted its products to many of the bank’s larger clients.

The investors were duped into believing that Antaboga was owned by Bank Century, which was the sales agent for Antaboga’s investment products.

The clients’ total claims are worth around Rp 1.38 trillion (US$148 million). The ruling required Bank Mutiara to pay Rp 35 billion to the 27 investors and to pay an additional Rp 5.6 billion in penalties.

In its decision, the court said that Bank Mutiara failed to protect its clients under the Consumer Protection Law and was thus liable to repay the lost investment.

The ruling upheld previous verdicts issued by the Surakarta Administrative Court and the Central Java District Court.

LPS executive director Mirza Adityaswara said that the verdict was a risk already counted in by potential buyers and that it would not undermine the bank’s attractiveness.

“Investors are still seriously interested in buying Mutiara. They have certainly reviewed all the risks and the potential,” Mirza said.

Mirza said that the agency and Bank Mutiara were still exploring other legal means, including a case review, to challenge the Supreme Court’s verdict. LPS owns 99.9 percent of Bank Mutiara.

Bank Mutiara president director Maryono declined to comment on the court’s decision, saying that he had not yet received a copy of the ruling.

“We will consult our lawyers first if we finally get a copy,” Maryono said. He added that he would also consider filing a case review.

Bank Mutiara, which has been up for sale since 2011, has not received an attractive bid from investors. Under regulations, the LPS has until 2013 to sell the bank in order to recoup the bailout.

Analysts have said legal uncertainties revolving around Antaboga have hindered finding a higher value for the bank. “The ruling will serve as a precedent for similar cases, despite the fact that the court will judge it on case-by-case basis,” banking expert Paul Sutaryono said.

Paul, a former executive with state-run Bank Negara Indonesia (BNI), said that the ruling might improve sale prospects for Bank Mutiara, as it provided a legal certainty for potential buyers on the Antaboga case.

The Supreme Court’s decision is the latest blow for Bank Mutiara, following a similar decision reached in out-of-court arbitration led by the the Consumer Dispute Settlement Agency in Yogyakarta in 2009.

Lawmaker Harry Azhar Aziz, who sits on the House of Representatives’ Commission XI overseeing financial affairs, said the case might prompt more lawsuits from aggrieved Antaboga clients.

“The ruling has led to the legal conclusion that Antaboga’s problem is now the responsibility of Bank Mutiara. It will be better for the bank to clean house,” Harry said.

Antaboga investors have been fighting to recoup their investments since late 2008 following the government takeover.

Former Bank Century owner Robert Tantular was sentenced to 9 years imprisonment, while fellow owners Hesham al Warraq and Rafat Alo Rifzi were sentenced to 15 years’ imprisonment in absentia last year for their role in the scandal.

Meanwhile, the government continues to search for $800 million from the bank that the trio have secreted away in Hong Kong, Switzerland and Singapore.

The government’s bailout itself was also contentious, leading to the ouster of then finance minister Sri Mulyani Indrawati and has continued to dog Vice President Boediono, then central bank governor.