Kerry B. Collison Asia News: Japanese Firm Got Almost a Free Indonesian Bank - ...

Kerry B. Collison Asia News: Japanese Firm Got Almost a Free Indonesian Bank - ...: Japanese Firm Got Almost a Free Indonesian Bank - Outgoing government didn’t want incoming Jokowi government to see what was in Bank Mut...

Japanese Firm Got Almost a Free Indonesian Bank - Outgoing government didn’t want incoming Jokowi government to see what was in Bank Mutiara

A scandal-plagued Indonesian bank, now in the hands of a controversial Japanese company, was sold to its new owners for virtually nothing, adding another layer of intrigue to the long saga of what was once the notorious Bank Century.  It is now doing business as PT Bank J Trust Indonesia TBK. 

The result, since Century’s founding in 1989, is the disappearance of the equivalent of more than US$1 billion from Indonesia’s treasury – including the equivalent of US$245.2 million paid and forgiven to J Trust to take over the bank, with the potential for criminal action against officials all the way up to the top of the government.

Bank Century virtually collapsed almost nine years ago, its demise and bailout ensnaring cabinet ministers, with hundreds of millions of dollars stolen and moved overseas, and leading to questions of impropriety directed against the government and Yudhoyono.

Clouds over the operation

When it became Bank Mutiara in 2009, the clouds did not lift. By then it was under the administration of the Indonesian Bank Insurance Corporation, a quasi-autonomous government organization more widely known by its Indonesian acronym LPS. Indonesian sources say concern was growing among Yudhoyono’s allies about the rat’s nest that would be found inside Bank Mutiara once a new administration came into office, and they were determined to get it off the books of the agency before President Joko Widodo took office.

The LPS went in search of buyers in 2014. Although it was offered to 18 would-be purchasers, it found few takers and the bank was eventually sold Tokyo-based J Trust Co. in a transaction that appears to have been anything but arms-length. The sale in fact appeared to be structured so that J Trust was the only bidder, with preferential, pre-determined terms. The Japanese concern renamed it Bank J Trust after supposedly agreeing to pay US$368.0 million in cash under Indonesian Financial Services Authority law.

But the records make it look like J Trust actually paid only 6.8 percent of that amount, or US$24.14 million upfront, and that was 33 days after the alleged sale date. According to an exhaustive examination of both J Trust’s books and LPS records, it appears that the LPS, Bank Sentral Republik Indonesia – the central bank – and several other government agencies were complicit in the transaction.  

CEO with a checkered past

J Trust Group is a Japanese financial services provider headed by Nobuyoshi Fujisawa, who, among other things, had been an executive with various subsidiaries of Livedoor, a Japanese Internet service provider that went belly-up spectacularly in 2006 amid charges of market manipulation, securities fraud and false accounting procedures.

According to records in Japan, Fujisawa was the President of Livedoor Credit Co Ltd, Livedoor Services Co, Livedoor Factoring Co Ltd and Kazaka Services, now Partir Services Ltd.  J Trust purportedly specialized in buying up distressed bankrupt concerns like Takefuji Corp., another consumer lending company that went under in 2010 with the equivalent of US$5.1 billion in liabilities. J Trust has emerged as a rebranded Southeast Asian vulture fund.

The Tokyo-based group shares a bewildering pretzel palace of cross shareholdings with APF Financial, Showa Holdings Ltd, Wedge Holdings Co., Ltd, Group Lease PCL, PT Bank J Trust Indonesia TBK and the Thailand-based Group Lease.  Mitsujo Konoshita, the chairman and chief executive of Group Lease was recently fined the astonishing equivalent of US$37.1 million by Japan’s financial regulator for stock manipulation of Wedge Holding shares in 2013.

US Commerce chief among shareholders

Other major shareholders include Taiyo Pacific Funds, Invesco, the California Public Employees Retirement System (CalPERS), Saikyo Bank and WL Ross CG Partners. The W L Ross is Wilbur Ross, the secretary of commerce in the Trump administration.

As Asia Sentinel reported on April 10, it was publicly announced by the Indonesian government that J Trust had bought Bank Mutiara and paid the equivalent of US$368 million for 99.996 percent of it. But no mention of cash payment of that amount has appeared in any of J Trust’s financial statements over the past three years. Under Financial Services Authority and LPS law, J Trust was required to pay the US$368 million in cash in full at the time of purchase. However, LPS records show that J Trust paid only the equivalent of US$24.14 million down with a promise to cover future losses for a set period of time.

Bank Indonesia then arranged for a sharia loan promissory note through the Deposit Insurance Corporation for the remainder.  In 2016, according to LPS records, the insurance corporation wrote down Rp3.065 trillion (US$230.65 million) on the sharia promissory note. That means the note was never paid and J Trust was virtually given Bank Mutiara in exchange for covering the flailing bank’s losses from Nov. 20, 2014 onward, up to a capped amount within three to five years.  Those losses amounted to US$151.8 million as of December 31, 2016.

No record of the payment

There is no record, either in J Trust’s annual reports, or in the LPS’s records, that the sharia loan or the upfront US$368 Conditional Share Purchase Agreement (“CPSA”) purchase price proceeds have ever been paid by J Trust in cash.  Over a period of weeks, Asia Sentinel has asked the LPS in a series of emails for the details of the sale, without ever receiving an adequate explanation of what happened. After a series of emails that produced no substantive responses, the editors of Asia Sentinel decided to go ahead with the story. 

Asia Sentinel has also repeatedly sought to get J Trust to provide details of its payment for the bank. After three emails to J Trust’s international public relations representative Keiko Nishihara, J Trust’s lawyers Nishimura and Asahi of Tokyo delivered an unusual response:

“Your inquiries in your said emails are pertaining to matters that may relate to the pending disputes in which J Trust has been involved; therefore, J Trust has no intention to answer your inquiries regarding any details.”

That was followed up on May 26 with a letter from J Trust’s Hong Kong-based lawyers Linklaters threatening libel action.

Subsequent emails to Linklaters as well as, Nishimura, Asahi and the LPS have been met with silence.  There has also been no response from J Trust or the LPS on when the Conditional Share Purchase Agreement with J Trust expires.  

In the meantime, J Trust Group has been hemorrhaging cash flow, pouring US$217 million into what is now Bank J Trust Indonesia, continuing into March 2017.  That is after allegedly agreeing on paper to pay what was said to be the highest multiple on a book value basis in Southeast Asian history for a bank in a non-competitive and non-transparent and seemingly fraudulent LPS sale process.

Major paper loss

The cumulative book value write-down for J Trust indicates a 65.2 percent paper loss on investment so far.  That raises questions why J Trust bought the Bank in the first place. The silence by the group and Fujisawa leaves no answers to that or a long string of other questions.

For instance, in its March 31, 2017 Annual Report, J Trust says that in October 2016, the board of directors passed a resolution to acquire the shares of DH Savings Bank, based in Busan, South Korea.

“After six months since we entered into a share acquisition agreement, the (sic. South Korean) Financial Authority was still not ready to accept the company’s application for becoming a major shareholder. The company accordingly cancelled the agreement and aborted the share acquisition plan.”

No record of Korean acquisition attempt

However, as Asia Sentinel reported on May 4, a spokeswoman for South Korea’s financial authority said the agency had no record of an application to take over DH Savings, and DH Savings refused any comment.  That raises the question whether the whole DH Savings exercise was merely an attempt at window-dressing to inflate J Trust’s less than impressive earnings and operating losses from FY2014 through FY2017.

Then there is the matter of J Trust’s accounting standards. In the same report announcing the mysterious cancellation of the DH Savings transaction, J Trust announced it was switching from the Japan Generally Accepted Accounting Principles, or J-GAAP, to International Financial Standards, or IFRS, which is generally looked upon as a sensible move because it standardizes J Trust’s accounting with a single set of standards developed and maintained by the International Accounting Standards Board on a globally consistent basis.

But fortuitously for J Trust, switching over to IFRS eliminated the three-month timing difference in account closing for its two Indonesian subsidies, Bank JTrust Indonesia and J Trust Investments, reflecting 15 months of operating revenue rather than 12 months and increasing operating revenue by 25 percent. It has also substantiated J Trust’s attempts to write off massive goodwill numbers over an extended period. Shades of Takefuji resound.

According to its adjusted Fiscal Year 2017 reports, J Trust lost the equivalent of another US$13 million on its Thailand-based Group Lease motorcycle lending operation after a US$11.5 million gain on the sale of shares of the Indonesia-based Bank Mayapada. Along with previous losses, Group Lease has an implied total stock price loss of 38.4 percent on J Trust’s US$220 million investment in Group Lease since May of 2015.

Accounting legerdemain documents profit

 Nonetheless, through a series of accounting adjustments, Group Lease managed to document US$ 28.98 million in net income for 2016, or did until the global accounting firm, E&Y, qualified its FY2016 accounts, causing its market capitalization on the Stock Exchange of Thailand to nosedive by US$2.2. billion in 90 days, from THB69.75 per share to THB12.40, a decline of 82.22 percent. In its own non-audited reports, J Trust said the qualifications “are not material” but its share price along with Wedge Holdings, Showa Holdings and APF Holdings has plummeted since February 14 in a Japanese version of a Valentine’s Day massacre.

None of this has managed to bolster J Trust’s stock price on the Tokyo Stock Exchange, falling from ¥14000 on Feb.16 to ¥809 on June 9, a 42.2 percent drop and the biggest including 2013, when the shares fell by 53.8 percent after J Trust’s ¥97 billion rights offering. The J Trust saga continues through today as Fujisawa’s accountants continue to adjust book losses.

Australia asked to consider conducting trial of Bali terror mastermind

 

AMERICAN lawyers are asking for Australia’s help to save the life of alleged Bali terror mastermind Hambali, amid moves to transfer him from Guantánamo Bay to Malaysia to face execution.

Hambali, 52, or Riduan Isamuddin, is accused of orchestrating the deaths of 88 Australians and 114 others on October 12, 2002, by financing the attack through Osama bin Laden’s al Qaeda network.

Hambali has spent 10 years in Guantanamo without charge. His lead lawyer, Ohio-based public defender Carlos Warner, says US authorities are trying to offload him to Malaysia, knowing he can never be tried in America.

“We’ve been advocating for a long time, mostly behind closed doors, for him to go to Australia,” Mr Warner told News Corp, saying it was the only place where Hambali could get a fair trial.

The trouble with trying Hambali in Australia is how our system would cope with such a high-profile Jihadist.

“We think that Australia is the right place for him to be because of the nature of the allegations. We also respect the due process that’s provided by Australian courts.

“Given what’s going on in Guantanamo, we have more faith in your courts than ours.”

Hambali was Jemaah Islamiah’s senior operational leader, based in Malaysia, from where he allegedly organised Bali, the 2000 Jakarta church bombings, the 2003 Jakarta JW Marriott bombing, and numerous other plots, including advance knowledge of 9/11.

Mr Warner is right that Australia’s legal system is among the most respected in the world, and the home of the majority of Bali victims; but love of due process and public tolerance has limits.

News Corp has been told the Australian government would flatly refuse to entertain a local trial for Hambali; and would make no interventions on his behalf were he sent to Malaysia.

Nor would Indonesia, which has said it does not want to take Hambali back for trial.

Australian survivors have expressed frustration with Guantanamo’s legal limbo. Some, like Peter Hughes, see the terror prison as a form of “safe haven” because it has prevented Hambali from answering for Bali.

Hughes, 56, who helped others escape the blast zone despite suffering serious burns, is just back from another regular visit to Bali (“I go sit on the beach, have a few beers, it’s all good”).

“The whole reason for Guantanamo was to get information,” he says. “They’ve exhausted all the information they can get from him and he’s worth nothing.

Victims would rather Hambali be tried in Malaysia where the punishment if he is convicted is death. Picture: Indonesian National Police, HO

“Malaysia or Indonesia, it doesn’t matter. They’ve both got the death penalty — but in Indonesia, he might be treated as a hero. Get him to Malaysia and get him killed, simple.”

Though Hambali is Indonesian, he spent years in Malaysia, where he came under the influence of now-jailed JI mentor Abu Bakar Bashir, then on the run from Indonesia. He allegedly gave his blessing for Hambali to take al Qaeda’s money for a South-East Asian terror program.

Hambali, who fought the Soviets in Afghanistan and joined the Filipino Islamist insurrection, allegedly dealt directly with Khalid Sheikh Mohammad, also in Guantanamo, accused of devising the 9/11 attack and taking it to bin Laden for approval; and of providing money to Hambali for Bali.

Hambali was arrested in Thailand in 2003 and moved about in secret CIA rendition prisons where he made admissions under torture. He arrived at Guantanamo in 2006. Then president George Bush, admitting he was in detention, called him “one of the world’s most lethal terrorists”.

It has been reported that US authorities flew to Malaysia in early November to discuss repatriating detainee Zubair, a former member of JI who is prepared to testify against Hambali and another Malaysian detainee, Lillie, in return for serving time at home.

Mr Warner says it is part of a strategy to offload Hambali to Malaysia, where he would likely face summary execution.

President Obama issued an executive order in 2008 to close the prison, which failed because of political opposition in the U.S. Picture: John Moore/Getty Images

Mr Warner says the US will not risk putting Hambali on trial, fearing the evidence would fail before a judge because it is tainted by his torture, detailed in the US Senate Select Committee’s 2014 report into the CIA’s illegal rendition program.

It also fears that key prosecution witnesses would be exposed as fellow jihadists who’ve done deals to save themselves. Mr Warner believes the Malaysian judiciary would overlook such concerns.

“I am convinced forces in the United States would like to see my client executed, or severely punished, that’s why it’s not going to happen in the US,” said Mr Warner. “It will happen in another country.”

Hambali faced a periodic review in September and was deemed a “significant continuing threat” to the US. He was recommended for ongoing indefinite detention under the Law of War.

US military guards reported Hambali had “emerged as a mentor and teacher to his fellow detainees, seemingly exerting influence over them and has been heard promoting violent jihad while leading daily prayers and lectures.”

US authorities, who have long been denounced for holding prisoners for years without trial, may have found an ideal Malaysian Solution.

President Barack Obama promised to shut Guantanamo upon taking office. He failed. President-elect Donald Trump said on the campaign trail: “We are keeping it open and we’re gonna load it up with some bad dudes, believe me, we’re gonna load it up.”

US President-elect Donald Trump plans to use Guantánamo Bay to lock up more ‘bad dudes’. Picture: Getty

Yet there is no apparent reason why Trump, as president, would object to a Malaysia deal.

Though Hambali can remain at Guantanamo indefinitely, the US has been forced to confront the extrajudicial problems of its offshore Cuban prison. It has transferred or released all but 60 of the 780 men who have been held since the facility began filling with terror suspects in 2002.

International law expert, Professor Ben Saul, from the University of Sydney, said the Terrorist Bombings Convention gave Australia jurisdiction over foreign terrorists who have harmed our citizens, meaning Hambali could face trial here.

“International counter-terrorism law requires the US to prosecute Hambali or extradite him to a country, like Australia, that has jurisdiction,” he says.

“Indefinite detention without charge is a denial of justice to his victims and their families, and a lost opportunity to punish and stigmatise terrorist offenders as criminals.

“Australia is well positioned to prosecute because of its proximity to the crime, the many Australian victims, and its close cooperative relationship with Indonesian law enforcement. Australia should show leadership in bringing terrorists to justice.”

Hambali’s long incarceration without charge or trial does raise other questions about human rights. Picture: Mike Brown/EPA

Counter-terror experts Greg Barton and Dr Clarke Jones said there were arguments for bringing Hambali to Australia for trial, but warned we lacked the facilities and management systems for a prisoner who is regarded as a “legend” in jihadist circles.

“If there’s a chance to bring Hambali to proper justice — and locking him in Guantánamo Bay is not proper justice — it would bring a lot of closure to Australians,” said Dr Jones.

“However, if we do that and bring him back, are we creating a rod for our backs?” He is especially concerned that young radicals not mix with the likes of masterful indoctrinators such as Hambali.

Professor Barton said there were “moral, legal and practical aspects” to ensuring Hambali faced trial but also worried about his influence in prison.

“There’s merit in the case that Australian lives were lost and he be prosecuted here but we need to think beyond that as to how you’d handle him.”

We may never need to worry about handling Hambali, but with more foreign fighters expected to return, and the terror threat now steady at “Probable”, the experts warn we will need to confront how we hold people of his

READY FOR ANOTHER ARAB WAR?

READY FOR ANOTHER ARAB WAR?

Ancient Bedouin warfare was reborn in the Gulf yesterday as the Saudi’s long held hatred for the tiny State of Sunni Qatar bubbled over amid claims of hacking and executions of each other’s citizens. It’s not just another spat this time as the Saudis via OPEC have the major say in total oil production, therefore pricing. And Qatar owns and exports gas from the world’s largest deposits.

There is little doubt that President Trump’s visit and his brash comments lit an old fuse between all those States who want a piece of Syria and Iraq, if not the entire Levant, once the dust settles.

Qatar is largely Sunni and supports the overthrown Egyptian Muslim Brotherhood, Al Queda and ISIS terrorists. Qatar also boasts media influence in the area via its Al Jazeera network where two separate channels are each dedicated to English and Arabian versions.

The headquarters of Al Jazeera Arab Language channel in Doha is an extravagant shrine to slain Egyptian, Osama bin Laden, with huge photographs including him on a horse with an assault rifle backed by an Arabian sunset. The entire studio leaves little doubt as to Qatar’s affiliations. 

But Al Jazeera English channel shows nothing of its terrorist alliances. Peter Greste did not understand that his English reporting, when it suited Qatar, was shown on the Arab channel to the Egyptians who promptly jailed him for three years. Peter never realised he was dealing with the devil who was using him for desperate influence in the Gulf.

Qatar's number one enemy is Egypt and it was Greste of Al Jazeera who got the blame for supporting the Brotherhood.

But Qatar is about to host the corrupt FIFA’s World Cup in the middle of a Gulf summer and it has other Gulf States nervous over the tiny country’s increasing influence in the region. 

It also has closer than acceptable (for the Saudis that is) relations with Trump’s new foe, the Shia State of Iran, and Iran hates all the same things as does Qatar. And it supports the same terrorist groups as Qatar, including Al Queda and ISIS who are already seeking a new alliance of destruction in the wake of an impending Syrian/Iraq vacuum.

 

So Trump’s determination to dump the EPA to assist with energy self-sufficiency may be a good move as oil is central to Gulf tribal warfare. But the terms of engagement of warfare have changed since the tented Bedouins' squabbles, now all States have access to modern weapons, no longer do they charge each other on moulting camels.

The only real damage is likely to be a sharp rise in the world's oil price, but even that will not be as catastrophic as it once was.

 

The West has continued to coddle the Saudi Family and the Saudis have recently taken an emboldened leadership of the Gulf’s task force to help wipe out ISIS. But that is already starting to come undone at the seams. 

The West seems incapable of realising that to kill off anything in the Middle East leaves a vacuum that will incite even greater problems.

Obama supported the 10 per cent of Shia in Iraq and in most States, this led to vicious tribal vengeance against the Sunnis and the Sunnis responded with even more violent paybacks. Trump has stated his determination to castrate Shia Iran's tilt at nuclear capability and that has altered the balance once again. And no-one knows where this one will finish.

 

Russia’s Putin apparently has greater foresight than the Americans who are fighting for the demise of Assad, because the vacuum that the popularly-elected Assad will leave is a short fuse on a Middle East time bomb that could involve Israel and suck the US and even Russia into another endless war where no-one can be sure of who they should be fighting.

Do you seriously believe NATO members, including the US, come even close to understanding corrupt Middle-East geopolitics?

It’s time to get out of that decadent Islamic hotbed of tribal hatred... we have enough trouble with it over here.

Pickering

Indo-German economic relationship can have real global clout

Europe’s increasing strain with the US represents a golden opportunity for India, one the latter can use to offer an alternative a Chinese-led new world order

Indian Prime Minister Narendra Modi’s visit to Berlin on Monday could not have come at a more opportune moment, with German Chancellor Angela Merkel having clearly outlined her intention to cultivate new allies in the east in the wake of America signaling its intent to withdraw from the world.

Europe’s increasing strain with the US represents a golden opportunity for India, which boasts a rapidly growing economy and a robust democratic political system.

According to Dr. Siegfried O. Wolf, a senior researcher at Heidelberg University’s South Asia Institute and a former consultant with the German Federal Ministry for Economic Cooperation and Development, Modi’s Germany trip can “usher a new frontier in European Union-Asia relations based on democratic values, which will help stabilize the Eurasian region.”

Wolf believes China’s efforts to create a new world order conducive to its own strategic interests create substantial common ground for New Delhi and Berlin to build a solid framework for economic and political cooperation. Indian Premier Narendra Modi has echoed that sentiment, endorsing an EU-centric world vision in which Indo-German ties truly count.

“At a time when protectionist tendencies are rising globally, the affirmation by our two leaders of openness, greater trade, investments and exchange of technology for mutual growth provides businesses on both sides with much needed confidence,” says Dr. Alwyn Didar Singh, Secretary General of the Federation of Indian Chambers of Commerce and Industry (FICCI).

Indo-German co-operation is enshrined in a framework adopted in May 2000: the Agenda for German-Indian Partnership in the 21st Century. However there is a feeling that more can be done strengthen bilateral relations on a strategic level.

After all, Germany is a key ally of India, and one that facilitated the lifting of global sanctions imposed on New Delhi after its 1998 atomic tests. It is also the country’s largest trading partner in the European Union and one of its leading sources of foreign direct investment, contributing US$2 billion in the last two years alone. Trade between the countries currently stands at US$18.73 billion.

“At a time when protectionist tendencies are rising globally, the affirmation by our two leaders of openness, greater trade, investments and exchange of technology for mutual growth provides businesses on both sides with much needed confidence”

The two currently have no formal bilateral trade agreement, however. An India-Germany Bilateral Investment Treaty lapsed in March this year and negotiations over a fresh trade agreement with the Europe Union have been creeping along at snail’s pace since 2007.

Meanwhile, the Germans have complained about obstacles to their entrepreneurial efforts, although Singh contends that some of those difficulties have been remedied with the implementation of the 2015 “fast track agreement” to facilitate German companies investing in India.

Modi’s Berlin trip is likely to enhance Germany’s contribution in making India a global design and manufacturing hub, and India’s FICCI is well positioned to play the role of facilitator. Crucially, a concentrated “Make in India” thrust and a business-friendly policy realignment from New Delhi are making India a key destination for global capital seeking profitable returns. Singh believes efforts to attract German SMEs will help to mitigate India’s unemployment problem significantly.

Former Indian Ambassador to Germany Kishan S Rana asserts: “Germany is not only the locomotive of the European Union but also a bastion of technology and innovation – the reason why it remains a vital partner for Indian growth ambitions.” Given India’s well-chronicled weaknesses in delivering on promises, Rana advocates a time-bound program of concrete aims be established.

Seema Sengupta is a Calcutta based journalist and columnist