Jakarta, Indonesia, March 20, 2002
—International Finance Corporation, a member of the World Bank Group, and the majority shareholder of PT Panca Overseas Finance Tbk. (“POF”) announced today that they have agreed the terms of a disposition of a loan from IFC to POF. Following agreement with the majority shareholder, IFC has halted all action in the Indonesian courts, including action concerning irregularities that had occurred during the year 2000 within the business of POF, as a result of which IFC and POF had been embroiled in legal disputes.
IFC has received confirmation satisfactory to it from the majority shareholder of POF that, after a thorough investigation of the facts, these irregularities have been the unintended result of an over-ambitious pursuit by management of POF of its commercial objectives when IFC filed a bankruptcy petition against POF, and have also been the direct result of important errors in judgment.
The settlement puts an end to a dispute that had attracted the keen attention of both domestic and overseas creditors of Indonesian companies. IFC, in its capacity as a member of the World Bank Group has been guided by the conviction that private investments, both in the form of equity and loans, are indispensable for the future of Indonesia and for a resumption of brisk economic growth in Indonesia. Mr. Banerjee, Resident Manager of IFC:
“The matter brought to court by IFC but now settled was inspired by the notion that, in Indonesia as elsewhere, local and foreign investors must be able to rely on the protection by the law and the adjudication process. Increased protection for investors through the courts or otherwise will act as an important catalyst of further recovery of the Indonesian economy and the Indonesian society at large.”
