The Hindu : Jain episode — a litmus test for trade ties?

Online edition of India's National Newspaper
Friday, Dec 20, 2002

Business

Business

Jain episode — a litmus test for trade ties?

By K. T. Jagannathan

CHENNAI DEC. 19. The detention of Arun Jain, Chairman and Managing Director of the Chennai-based Polaris Software, and his senior colleague, Rajiv Malhotra, by the Indonesian police in Jakarta has drawn predictable flak from the business community in the country. New Delhi is understandably upset over their arrest and rightly putting diplomatic pressures on Jakarta to secure their release. The two were taken into custody by the police in Jakarta following complaints by Artha Graha, a private bank.

Available information suggests that the complaint relates to alleged commercial disputes between Polaris and Artha Graha over the implementation of a project signed in the middle of this year. Mr. Jain and his team had apparently gone to Jakarta to paper over the differences with Artha Graha, which had sought termination of the contract. Ironically, he and his official appeared to have walked straight into gaol when they landed in Jakarta! The entire episode has made a mockery of the dispute resolution mechanism in this instance. Giving a short shrift to such a mechanism in international commercial dispute cases such as this one is bound to have negative fall-outs on the two-way trade between the countries in question and even strain bilateral relations.

Polaris and its men may even be guilty of violation of commercial contracts. Yet, prison without trial is inexplicable and unjustified. The Jain imbroglio will definitely deter Indian businessmen wanting to work in Indonesia. They will think several times now before taking a flight to Jakarta. Yet, the Jain incident should be viewed as an aberration. One must desist from generalising this.

It is quite possible that the entire `drama' was played out by an over-enthusiastic local police, which could not fathom the larger implications of arresting foreign businessmen for a commercial dispute on relations between two sovereign States. Perhaps, the police had chosen to be sympathetic to complainant Artha Graha without realising the international ramification of the matter. Both New Delhi and the business community here will do well to impress upon Jakarta that it should immediately set right the wrong committed by the overzealous unsuspecting local police authority.

The post-arrest crisis management by Polaris, nevertheless, has already raised several issues. The second-rung management apparently had wasted considerable time in getting sensitised on the enormity of the situation arising out of the arrest of Mr. Jain and his official.

The time lag it took to notify the arrest, drum up support, move the Government and despatch the legal team to Jakarta cannot fall into the realm of good corporate governance practices.

Till date, it has not come out openly with the nature of the complaint against Mr. Jain and his colleague. Perhaps, the power set-up in Polaris has been too much a centralised one. When he returns home, Mr. Jain will certainly have to ponder a lot on the failure of the second-rung leadership to provide a `just-in time' solution to extricate him from the clutches of the Indonesian police.

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