The Hindu : Indonesian police detain Polaris CEO

Online edition of India's National Newspaper
Tuesday, Dec 17, 2002

Business

Business

Indonesian police detain Polaris CEO

By Our Special Correspondent

CHENNAI DEC. 16. In a development that is bound to trigger a major convulsion in the Indian software industry, the Indonesian police have detained the Chairman and Managing Director of Polaris Software, Arun Jain, who was on a business visit to Jakarta.

Along with him, Rajiv Malhotra, head of bank ware division of the company, has also been held by the police at Jalan Truno Joya Tiga 3 station in Jakarta.

According to a company notification to the National Stock Exchange, they were detained by the Indonesian police on complaints filed by Bank Artha Graha, a private bank in that country. The notification was, however, silent on the nature of complaints made by the Indonesian bank.

Mr. Jain and three other company officials had gone to Jakarata last week ostensibly to resolve disputes relating to commercial issues with the bank. The Indonesian bank and Polaris had signed a couple of agreements in June and August this year, covering central processing, disaster recovery and branch server related work. The contract was to end by July next.

On November 27, the bank had served a notice of termination of the contract on Polaris. The grounds for the termination notice were, however, contested by Polaris in a subsequent communication to the bank and the company sought the issue to be resolved through parleys.

A company spokesman regretted that the local police could detain the two who had gone to Jakarta on a business visit. Two other officers of the company who had accompanied the team to Jakarta were however let off. The spokesman said both Mr. Jain and Mr. Malhotra were detained "against their wishes and were not allowed to leave the premises". He claimed that both were detained by the Indonesian police the same evening upon complaints by the bank.

The board of directors of the company met in New Delhi today to take stock of the extraordinary situation. The board also appointed Govind Singhal, Executive Director, to act as CEO in the interim. In a release to the NSE, Mr. Singhal regretted that though there was a specific provision in the contract for arbitration in Singapore to settle disputes, the Chairman and a senior official have been subjected to humiliating treatment for a commercial dispute".

The company has reportedly moved the Indian Government and the National Association of Software and Service Companies to secure the return of Mr. Jain and Mr. Malhotra.

Poliaris shares fell to Rs. 185.30 on the NSE from Rs. 188.50.

Since the details of the `Jain dention episode' have not been out, sources are unwilling to hazard any guess on how this will impact the business prospects of Polaris. The company, it may be pointed out, writes programmes for high profile clients like Citibank.

In fact, the Citi Group has some equity stake in the company. Polaris has been in the headlines ever since one of the Citi Group-promoted outfits, OrbiTech, was merged with it.

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