International Shipping Magnates Sue Tommy Suharto for $145 Million
A company controlled by the youngest son of the late Indonesian dictator Suharto is fighting legal claims for $145 million from some of the world’s best-known shipping families.
Companies linked to the Norwegian billionaires Arne Wilhelmsen and Arne Blystad, as well as the Polemis family, one of the oldest maritime dynasties in Greece, say they leased ships in 2007 and 2008 to a Singapore-registered offshoot of the Indonesian conglomerate PT Humpuss, which failed to pay the fees. The conglomerate is controlled by Hutomo Mandala Putra, who is known as Tommy Suharto.
The offshoot, Humpuss Sea Transport, which provides chemical tankers and other shipping services, was dissolved in Singapore in late January and filed for bankruptcy protection in the United States in mid-March.
Humpuss Sea Transport was “cleaned out” of its $60 million worth of ships and shareholdings after creditors began clamoring for unpaid vessel hire fees, according to a September 2011 ruling by a London High Court judge, Julian Martin Flaux. The judge said the company’s property had been moved to another Humpuss entity in Indonesia, and the Singapore business was “no more than a shell.”
The case highlights one of the major challenges of doing business with companies from fast-growing and resource-rich Indonesia. Because of corruption in many Indonesian courts, some debtors have been able to shield their assets from international parties, plaintiffs’ lawyers say.
“If you are dealing with a big conglomerate, the corruption in the legal system means your chances” as a foreign litigant “are minimal,” said Marianne Brookes, a lawyer in London who is representing the Empire Group, the company controlled by the Polemis family, in its battle for compensation from Humpuss.
So far, none of the creditors have tried to use the Indonesian court system to get paid.
Creditors have won damages and asset-freezing orders against the Singapore company and its Jakarta-listed parent, Humpuss Intermoda Transportasi, in London and New York. But they have not received any money.
Because Indonesia does not enforce foreign rulings, litigants that have won cases against a local company abroad must restart their court cases in Indonesia from scratch. International judgments can be used as evidence, but courts in Indonesia are known for putting the needs of domestic litigants first.
“When international companies approach me with a foreign judgment that they wish to get enforced in Indonesia, I tell them I doubt success,” said Todung Mulya Lubis, principal of the Indonesian law firm Lubis Santosa & Maramis and head of the country’s branch of Transparency International, an organization that gauges honesty in government.
Humpuss Intermoda is the chemical tanker division of the 50-year-old Tommy Suharto’s much-reduced holding company, PT Humpuss, through which he also owns hotel and airline interests.
The Indonesian tycoon and PT Humpuss are not subject to any court claims in the shipping case.
Between October 2007 and January 2008, Humpuss Sea Transport arranged to hire four new ships from Empire Chemical Tanker Holdings, a company controlled by the Polemis family.
Empire built the ships and delivered them in early 2009, by which time, because of the global financial crisis, the freight market had collapsed. The cost of hiring a dry cargo vessel reached a record high on May 20, 2008, before crashing 93 percent to a 22-year low in December of that year, as measured by the Baltic Dry Index, which assesses the price of transporting major raw materials by sea.
Humpuss stopped paying rent to Empire for the ships.
The Greek company, which Ms. Brookes said was owed $60 million, has won a worldwide asset-freezing order against the Singapore entity and Humpuss Intermoda Transportasi, its parent. Tommy’s main company, PT Humpuss, is not subject to the freezing order.
In December, a Norwegian investment syndicate, Parbulk II, whose members include the Blystad and Wilhelmsen families and the Norwegian holding company Pareto Group, leased a ship to Heritage Maritime, a Panamanian subsidiary of Humpuss Sea Transport.
The Norwegian syndicate also did not receive hire fees and was awarded $27 million in compensation by a London arbitration panel in December 2010. The legal bill remains unpaid.
Hanjin Shipping, a South Korean company, also says it is owed $58 million for vessel hiring, according to documents reviewed by this newspaper.
Those creditors have appointed a liquidation firm, Borrelli Walsh, based in Hong Kong and Singapore, to try to get their money back.
“We are now working with the appointed liquidators” to resolve the situation, said Fredrik Platou, a spokesman for the Parbulk syndicate.
The liquidator, however, was appointed by the Singapore court and has no legal powers in Indonesia. And Humpuss Sea Transport, the Singapore company the liquidator now controls, has no assets.
Ms. Brookes, the lawyer for Empire Group, said her client had believed that doing a deal with a Singapore entity would mean it was protected under international law.
“But the Singapore company was left as a shell,” she said, “and everything it owned was moved into Indonesia. It is going to be very difficult to litigate in the Indonesian courts, where foreign parties seem to get nowhere.”
Tommy could not be reached for comment. Theo Lekatompessy, the chief executive of Humpuss Intermoda Transportasi, did not return an e-mail requesting comment. Lawrence Graham, the London law firm for Humpuss Group, declined to comment, as did Mourant Ozannes, lawyers for Tommy. A spokesman for the Humpuss Sea Transport liquidator Borrelli Walsh also declined to comment.
Members of the Suharto family enriched themselves to the tune of between $18 billion and $35 billion during the Suharto presidency, according to Transparency International.
Tommy was jailed in 2002 for having arranged the murder of a judge who had sentenced him to prison for corruption. He served four years of his 15-year sentence in what the Indonesian media said was a carpeted, air-conditioned cell replete with an exercise bicycle.
New York Times