Monday, July 16, 2012

Former Merpati Airlines President Director in for the Fight of his Life

Monday, 16 July, 2012 | 11:07 WIB 

TEMPO Interactive, Jakarta: Prosecutors were determined to bring to the Antigraft Court a case of Merpati Airlines paying money to lease airplanes that never arrived to Indonesia. The indictment filed is considered premature.

On the way to the capital’s Anti-Corruption Court, Hotasi Nababan straightened his tie a number of times. The former president director of Merpati Nusantara Airlines was browsing through a book containing his defense plea for an ongoing trial linked to Merpati Nusantara Airlines. The airlines paid a US$1 billion security deposit to lease two planes from a US company in 2006. The planes never arrived, and the company never returned the deposit.

Dressed in a white shirt, Hotasi was preparing to attend his own trial at the Antigraft Court.

Together with Merpati Airline’s former general manager, Tony Sudjiarto, Hotasi is accused of committing corruption through the leasing of two Boeing aircrafts, a Boeing 737-500 and Boeing 737-400 in 2006. Merpati Nusantara signed a deal in 2006 with US-based Thirdstone
Aircraft Leasing Group to lease the aircrafts, paid a $1 billion security deposit, but never received either the planes or a refund. At the time, Hotasi led Merpati. A lawsuit was filed against Thirdstone in 2007 for breach of contract and a district court in Washington DC ruled
in favor of Merpati, ordering Thirdstone to return the security deposit. The payment still did not arrive.

Guntur Aradea, Merpati’s financial director at the time, also came along as a suspect. But Guntur’s dossiers had not arrived in the court. The three are charged with violating the law and abuse of authority. The Attorney General’s Office which investigated the case since early 2011 has accused Hotasi and his colleagues of causing the state financial losses because the planes that were leased never arrived. According to the AGO, this case had strong indications of corruption because there had been no refund of the $1 billion security deposit. “There was no refund,” said Ariawan, the prosecutor of this case.

In May 2006, Merpati had decided to add two more airplanes to its company. The need was also announced through the Internet. In December 2006, an American company, Thirdstone Aircraft Leasing Group (TALG), made an offer.

Before accepting TALG’s bid, Merpati made inquiries about the company that was founded just two years before. The owner, Allan Messner, according to Hotasi, was a credible figure in the global airlines industry. Merpati finally accepted the bid made by TALG. On December 18, 2006, a leasing agreement was signed. The rent payment for each aircraft - US$150 thousand per month – was paid in advance on a monthly basis. Merpati agreed to rent two aircrafts for 60 months.

Another option, according to Hotasi, was to hand in a security deposit of $500 thousand for one aircraft, making it a total of $1 million. TALG refused to be paid through an escrow account. It was this prerequisite that obliged Merpati to pay in cash. According to Hotasi, Merpati did not have other options at the time because one could hardly find companies that were willing to lease their aircrafts to airline companies like Merpati with poor financial conditions.

To avoid taking additional risks, Merpati requested the money not to be given directly to TALG, but to an independent institution or an appointed custodian. TALG agreed and proposed Hume and Associates as the custodian. Having conducted verification procedures, Merpati found that this custodian was not fictitious. On December 20, 2006, the security deposit was transferred.

On January 5, 2007, the promised first aircraft did not appear. TALG suddenly demanded a price revision. Merpati requested the return of the security deposit. The deposit was never returned. The same thing occurred again on March 20 of that year, which was the due-date for the arrival of the second aircraft. Later on, TALG could no longer be contacted, and finally it filed for bankruptcy.

After that, Merpati brought the case of Alan Messner as well the custodian that had caused the loss of the security deposit to Washington DC Federal Court. This legal effort was supported by the Attorney General, represented by Yoseph Suardi Sabda at the time. On July 8, 2007, the Washington DC Federal Court ruled in favor of Merpati and demanded TALG to pay back the deposit. So far, Merpati has only received US$4,793.

In the eyes of the Attorney General, Hotasi and his staff were viewed as careless. According to the prosecutor, Hotasi did not plan the lease of the two aircrafts through a meeting of shareholders. He was accused of failure to take prudent measures because he paid the security deposit without the use of an escrow account or through letters of credit. Worse still, the money could be just eaten away by TALG. Hotasi was also considered by the AGO to have known that the money would be used by TALG to buy airplanes.

As he read his objections out in court against the prosecutors’ indictments on Thursday last week, Hotasi said that he had followed procedure. The company, he said, did not require for a decision to be taken at a shareholders’ meeting when it comes to leasing of aircrafts.“In business, everything must be done quickly,” he said. The process of aircraft leasing had also be done carefully. It was realized in the fact that the security deposit had not been paid directly to TALG, but through an independent institution that was appointed a custodian.


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