MR. ARUN JAIN, CMD POLARIS SOFTWARE 
ARRESTED IN INDONESIA

The Chairman of Polaris group, Mr. Arun Jain, has been arrested by the Indonesian police over over a commercial dispute between his company and Artha Graha Bank in Jakarta. Mr. Jain was detained on December 13 on a complaint by the Bank which had signed a contract with Polaris and subsequently cancelled it. His arrest sent shock waves in the entire IT industry. The reaction was so sharp that a delegation of Nasscom called on IT minister Pramod Mahajan. The external affairs ministry also took up the matter with the Indonesian ambassador and lodged a strong protest and demanded the release of Mr. Jain. The Polaris software had entered into and agreement with Bank Artha Graha in June and August of this year. The company claimed that the bank unilaterally terminated the contract, which was to be completed by July 2003. Polaris objected the termination and wanted to resolve the issue through talks. Mr. Jain went to Jakarta on December 13 to meet the bank officials at Jakarta and later was arrested in the bank premises.

Sources from industry say there is a sinister story behind Mr. Jain's arrest. He went to Jakarta to settle the dispute. The bank asked Polaris to pay damages and return the advance. The bank started putting pressure on Mr. Jain to settle the dispute of payment before he could return to India. Mr. Jain requested time to consider the request. He was willing to consider this but the bank apparently asked for a "ridiculously large" amount. The bank, which has closed ties with the Indonesian military got Mr. Jain arrested. The entire Jain Samaj is both indignant and worried. Ahimsa Foundation requests all the Business leaders of Jain community around the world to come together and register a protest with the Indian and Indonesian Government. 

Message From Jain Samaj

This inhuman and barbarian act of arresting a respectable businessman of India and a member of our community by the Government of Indonesia should be condemned by one single voice of the entire Jain Samaj. Against the arrest of Mr Arun Jain on such frivolous charges, the entire Jain Samaj on global level should register its strong protest with our respectable Prime Minister - Shri Atal Bihari Vajpayee, Minsiter of Information & Technology- Mr. Pramod Mahajan and President of Indonesia - Ms. Megawati Sukarnoputri. 

We also request all Jain business and industry leaders to take up the issue jointly with the Government of India and Government of Indonesia through appropriate forum. 

To register your protest please forward this mail to President of Indonesia - Ms. Megawati Sukarnoputri - megawati@gmx.net or megawati@forpresident.com , Cc: Prime Minister of India, Mr. Atal Bihar Vajpayee - abp@hindustan.net , pmosb@pmo.nic.in Cc: Minister of Information & Technology - Mr. Pramod Mahajan -minister@mit.gov.in and Cc: Ahimsa Foundation - ahimsa@jainsamaj.org 

India protests against Indonesia, detaining businessman

Statesman News Service
NEW DELHI, Dec. 17. — The foreign ministry today summoned the Indonesian Ambassador in India, Mr Zakaria Soemintaatmadja, and lodged a strong protest against the treatment meted out in Jakarta to the head of Polaris Software Lab, a leading Indian software company. And, if the foreign ministry’s efforts to extricate the Polaris CMD, Mr Arun Jain, do not work out “soon”, the Prime Minister may intervene in the matter with the Indonesian President, making it a volatile political issue. The government is still trying to keep it within the purview of a commercial dispute.
The information technology and communications minister, Mr Pramod Mahajan, said today he would request the Prime Minister, Mr Atal Bihari Vajpayee, to speak on the issue with the Indonesian President, Mrs Megawati Sukarnoputri. If the issue was not resolved in a day or two, the external affairs minister, Mr Yashwant Sinha would take up the matter with his Indonesian counterpart, Mr Mahajan said.
India regretted that the issue had not been handled properly by Jakarta in keeping with “the excellent relations” that exist between the two countries.
The external affairs ministry spokesman said the Indian Charge D’affaires in Jakarta, Mr Amar Sinha, had simultaneously taken up the matter with the Indonesian foreign ministry and other officials concerned
“We have taken up the matter strongly with the Indonesian Government and we hope it will be resolved soon”, he said.
The Chennai-based Polaris, in a statement yesterday, said the Indonesian police had detained Mr Jain late last week following a complaint by Indonesia’s Bank Artha Graha, a client of the software firm.
Mr Jain and another senior official, Mr Rajiv Malhotra, were detained when they went to the Indonesian bank’s office on 13 December to look into the bank’s termination of a contract with Polaris.
The Embassy has also approached Indonesian Cabinet ministers with close ties to the military in Jakarta, as the bank is reportedly a front organisation for the army.

BUSINESS STANDARD
Govt steps up efforts to free Polaris chief

Our Bureaus in New Delhi/ Chennai
Published : December 18, 2002

The Indonesian Ambassador was today summoned to the foreign office and told of the Indian government’s deep dismay at the arrest of Polaris CEO, Arun Jain. Jain, foreign office sources said, is still in police remand and the Charge d’affaire in the Indian Embassy in Djakarta is in touch with the Indonesian government on the issue. Yesterday India informed the Indonesian Ambassador on the telephone that the arrest was reprehensible. However, Foreign Minister Yashwant Sinha is hoping that traditionally friendly relations between India and Indonesia will help sort out the matter and is not likely to make a statement just yet. Polaris Software Lab today said that efforts to secure the release of its Chairman & Managing Director, & CEO, Arun Jain, and Rajiv Malhotra, Head, Bankware division, under illegal police custody in Jakarta remained inconclusive.

According to Polaris sources, the company is being assisted by the Government of India and NASSCOM in its efforts to secure the release of its senior officials. According to unconfirmed reports the Indian Prime Minister may intervene and is expected to speak to the Indonesian President if the issue is not resolved in the next two days. It has also been reliably learnt by Business Standard that Bank Artha Graha of Indonesia under whose complaint Arun Jain and his colleague have been detained, has in its termination notice to Polaris on November 27, 2002, sought repayment of about $ 662,000 that it had already paid to Polaris. Polaris officials however refused comment on the amount involved citing Non Disclosure Agreements signed.

Addressing a press conference, acting CEO, Polaris, Govind Singhal said that the company's immediate efforts were to secure the release of its two officials and termed their detention as unlawful and unfortunate. "This is no criminal offence and the action that Bank Artha Graha has taken is unwarranted". The dispute between Bank Artha Graha and Polaris is over project related milestones. According to details that are emerging the Bank Artha Graha is run by the Indonesian Army Foundation and that the software contract that Polaris was executing was worth $1 million annually. Polaris had in its reply on December 3, 2002 to Bank Artha Graha's termination notice said that it was willing to clear any misunderstandings that had crept into the relationship.

The agreement between Bank Artha Graha and Polaris clearly provides for legal arbitration under Singapore law, Singhal said. He said that the Polaris officials were initially detained on the 25th floor of the Bank Artha Graha and then later shifted to a dingy and unhygenic cell on December 13. They have been at the present moment been shifted to a cleaner cell, he said. Arun Jain, a strict vegetarian, has been facing problems with his diet and thanks to the intervention of the Indian Embassy has in the last two days been able to get some vegetarian fare. Singhal said that contrary to reports Polaris had committed no fraud and the issue on hand was commercial, governed by a contract signed under Singapore laws with an option for arbitration only under Singapore laws.

"In this context, the detention in Indonesia of our officials, under Indonesian law, clearly violates the terms of the contract" Singhal said. India said on Tuesday it was exerting strong diplomatic pressure for the release of the chairman of an Indian software firm detained by Indonesian police in Jakarta as shares of the firm fell on news of the detention. Polaris Software Lab Ltd, based in the southern city of Madras, said late on Monday Arun Jain was detained last week after a complaint by Indonesia’s Bank Artha Graha, a client. It said Jain, who is also the firm’s chief executive, and another senior official were detained when they went to the Indonesian bank’s office on December 13 to look into the bank’s termination of a contract with Polaris.

“Bank Artha Graha filed a report with the police station...and on that basis the Indonesian police detained them,” Polaris said in a statement, without elaborating. Bank officials were not immediately available for comment. An Indian foreign ministry spokesman said New Delhi had raised the case “strongly” with Jakarta and officials of the two countries had held talks in both capitals. “We are certainly seeking his release from police custody. We are hopeful that the matter will be resolved soon,” spokesman Navtej Sarna told reporters in New Delhi.

“We have an excellent relationship with the Indonesian government and so to that extent the handling of this case is not in keeping with the relationship between the two countries.” “It is a commercial dispute which should be handled within a commercial framework,” Sarna said. Telecommunications Minister Pramod Mahajan told a local TV news channel that if the matter was not settled in “a day or two” the foreign minister would speak to his Indonesian counterpart and Prime Minister Atal Behari Vajpayee would talk to President Megawati Sukarnoputri, if necessary. Polaris, a financial services software firm, started off by writing code for Citigroup’s Indian operations and counts the financial services giant as one of its largest customers.

It is in the process of merging with Citigroup’s unlisted Indian technology unit, Orbitech Solutions. Citigroup, which now holds 6.25 percent of Polaris, will hold a little over 47 per cent in the merged entity. Polaris shares were down 4.36 percent at 176.75 rupees, off a low of 172.45 by the close of trade, while the main Bombay index ended down 0.52 percent. An Indian embassy source in Jakarta, who declined to be identified, said Jain and Vice-President Rajiv Malhotra had been held at national police headquarters since December 14. Indonesia allows police to hold people for 20 days while deciding whether to take the case to prosecutors, who determine whether to take it further. That period can be extended, however.

Polaris had entered into agreements with the Indonesian bank in June and August to provide software services by July 2003. Bank Artha Graha served a termination notice in November and Polaris responded early in December, saying the grounds for termination were “incorrect” and offering to hold talks. Polaris said its board had appointed executive director Govind Singhal as acting chief executive officer. “There is a specific provision in the agreement for arbitration in Singapore to settle any dispute,” Singhal said in the statement. “It’s disturbing that our chairman and a senior executive have been subjected to humiliating treatment for a commercial dispute.”

INDIA BUSINESS
PM to push for Polaris CEO's release 
TIMES NEWS NETWORK[ TUESDAY, DECEMBER 17, 2002 10:31:52 PM ]

NEW DELHI: Four days after the arrest of Polaris chairman Arun Jain and senior vice-president Rajiv Malholtra in Jakarta, there are no signs of their release. Despite frenetic activity on various fronts in India, the duo continues to be detained by Indonesian police at the time of going to press. The Indonesian ambassador was summoned on Tuesday to South Block. The Indian embassy in Jakarta has also taken up the issue with the Indonesian government.

We have taken up the matter strongly and we are hopeful that the matter will be resolved soon,’’ said the spokesperson at the ministry of external affairs. He added other options — including political ones — will be used only if diplomacy does not work. IT minister Pramod Mahajan said that if the issue was not resolved in a day or two, external affairs minister Yashwant Sinha would take up the matter with his Indonesian counterpart. ‘‘If needed, I will request Prime Minister Atal Bihari Vajpayee to talk to Indonesian president Megawati Sukarnoputri on this issue. Recently, Megawati was in India to build trade relations and ask for FDI. MNCs operating in Indonesia report that the business environment in the country has deteriorated with ransom threats commonplace. Diplomatic pressure in the past has worked in sorting out such incidents.

Jain and Malhotra were arrested on December 14 while negotiating a commercial dispute with Indonesian bank Artha Graha, which is controlled by the Indonesian Military Foundation. The Rs 600-crore Chennai-based company says that any dispute has to be resolved in Singapore courts. A shocked corporate India got into the act too. Several multinationals, including Citibank — which has a 40 per cent stake in Polaris — are said to be exerting pressure on Indonesian authorities to act swiftly to resolve this issue. ‘‘The rule of law is completely broken. For every commercial contract there is a dispute mechanism. Our first priority is to get both of them back to India,’’ said Kiran Karnik, president, Nasscom. Industry bodies CII and Nasscom are working round the clock to secure the release of Jain and Malhotra. As a fallout, industry representatives said Indonesia may be black-listed by several companies. Currently, Indian software firms — like TCS, Wipro, Mascon — have offices in Indonesia.

On Tuesday, Polaris shares were down 4 per cent at Rs 176.75 on BSE.

THE HINDU
Delhi takes up Polaris CEO's detention with Jakarta
By Amit Baruah 
NEW DELHI Dec. 17. The Indonesian Ambassador, Zakaria Soemintaatmadja, was summoned to the External Affairs Ministry today in connection with the detention of Arun Jain, chairman, Polaris Software, in Jakarta, even as India, for the first time, officially criticised the authorities of the United Arab Emirates in the Anees Ibrahim case. A Foreign Office spokesman said Mr. Jain's detention had been taken up "strongly'' both in New Delhi and Jakarta by the Indian Charge d'Affaires, Amar Sinha. ``We are hopeful that the matter will be resolved soon,'' the spokesman said adding that the Polaris case was a "commercial dispute'' and should have been handled "commercially.'' Its handling was not in the spirit of traditional, friendly relations between India and Indonesia.
In a related development, the Information Technology Minister, Pramod Mahajan, said the External Affairs Minister, Yashwant Sinha, would speak to his Indonesian counterpart in a day or two if the matter was not sorted out. (Sources said that the Indonesian Foreign Minister, Hasan Wirajuda, was out and was expected to return to Jakarta only later tonight). And if necessary, the Jain case would be taken up by the Prime Minister, Atal Behari Vajpayee, with the Indonesian President, Megawati Sukarnoputri.

On the basis of information provided by the Indian mission in Jakarta, Mr. Mahajan told presspersons that when Mr. Jain landed in Indonesia to sort out the dispute, $ 65,000 was demanded from him as "termination charges'' for the contract. Mr. Jain, who procured the sum, was not released even after the money was paid. Now, a sum of $10 million was being demanded for his release.

POLITICS/NATION
Vajpayee to talk to Megawati for Polaris chief's release
TIMES NEWS NETWORK[ WEDNESDAY, DECEMBER 18, 2002 01:48:09 AM ]NEW DELHI: The government reacted angrily at the cavalier treatment meted out to Polaris CMD Arun Jain in Indonesia with the IT minister Pramod Mahajan pledging full support to the Indian businessman.
Mr Mahajan said Prime Minister AB Vajpayee would speak to President Megawati Sukarnoputri if Mr Jain isn't released shortly.
Mr Mahajan said: "This kind of illegal activity against Indian businessmen is wrong. Definitely we will support Arun Jain and the other Polaris official (Polaris senior VP Rajiv Malhotra). To the best of our knowledge, they have not done anything which deserves this kind of treatment."
In Jakarta, charge-d'affaires at the Indian embassy Amar Sinha will be meeting Indonesian foreign minister Noor Hasan Werajuda.
Following this meeting, foreign minister Yashwant Sinha is expected to have a word with his counterpart to protest against the arrest. Meanwhile, the Indonesian ambassador, Zakaria Soemintaatmadja, was called in to the foreign office to be given India's position on the matter. A spokesman of Indonesian police, Zainuri Lubis, quoted by news agencies from Jakarta, said that the arrests were made after the bank filed a complaint over "a business dispute of around $1.3m."
An MEA spokesman said the issue has been taken up strongly with Indonesian authorities both in Delhi and Jakarta and hoped that the Indonesian authorities would "assist in resolving this situation as soon as possible."
Indignant over the arrests, the spokesman said the "handling of the case is not in keeping with the ‘excellent' state of the bilateral relationship."The Indian indignation on around the fact that as a commercial dispute it could have been resolved through arbitration or even legal recourse. But rough and ready measures such as locking up the businessmen and demanding "unreasonable" sums of money from them was clearly against the grain.
When contacted by Our Mumbai Bureau, the Indonesian embassy in India said it was trying to secure the release of Mr Jain. An embassy officials said, "We are trying through the official channels to find out what is the reason for the detention as we only have information from Indian newspapers at this stage."
Indoneasian embassy first secretary Swaji Raju, who is co-ordinating on behalf of the embassy here with the Indonesian government and the local authorities there, said: "It seems to be a commercial dispute, though we do not have all the details. Therefore, there should be a arbitration mechanism in the contract that the two companies have signed. Mr Jain is a respected businessman and we feel that the arbitration proceeding should be carried out in the proper manner."
The embassy officials were not willing to speculate on how long it might take to secure the release of Mr Jain.
Meanwhile, Indian industry came out in support of Mr Jain while expressing their shock at the "unwarranted" arrests.
The Telecom Equipment Manufacturers Association said arrests were "highly deplorable," and unless an amicable resolution to the problem was found right away, "Indian businessmen would be forced to rethink their business strategy in that part of the world."

FT.COM
Indian software head held by Jakarta police
By Khozem Merchant in Bombay
Published: December 17 2002 20:54 | Last Updated: December 17 2002 20:54
The chief executive of Polaris, a leading Indian software service company, was being held in police custody in Jakarta on Tuesday after a dispute over a contract with an Indonesian bank. News of Arun Jain's arrest sent shares in Polaris down about 4.5 per cent as diplomats tried to free him and a senior colleague. Jakarta police had detained Mr Jain late last week after Bank Artha Graha, a Polaris client, filed a complaint.
Mr Jain was in Jakarta to try to settle a dispute about a cancelled contract between the bank and Polaris.
On Tuesday, Govind Singhal, acting chief executive of Chennai-based Polaris, confirmed that Artha Graha was demanding compensation, but not the $10m quoted by a news agency.
The exact nature of the charges remains unclear.
Polaris, whose clients are largely in the financial services sector, grew on the back of long-term contracts with OrbiTech, the wholly owned Indian software services unit of Citigroup, the US financial services group.
In October, Polaris merged with OrbiTech, the largest financial services software company in the Indian information technology sector.
The combined business boasts revenues of $150m, making it one of the largest companies in the second tier of the Indian software sector.

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