World - - Feb 07,2017
A court hearing will be held in Indonesia on Tuesday into a billion-dollar row between Goldman Sachs and a local tycoon.
It has been revealed that a unit owned by Goldman Sachs illegally sold shares owned by the company.
Goldman took the unfamiliar step of counter-suing the tycoon - Benny Tjokrosaputro- on the grounds of reputational harm. The hearing on Tuesday will offer the retail-to-property businessman an opportunity to snub Goldman's assertion.
The billion-dollar dispute has boiled up at a time when Southeast Asia's largest economy, Indonesia, is boarding on its biggest drive for foreign investment since a decade. According to legal experts, the outcome could give a signal on whether the country's civil court proceedings will safeguard the rights of foreigners.
Bill Sullivan, senior foreign counsel at Indonesian law firm Christian Teo & Partners says Goldman’s prospects at the trial could be hampered by a general absence of transparency in Indonesian court proceedings.
According to the court documents and people aware of the matter, Goldman's dispute with the president director of PT Hanson International shoots from a deep area of the financial market in which individuals or companies pledge shares in return for short-term loans.
Tjokrosaputro had assured 425 million Hanson shares to U.S. hedge fund Platinum Partners with a barter involving a loan on the basis that he could acquire the shares back upon repayment. Meanwhile, Goldman's unit, Goldman Sachs International, took over the Hanson shares from Platinum as a fence for the products it had entered into with the fund.
In late 2014, New York-based Platinum was pulled into financial difficulties and had difficulty paying back a large number of investors, as per U.S. authorities.
Goldman started selling the shares bought from Hanson last year but was compelled to stop after Tjokrosaputro lodged a police complaint.
In September last year, Goldman was sued by Tjokrosaputro for 15 trillion rupiahs ($1.1 billion), claiming the transaction was directed "unlawfully".
As a reaction, last month Goldman countersued the tycoon for at least $1.1 billion appealing reputational damage.