JAKARTA: An Indonesian court has declared a unit of Prudential Plc bankrupt after a petition from a former consultant, triggering alarm among foreign investors and an official protest from the British Embassy.
Britain's second biggest insurer said the unit, PT Prudential Life Assurance, was financially strong and it would appeal the ruling.
The ruling revives memories of a similar case involving Canada's Manulife Financial Corp, which was a public relations disaster for Indonesia and further damaged the reputation of the country's legal system.
The British embassy and foreign businessmen said the ruling had the hallmarks of the Manulife saga, when the same court ruled in 2002 the local unit of Manulife bankrupt even though the insurer was solvent, outraging investors and angering Canada.
A higher court later overturned that ruling.
“We are seriously concerned about this case. It has strong similarities to the earlier Manulife case,” the British embassy said in a statement.
“We are in urgent discussions with the company about action with the Indonesian authorities.”
Prudential said in a statement that the Jakarta Commercial Court handed down its bankruptcy ruling last Friday.
The Prudential statement said the court ruled it owed the ex-consultant around US$400,000 and put the firm into bankruptcy.
Neither court nor government officials were immediately available for comment. – Reuters