Sticking to its Guns

If one were to look at the recent events–Polaris versus Bank Artha Graha,

Indian IT professionals defamed by Malaysian Police and the iFlex issue–these

have appalled the industry at large. While industry watchers try to come to

terms with the problem and try to figure out with whom the fault rests–we turn

our clocks back a little and take a look at the Polaris issue to see how the

case stands as of now...

The

case



Chennai-based Polaris Software Lab had entered into a contract with

Indonesia based Bank Artha Graha (BAG) to provide core-banking solutions. The

project was slated to go live only in June 2003 and not within four months of

commencing work in January 2001 as claimed by BAG. Polaris also claims that BAG

failed to make scheduled payments amounting to $ 440,633 (non-payment since

April 2002). Notwithstanding, BAG chose to terminate the contract prematurely in

November 2002.

It is in this backdrop that Arun Jain; CEO of Polaris went to Jakarta. There

are conflicting versions as to the setting up of the meeting. Polaris states

that the CEO himself went, because BAG’s president and director, Anton Hudyana,

made a personal request to Jain to come for discussions. Meanwhile BAG says that

it was Polaris that initiated the meetings and not BAG, and the bank agreed for

the meeting when Jain accepted its demand of coming in person. Jain landed in

Jakarta on December 13 2002, accompanied by senior vice president Rajiv Malhotra.

Confusion prevailed again when they could not zero in on a location to hold the

meeting, but it was agreed that the discussions would be held in BAG’s

boardroom on the 28th floor.

After an inconclusive meeting Jain was detained by the local police. So the

web was spun and Polaris caught in the quagmire that exposed the dangers of

operating out of emerging geographies. And how Arun Jain managed to walk free

from that mess is part of industry folklore now…

The rebuttal continues



Polaris squarely blames BAG for "deliberately manipulating the

circumstances and turning a commercial dispute into a criminal one". BAG,

meanwhile, has threatened defamation proceedings against Polaris in Singapore.

Polaris has retaliated, as the spokesperson of the company put it, "We

openly invite BAG to proceed with its defamatory proceedings, because we are

going the legal way, backed by hard facts. There is no doubt that BAG used

deplorable methods to extort a sum of $10 million. Moreover, Anton Hudyana is

not telling the truth–he turned a pure commercial dispute into a criminal one

and threatened of police action and dire consequences."

While Polaris does not divulge the exact nature of its legal strategy, many

in the industry believe that it would have adopted a two-pronged strategy–its

first priority will be in squashing the case of criminal deception filed against

it in Jakarta. The second, to try and solve the commercial dispute through the

arbitration, which is currently going on in Singapore at the International

Arbitration Center. It is still premature to adjudge the outcome of the

arbitration. From the developments so far, it becomes clear that compared to

BAG, Polaris has moved the case in a professional manner, post Arun Jain’s

release. It has done the necessary damage control exercises by informing the

media about its side of story. Meanwhile Artha Graha’s approach from the

beginning has garnered lots of negative publicity locally in Indonesia and many

had voiced their skepticism on the working of the Indonesian legal system. This

makes its case against Polaris bit weak. Given that, the most viable solution

many believe is that BAG should soften its stand and allow Polaris to finish its

task and rework on the SLA’s- this maybe the panacea to the whole issue.

G Shrikanth