C.

Explanation on how the alleged expropriations were conducted and the impact of the
expropriations on financial performances of publicly listed companies under APP
Group
Corporate decision making are often done by those with major power that makes
management role to protect minority shareholders are undoubtedly important. In one side,
there still exist companies - like Asia Pulp and Paper - which violates the right of the
stakeholder for a high-power conglomerate. Expropriation is the process of using one’s
control to maximize own welfare and redistribute wealth from minority shareholders to
oneself. On the other side, other forest-based are now proven to increasingly care about
making transparent report, even higher-cost sustainability report, as the stakeholder care
more about these companies social, environment, and economic impact. In all cases,
stakeholders are proven to have an influential role on ex-ante, current, and ex-post business
activity. Furthermore, company have to manage all the capital obtained, tangible and
intangible, in order to have a sustainable operation.

D. Based on principle 2 of OECD/G20 CG relevant regulations in Indonesia, mechanisms

that could have been implemented to prevent point C to happen?
Basically, principle II of OECD regulates shareholder rights and shareholding functions,
whereas stock investors have special rights over shares held by one company to sell,
transfer ownership, share of profits in accordance with their share of ownership,
comprehensive to the company, as well as the right to influence the company through
the general meeting of shareholders.
This OECD Principle II is already covered by the prevailing regulations in Indonesia. The
basic rights of shareholders listed in principle II of OECD have been listed explicitly in UU
No.40 of 2007 Perseroan Terbatas. How the company should act in maintaining a
relationship with the shareholders through the RUPS is also included in both the statutory
regulations and the Bapepam rules.
To prevent what happened in point C, we need a policy that specifically ensure the
transparency of the report and also regulate management role in protecting stakeholder
interest, not only the related-party as discussed more in Asia Pulp case, is undoubtedly
important.
E. Assessment the debt restructuring process at APP with respect to the sub principle F
of OECD/G20 Principle 4 :

F. The corporate governance framework should be complemented by an effective, efficient

insolvency framework and by effective enforcement of creditor rights.

The reason why bank give loan to Widjaja family is because APP was the top prospect on most
banks’ target client list. In June 1999 Morgan Stanley Dean Witter issued an outperform rating
and reported that APP was well positioned for Asia’s recovery.

BPPN considered as too lenient in its approach

 Resulted in a protest by 11 ambassadors to Indonesian President Stating
 Master Restructuring Agreement (MRA) was still signed on 30 October 2003, concerning $6.7
billion of APP Indonesia’s debts
 Several core elements of the MRA clearly favored the Widjaja’s.
i) the payment of the debts was planned during a period longer than fifteen years,
ii) until the beginning of the repayment the accrued interests were not included and therefore
represent a new financial subsidy to the group,
iii) the control of operations was not altered and the ultimate shareholders are still in position
to decide of the group’s strategy.