by Sara Webb
• APP disclosed to creditors in 2001 that it had made a $220 million loss on two derivatives contracts, which had never appeared in its financial statements. It said its financial statements for 1997 to 2000, which were audited by Arthur Andersen, might have to be restated.
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Eka Tjipta Widjaja, |
Some bankers questioned why the group had kept these two derivatives contracts quiet, who had authorized these transactions and whether there had been any need to do such deals in the first place. A few years earlier, APP had had to disclose hits on other risky derivatives contracts in its New York listing prospectus; in that instance, members of the Widjaja family agreed to bear the substantial cost of terminating the transactions.
In an email to representatives of APP, Sinar Mas, and the Widjaja family, Euromoney asked for comment on the various red-flag transactions: it did not receive any response regarding those subjects.
• Then four of APP’s Indonesian subsidiaries started legal proceedings in Jakarta against five companies incorporated in the British Virgin Islands, claiming these subsidiaries had sold goods including copy paper and wine appreciation guides worth about $1 billion, or roughly a third of its annual sales, to these five companies and had not been paid.