Chennai: The Christmas bells chimed and the carols began at the Le Meridian Hotel here as if to welcome their return. Bringing down the curtains, though temporarily, on what he calls as “an 11-day Indonesian safari,” Polaris Software Lab chairman and managing director and CEO Arun Jain and his colleague Rajiv Malhotra, senior vice-president, finally set their foot on the Chennai soil on the midnight of 24 December 2002.

The two were arrested and detained by the Jakarta police based on a compliant made by Bank Artha Graha, on being dissatisfied with the Polaris Software’s work quality and delivery delays (See ).

A visibly happy Jain lifted his three-year-old daughter Aarushi while thanking his well-wishers. A teary-eyed Manju, his wife, watched the scene silently. Taking the arrest news bravely and giving the emotional support to others, this psychology graduate from Jesus Mary College, New Delhi, had been to Thirupathi and Puttaparthi, and offered her sincere prayers for the duo’s safe release.

According to Malhotra, his pregnant wife is doing well in Delhi and is a much-relieved lady now. Minutes after their landing, the duo walked into a star hotel to address the media that had assembled in good strength even at the wee hours.

“The Indonesian episode will in no way affect our image in the banking and financial software domain,” assures Jain. According to him, the company’s leading clients have called the officials and had expressed their support.

However, the release does not mean an end to their troubles. Part of the release condition is that Jain and Malhotra would cooperate by visiting Indonesia and assist the Jakarta police in their investigation. Further, Polaris is yet to decide whether to take the case to Singapore courts where any contract disputes are to the settled as per the original contract signed with Bank Artha Graha.

Speaking about the Indonesian safari, Jain says: “Looking at the sequence of the events, it seems our arrest has been premeditated. The detention at the 20th floor of the bank premises; the police complaint and the subsequent arrest happened as if they were meticulously planned.”

According to Jain, the four-member Polaris team (Jain, Malhotra, Rajiv Arora, Chander Singh — the latter two are senior vice-presidents of the company), reached Bank Artha Graha’s headquarters at 1.30 pm on 13 December 2002 after finishing their lunch.

In the end of the 90-minute meeting, Anton Hudyana, Bank Artha Graha’s president, insisted on terminating the $1.3-million software contract and demanded $10 million as damages. “I couldn’t understand anything when Hudyana said the dispute has gone to the police. As per the contract all disputes are to be settled only under the Singapore laws and the maximum amount of compensation that would be payable by us will be restricted to the amount paid by the bank to us,” says Jain.

The Polaris team tried to reason out with Hudyana who refused to listen. “$10 million is not a small amount to be wished away. I decided to stand up to protect the shareholder value. We tried to reason out with the bank officials but they refused to listen and we were locked up inside the bank’s boardroom.”

While being detained inside the bank premises, Malhotra, on the pretext of using the toilet, informed the Delhi office about their predicament, while Jain called Citibank’s security cell in London. “The Delhi office in turn informed the Indian embassy in Indonesia. An embassy official was denied permission to meet us.”

Meanwhile, the Polaris team was shifted to the Jalan Truno Joya Tiga 3 police station. “That was a great relief to us. At least we could access others rather than being held captive in the bank’s premises,” Jain recalls.

En route, the team thought that the detention at the police station would be for just 24 hours to embarrass them. However, Arora and Singh were released 26 hours after being taken to the police station, while Jain and Malhotra were detained.

“We never thought we will be jailed for eight days,” says Jain. With its core officials getting into serious problems, Polaris set up hot cells in Chennai and Delhi and mobilised support from the government, software industry and the media.

With External Affairs Minister Yashwant Sinha speaking to his Indonesian counterpart Noor Hasan Werajuda and the mounting diplomatic pressure (the Indonesian ambassador in India was called by the ministry of external affairs twice to convey the country’s dismay in the way in which the Indonesian government is handling the issue), the duo was released.

“We were released on 20 December 2002, but our passports were not returned immediately. Till now we don’t know why the Indonesian police withheld our passports.”

The disputed deal In 2000, Polaris launched its BankWare division to sell banking software products. The company got a licence from an American company to sell the latter’s banking software products. “The product is now running successfully in 60-odd mid-sized banks worldwide,” says Ashok Korwar, advisor, CEO office, Polaris.

Sometime in November 2000, Polaris logged on to Bank Artha Graha. At that time the mid-sized Bank Artha Graha had fired a local software company that was trying to implement similar software package unsuccessfully for two years.

The Chennai company signed a memorandum of understanding (MoU) with the bank in February 2001 and started implementing the software package. July 2001 saw the sealing of the final deal. As per the contract the system was to go online during July 2003. On its part the Indonesian bank has paid Polaris $6.62 lakh of the $1.3-million deal. “The last payment was made on 25 April 2002,” says Jain.

However, differences between the two started to arise and Bank Artha Graha was unhappy with the quality and the delay in completing the project by Polaris. Says Malhotra, who heads the BankWare division: “Part of the problem was that the bank kept on demanding new features. We committed the mistake of not freezing our offering at some point and faced the problem of moving targets.”

The first sign of differences cropped up in October 2002 and a team from Polaris went to Indonesia to iron out the issue. The company got one month’s extension to complete a part of the project. However, on 27 November 2002, the bank terminated the contract for which Polaris replied on 3 December 2002 expressing its willingness to discuss in person.

Adds Korwar: “We expressed our ability to customise the product when the bank said that the solution was not performing as per its expectations. We were even willing to provide banking solutions developed by OrbiTech Solutions, a company that will soon be merged with Polaris.”

According to him, Bank Artha Graha chose an older version of the product, which is not sold anywhere either by Polaris or the American company that owns the product. And that product was not able to support many of the bank’s requirements. Though industry sources say Polaris earlier too had some problems in meeting its delivery schedules, Govind Singhal, executive director, denies any such lapse.

The learning Though Jain terms his arrest and detention as his longest vacation, it turned out to be a sort of study holiday. The Indonesian safari has taught them several lessons. Some of them hold good even to other companies.

“The risk of doing business in developing countries is different from the business risks that exist in developed nations. We did know that Indonesia is a difficult country and hence incorporated two safety clauses — disputes to be settled under Singapore laws and the maximum compensation payable by Polaris is limited to the total amount received by it from Bank Artha Graha,” he says.

The second lesson is to understand and assess the product and the subject knowledge of the other party. “If a cyclist is made to drive a car then the systems and procedures should be such that it is possible.”

There is also the need to do a due diligence of the customers, especially in the case of mid-sized corporates. “Taking the Indian embassy into confidence in this regard and also for other things will be of immense use rather than ruing later,” he prescribes.

Referring to the steps taken by the Indian embassy officials in Indonesia and in India, Jain says: “Now I understand the real power of the bureaucracy.”

  also see : No way to settle a dispute