1. Hendra’s Latest Misdeed
When Norbert and Freddie arrived, the former was out of breath. Notwithstanding his energetic and imposing bulk, he found it difficult to keep up with Freddie’s youthful speed. In addition, Norbert was badly shaken. I suspected the two had had a row. My fears, though, were allayed when Freddie asked Norbert to raise the problem they had encountered. My heart sank when Freddie said, impulsively, “Curse that bastard Hendra; what a Schweinehund!”
“You’d better tell me all about his latest misdeed. That fellow is the limit!”
“He is. On this point, Freddie and I are in agreement,” muttered Norbert.
I concurred. Hendra, whose real surname was one of those Indonesian tongue-twisting titular tags, was a man of about my own age. The nature of his business has remained unclear to me ever since we first met. I suspected he was a financial jack of all trades but, alas, never a master of his fortune. He kept hitting the jackpot only to squander his gains.
Like many wealthy Indonesians, Hendra used Singapore as a base for his dealings. Over the years, the Bank lent him a substantial amount of money under the guise of shell companies and strawmen. All in all, Hendra and his nominees had some twenty accounts with the Bank. Each, except an account in his wife’s name, was heavily overdrawn.
Most facilities had been granted before Norbert took over the Bank’s bad loans portfolio. He was flabbergasted when he familiarised himself with the file. All his attempts to reason with Hendra failed. So did a visit to Hendra’s hometown of Surabaya. Hendra was not only a glib talker but also an excellent host. Norbert added two kilos to his bulk; but the accounts remained in debt. On a few occasions Norbert was even talked into sanctioning further credit facilities. No attempt was made to consolidate the accounts.
The situation changed when Freddie took up his position. Some of the facilities had been granted without the formal approval of one of the members of the Bank’s credit committee. When this deficiency was brought to the new compliance officer’s attention, he went through the entire history of Hendra’s accounts.
Freddie was outraged by the facts emerging from the file. Practically, a firm word with Norbert would have sufficed. Instead, Freddie referred the matter to the Bank’s head office in Germany.
The directors of the Bank reviewed the file. In the event, Norbert was instructed to pursue the matter “energetically and diligently” and to report back within three months. As always, he controlled his temper. Freddie’s name, though, had been entered in bold letters in Norbert’s bad books. Norbert did not like snitchers.
2. A Set-Off Agreement
Shortly after that incident, Norbert decided to refer the file to me. Having discussed the details with Freddie, I concluded that the first step was to consolidate the accounts. To do so, we required a document known as a “set-off letter” authorising the Bank to “combine”. In theory, it was a simple step. Practically, we faced a quagmire. As was to be expected, Hendra had the right to transact any business in respect of each account. Legally, though, the ownership was vested in different parties. We needed the consent of all of them.
In the event, I utilised a rough draft prepared by Freddie. Each party whose name appeared in the Bank’s ledger as co-owner or as joint holder of any account, was required to execute it.
The final document comprised two pages. One spelt out the set-off agreement and was executed by Norbert on behalf of the Bank. The second page was a schedule, which bore the signatures of all required parties. Attached to this were powers of attorney executed in Jakarta by all relevant parties. Hendra was given the authority to sign on behalf of each of them. Once executed, the agreement would be airtight.
Initially, Hendra refused to execute the document. Two days later he caved in. The Bank remained the only financial institution prepared to deal with him; and Hendra required “further accommodation” of S$55,000. Norbert, who oversaw the file, refused to consider any further advance prior to the execution of the set-off letter. Reluctantly, Hendra agreed to sign on the dotted line.
Freddie perused all the documents for regularity prior to the date of execution. After two hours of meticulous perusal Freddie confirmed that all was well.
Norbert summoned Hendra so as to proceed with the formal execution. Hendra, though, had many questions to ask. As Norbert was not prepared to invite Freddie to attend, he asked me to come over to the Bank.
It took me a while to allay Hendra’s feelings of unease. His main concern, I sensed, was his fear of the Indonesian tax authorities. Further, he advised that his wife was not prepared to consolidate “her account” with his. Norbert yielded and, to avoid difficulties, sent various documents for re-typing. When they were properly typed out, it was time for a break.
Norbert and I accepted Hendra’s invitation to have lunch with him in a nearby Indonesian restaurant. Seeing that spicy food did not agree with me, Hendra ordered various dishes suitable for my unsophisticated European palate. Following the repast, I had to return to my office. Hendra and Norbert walked back to the Bank.
3. Subsequent Events
During the next few months, Hendra asked for several extensions and for extra credit facilities. Notwithstanding Freddie’s misgiving, Norbert approved them. The total indebtedness in the consolidated account stood at S$650,000. Despite the constant sceptical memorandums from head office, Norbert refused to take action. Sooner or later Hendra was going to settle his debts voluntarily.
Freddie disagreed. He feared that Hendra might declare bankruptcy. I shared his misgivings. Norbert, in contrast, remained confident. He was certain that ‘his client’ would not seek refuge in insolvency proceedings. Hendra’s main object was to keep going. Bankruptcy would cripple him for at least three years.