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Feb 23, 2010
Astro wins $324m award against Lippo
Malaysian firm wins dispute over failed pay-TV venture
By Leslie Lopez, Senior Regional Correspondent
The award is the latest twist in the crumbling alliance between Mr Ananda
(above) and the Riady family which began in 2005 when both groups agreed to set
up a joint venture to operate a pay-TV business in Indonesia. -- PHOTO: THE
STAR/ ASIA NEWS NETWORK
KUALA LUMPUR: Malaysian tycoon T. Ananda Krishnan's satellite television
operator Astro has won a roughly US$230 million (S$324 million) award against
the Lippo Group from the Singapore International Arbitration Centre (SIAC) over
its failed joint-venture into a pay-TV business in Indonesia.
The SIAC award, which was handed down last week, could have far-reaching
implications on the Indonesia conglomerate which is controlled by the powerful
Riady family.
Lawyers and bankers familiar with the arbitration said the award allows Mr
Ananda's publicly listed Astro All Asia Networks, which operates his satellite
TV business, to file claims arising from the compensation from three
Lippo-controlled entities including PT First Media Tbk, which is listed on
Indonesia's Surabaya Stock Exchange.
Astro announced the SIAC award to the Malaysian stock exchange yesterday,
according to Bernama news agency. A senior Astro executive declined to discuss
details of the SIAC award, which he said are confidential under the arbitration
rules.
Lippo executives were not immediately available for comment.
The SIAC award is the latest twist in the crumbling alliance between Mr Ananda
and the Riady family which began in 2005 when both groups agreed to set up a
joint venture to operate a pay-TV business in Indonesia through PT Direct
Vision (PTDV), which owned a multimedia licence awarded by the Indonesian
government.
The pay-TV tie-up led to other corporate ventures in a cellular operation in
Indonesia and a property venture in Singapore with both groups acquiring
Overseas Union Enterprise (OUE) from United Overseas Bank.
While the Riadys no longer have any interest in the cellular business, the
joint venture into OUE is riddled with problems between the two business groups
over how to manage the property company, bankers and lawyers said.
They said that the turmoil between Mr Ananda and the Riadys underscored the
difficulties of forging inter-regional corporate alliances in South-east Asia.
The Lippo group, which is headed by Mr Mochtar Riady and his son James, ranks
as one of Indonesia's largest conglomerates with interests in finance, property
and infrastructure.
Mr Ananda, one of Malaysia's richest businessmen, presides over a multimedia
empire, which over the past two decades has successfully melded
telecommunications delivery systems and content.
>From its broadcast centre just outside Kuala Lumpur, Measat satellites beam
>programming for Astro to consumers in Malaysia, Brunei and Indonesia. The
>satellite is also used by Maxis.
Mr Ananda's corporate empire also features holdings in the regional
power-generation sector, gaming, shipping and property such as the Maxis Tower,
that line-up alongside the Petronas Twin Towers in Kuala Lumpur and the Four
Seasons Hotel in Geneva.
According to lawyers and bankers familiar with the latest arbitration award,
Astro can stake claims for monies granted by the SIAC from PTDV, which is
controlled by both PT First Media and another Lippo unit, PY Ayunda Prima Mitra.
Several bankers closely tracking the fallout between Mr Ananda and his one-time
Indonesian partners said that the Lippo Group would likely challenge the SIAC
award in the Jakarta courts.
But several corporate lawyers said that awards handed down by the SIAC are
governed by what is commonly referred to as the New York Convention, which
obliges countries to recognise and enforce arbitration awards made by other
jurisdictions.
Last year, SIAC handled disputes worth $1.5 billion in sectors such as
construction and engineering, shipping and maritime, trade and insurance. It
heard 160 cases last year, of which 114 involved foreign parties.