McDonald’s Franchise Denies Hamburger King’s Claims of Shareholders Rights Abuses

Date AddedJune 17, 2009 06:01:32 AM

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The war of words continued on Monday between McDonald's and Bambang N. Rachmadi, the holder of 13 McDonald's fast-food franchises, with the US burger giant's Jakarta office denying Rachmadi's claims that he was not consulted about franchise transfers to the wealthy Sosrodjojo family.
"Mr. Rachmadi was fully and properly informed of all matters to be decided by the shareholders of PT Bina Nusa Rama [BNR]," McDonald's said in a statement.
"His rights as a shareholder were completely respected. He had the full opportunity to make himself heard and to vote on those matters. Any allegations to the contrary are totally groundless and without merit."
Rachmadi, the company said, held only 10 percent of the shares in BNR.
The company has been awarded the right to hold McDonald's franchises through PT Rezeki Murni, a company Rachmadi controls.
McDonald's also said that Rachmadi resigned as BNR president director on May 12, and that he had been replaced by another BNR shareholder.
The handover of franchises to the Sosrodjojo family, the company said, would have no effect on Rachmadi's rights to the outlets he owns.
For more than a week, Rachmadi has spoken to the press about McDonald's June 3 move to sell assets in 97 outlets and transfer the master franchise rights.
"My rights as a shareholder have been bulldozed," he said. "BNR has been reduced to just a meaningless asset."
Rachmadi said that under his stewardship, the fast-food chain had incurred no major losses or debts, adding that a one-sided action to transfer the franchise rights and joint-venture outlets to a third party was not a prudent business decision.
Tetty Hutapea, a representative of the PT Adhyaksa law firm, which is advising Rachmadi, said last week that he expected to file a civil suit for unspecified damages against the fast-food chain at some point this month. The lawyer filed a suit at the South Jakarta District Court in March.
But McDonald's said that "BNR, its management and its majority shareholder have at all times acted in accordance with Indonesian law."
Rachmadi was also the controlling shareholder of PT Bank IFI. In April, the bank was liquidated by Bank Indonesia, the central bank, after the authorities said that Bank IFI had liabilities of Rp 600 billion ($60 million) against assets of only Rp 400 billion.
Local media have reported that Rachmadi tried to sell his interest in McDonald's, as part of efforts to help repay Bank IFI's debts. But the businessman has discovered that the assets have already been moved out of his grasp.