Officials from Singapore's Commercial Affairs Department, the police department responsible for investigating cases of suspected fraud, visited the Singapore offices of Asia Pulp & Paper Co. and Asia Food & Properties Ltd., people familiar with the situation said. The police unit's officials spoke to company employees and took away documents.

But so far the extent of the police unit's investigation -- and whether it has implications for the debt restructuring of the two companies -- is unclear. Several creditors and investors are angry that APP and AFP have conducted several questionable transactions that resulted in substantial financial damage. Some have called privately and publicly for the Singapore authorities to investigate these matters.

"It is not our policy to comment on any police investigations," a spokesman for the police unit said, declining to confirm the investigations.

A spokeswoman for AFP, however, confirmed that investigators had visited the company's offices in Singapore's financial district on Nov. 30 and that the officers asked for records and information. "We will extend our full cooperation," the spokeswoman said. People familiar with APP said the police unit also visited its offices in the past 10 days and also took away some documents. Neither company specified which employees had been questioned or the specific nature of the investigation.

Big Losses

Singapore-headquartered APP, which called a debt standstill in March on some $13.4 billion of debts and other obligations, has said it aims to present a draft debt-restructuring proposal to creditors by late January. However, many of its creditors and investors are furious about transactions that resulted in big losses for APP. These include two derivatives contracts, not disclosed in its audited financial statements for 1997-1999, that ended up as a $220 million hit for APP. And a decision by APP to sue five companies incorporated in the British Virgin Islands -- APP claims they owe the company about $1 billion -- has proved highly controversial.

An investigation by the Asian Wall Street Journal showed several people involved in the five British Virgin Islands companies were actually former or current APP employees, leading to suspicions -- which APP has denied -- that these companies were related parties.

Singapore-listed AFP and its subsidiary, Golden Agri-Resources Ltd., have also come in for heavy criticism after they placed several hundred million dollars of company cash deposits with a bank in the Cook Islands that is wholly owned by the Widjaja family. In July, the family admitted its Cook Islands bank was unable to repay the deposits. It has now agreed to repay the money over a five-year period -- effectively leaving both AFP and its subsidiary without any meaningful cash deposits during that period.

Creditors Take Action

Several investors and creditors have complained about the Singapore authorities' lack of action until now.

Mark Mobius, head of Templeton Emerging Markets Fund, said Tuesday he was "delighted" to hear the police unit had started to look into the companies. "Frankly I'm very surprised it took them so long," Mr. Mobius said. "I had almost given up hope, but this is very, very good news, and I hope they extend this into a criminal investigation."

Mr Mobius added that the case of APP is "of world-wide significance because of the number of investors involved... . It would help if they were able to get to the bottom of this." Mr. Mobius said his funds aren't invested in either APP or AFP but that Franklin Resources Inc. of San Mateo, California, which owns Templeton, has funds that do hold APP bonds.

One creditor, speaking on condition of anonymity, dismissed the police unit's decision to question employees at the companies as coming too late. Other creditors said it's unclear what the implications of a police unit investigation might be. One fear is that the possible prosecution or imprisonment of company executives could hold up the group's debt restructuring. But in other such cases, criminal action has prompted a change of management that has allowed debt restructuring to move ahead.

Investors and creditors are clearly losing patience with APP. Several investors have hired lawyers to prepare class-action lawsuits against the company, various members of the Widjaja family, and APP's auditors, Arthur Andersen LLP in the U.S.

Others are pursuing other avenues. Earlier this month, export credit agency officials representing 11 governments met with Teguh Widjaja, APP's chief executive, in Stockholm. A person present at the meeting said this was the first time the agencies -- among APP's numerous creditors -- had met in relation to the APP case because they wanted to join forces against and put pressure on the company.