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Prosecutors name three palm oil groups suspects in corruption case
The Attorney General's Office has named three palm oil companies suspects in a corruption investigation, alleging misconduct in obtaining export permits at a time when shipments were being restricted.
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T
he Attorney General's Office has named three palm oil companies suspects in a corruption investigation, alleging misconduct in obtaining export permits at a time when shipments were being restricted.
The investigation comes after the Supreme Court upheld a lower court's imprisonment of executives at those companies last month for manipulating documents or submitting false data to obtain export permits.
Indonesia, which accounts for about 60 percent of the global palm oil supply, imposed tight export measures last year, including a three-week ban on shipments, to try to secure domestic supply to rein in soaring local cooking oil prices.
Prosecutors said the executives had acted on behalf of their companies, the Singapore-based Wilmar Group and Musim Mas Group and the Medan-based Permata Hijau Group, and that the investigation into the firms sought to recover state losses.
"Those three companies must be held responsible," AGO spokesperson Ketut Sumedana said in a statement issued on Thursday.
Musim Mas Group said on Friday it respected the legal proceedings and would fully cooperate with the authorities. Wilmar Group said no official charges had been filed against it and that it was seeking clarification on the issue.
Permata Hijau did not immediately respond to a request for comment.
A senior Trade Ministry official has also been jailed in the case for abusing his official position. The ministry’s foreign trade director general, Indrasari Wisnu Wardhana, was found guilty of abuse of power and causing state losses and sentenced three years in prison.
At the peak of cooking oil scarcity last year, Indrasari and three palm oil executives were arrested on the allegation that they were colluding to issue export permits that were not based on domestic selling prices. The palm oil companies where the executives had been working also failed to fulfill a domestic market obligations (DMOs), which required palm oil producers to sell an amount equivalent to 20 percent of their export volume on the home market.
Last month, Indonesia's antitrust agency fined seven cooking oil companies for restricting sales during the cooking oil scarcity period.
Despite being the world’s largest palm oil producer, Indonesia often find itself in acute shortages of the commodity and its derivatives, including cooking oil, as the government has poor control of domestic supplies and industry players have been drawn to higher prices on the international market.
But as commodity prices continue to wane, CPO exporters’ windfall on international markets has come to an end. Meanwhile, extreme weather in the country has impacted harvests.
Experts have predicted that this year’s El Niño could impact palm oil and rice production in Indonesia and Malaysia, which together supply 80 percent of the world's palm oil, as well as Thailand.
