Government backs investigation of tainted CPO

Government backs investigation of tainted CPO

JAKARTA (JP): The government said on Tuesday it would support
calls by the House of Representatives for an inquiry by the
National Police into Europe-bound crude palm oil (CPO) which was
tainted with diesel oil.

Minister of Industry and Trade Yusuf Kalla said he had sent a
letter to National Police chief Lt. Gen. Rusdihardjo asking
greater attention be focused on the case, because the
investigation by local police was moving too slow.

The investigation, which is currently being handled by the
Medan Police, was opened following the discovery of 85,000 metric
tons of tainted CPO in Rotterdam. The CPO was shipped from
Belawan Port, North Sumatra's main gateway for CPO exports.

"Involving the National Police is a good idea," Yusuf said
before the opening of a business luncheon sponsored by the
Indonesian-Argentinean Chamber of Commerce and Industry.

Yusuf said he was aware the local police were investigating
the tainted CPO, but would encourage the National Police to open
its own investigation.

The tainted CPO is believed to be the result of thieves mixing
diesel oil with the crude palm oil, thereby preventing
authorities from detecting the theft of the CPO by the reduced
volume.

Resolving the CPO thefts is instrumental to resuming CPO
exports to Europe at their normal levels, Yusuf said.

Soon after the discovery of the tainted crude palm oil in
Rotterdam, the Dutch government demanded Indonesia take action
against the responsible parties and are now pressing for a
resolution of the case.

Yusuf said he was still awaiting a report from the General
Attorney's Office on the matter, adding that the attorney general
had to wait for the police to conclude its investigation.

"It's all of our responsibility to find a quick resolution,"
he said.

The Federation of Palm Oil Producers and the House of
Representatives called on the government last week to resolve the
CPO thefts in order to regain the confidence of importers.

Federation chairman Derom Bangun called on President
Abdurrahman Wahid to address the issue during his planned visit
to several European countries early next month.

Legislator Ade Komaruddin of House Commission V for industry
and trade said his commission, which is in recess until Jan. 20,
would recommend the government order the National Police to
investigate the case.

The suggestion came after the commission sent a team,
including Ade, to Medan for four days to investigate the matter.
The team discovered what Ade called a vicious cycle of
cooperation among CPO thieves, police and military personnel and
a number of CPO companies that purchased the stolen crude palm
oil.

The team discovered the practice of CPO thieves mixing diesel
oil with the crude palm oil to cover their crime.

Yusuf said that of the 85,000 tons of contaminated CPO shipped
to Rotterdam, European importers were willing to purchase around
60,000 tons at discounted prices.

"Of course they will sell the tainted CPO for nonconsumption
products like soap," he said.

Yusuf declined to quote the prices paid for the contaminated
CPO, but according to media reports importers agreed to purchase
the tainted CPO at between US$50 and $120 per ton.

According to the Dutch Department of Health, the contamination
level of the CPO was negligible and would be safe for use in food
products.

However, 21,000 tons of the tainted CPO have already been
shipped back to Belawan, for which Indonesian exporters must pay
about $415 per ton in charges.

As a result of this case, Indonesia's CPO exports to Europe
dropped drastically, causing stocks of the product to pile up in
several production centers, according to the palm oil federation.

Indonesia's CPO stocks have reached between 400,000 and
500,000 tons, and the stocks will continue to increase because
the market is already oversupplied, the federation said. (03)