House urges investigation into questionable CPO deals
House urges investigation into questionable CPO deals
JAKARTA (JP): The House of Representative has demanded the
Joint Marketing Agency of state plantation companies renegotiate
several crude palm oil contracts signed last year by the Palm Oil
Marketing Center and foreign buyers.
The chairman of House Commission V for industrial and trade
affairs, Bachtiar Chamysah, said on Monday that key executives of
the Palm Oil Marketing Center (POMC) should also be investigated
for alleged malfeasance in selling crude palm oil (CPO) to
several foreign buyers last year.
Bachtiar said a number of contracts entered into by POMC with
foreign buyers, or domestic buyers representing foreign buyers,
were suspected of being tainted with collusion.
"Our investigations found that the prices quoted in the sales
contracts were way below prevailing market prices, thereby
causing US$9 million in losses to the government," Bachtiar said.
POMC took over the marketing of state companies' crude palm
oil in July 1998 from the Joint Marketing Agency at the directive
of the then minister for state enterprises, Tanri Abeng.
The agency was put back in charge of marketing last November
upon the discovery of alleged malfeasance committed by several
POMC officials in CPO sales to foreign buyers.
Bachtiar said the Management Consultative Board of State
Plantation Companies had assigned a special team from the Joint
Marketing Agency to renegotiate sales contracts previously signed
by POMC with eight foreign buyers.
He said that preliminary investigations showed that these
sales contracts were the result of collusion between the buyers
and POMC.
"Some buyers are willing to repay the difference between the
market prices and those quoted in their contracts, but
negotiations are still underway to determine the final amount to
be paid.
"I don't accuse anyone, but an investigative audit of POMC's
transactions throughout last year will ascertain whether there
was malfeasance or not in the contracts," Bachtiar said.
The House commission sent a team to Medan, North Sumatra, last
month to investigate the case of 85,000 metric tons of
contaminated CPO which was shipped from the province to Rotterdam
late last year.
The investigation in North Sumatra, Indonesia's largest CPO
producer, also led the House commission to conclude that several
sales contracts made by POMC in Jakarta with foreign buyers were
"highly questionable".
The commission criticized POMC's authority as being too
excessive, saying it failed to coordinate with the Management
Consultative Board of State Plantation Companies in its marketing
operations.
Bachtiar said that from July 1998 to October 1999, alleged
irregularities or misconduct by POMC's management in the sale of
crude palm oil to foreign buyers had caused $9 million in losses
to the government.
"The losses were incurred because the prices quoted in the
contracts were much lower than the average market prices," he
said.
According to data from the commission, the foreign buyers in
question are the Wilmar Group, the Global Group, the S. Alcan
Group, the Tritunggal Group, the Allmax Group, the Rich Asian
Group, the Kuok Group and Golden Oil.
No data, however, was available on the amount of crude palm
oil involved in the contracts.
The eight companies, he said, took advantage of POMC's sales
procedures, which contained loopholes which allowed for collusion
in setting CPO prices below the market price.
Bachtiar also alleged that POMC marked up the freight costs of
CPO, which under a Free on Board contract were charged to state
plantation companies.
"The standard is $45, but POMC set the cost at between $52 to
$70," he said, adding that this was another indication of POMC's
collusion with several foreign buyers.
Bachtiar suggested the government review CPO sales procedures
to ensure greater transparency and fairness in the transactions.
(03)