Indonesian police arrest four for involvement in fuel smuggling

JAKARTA (Reuters) - The Indonesian police said four people, including two navy contractors and an official of state-owned oil and gas company Pertamina, were arrested for their involvement in a five-year-long fuel smuggling operation worth millions of dollars.

The operation, which occurred several times a month from 2008 until 2013, involved the stealing of small amounts of fuel from Pertamina's ships that were then sold to other vessels in international waters near the Malacca Straits, the police said.

President-elect Joko Widodo, who takes office on Oct 20, has made tackling fuel smuggling a key part of his plan to minimize Indonesia's ballooning fuel subsidy bill.

Government officials estimate as much as 5 per cent of Indonesia's fuel is smuggled and sold to neighbouring countries such as Singapore and Malaysia.

Pertamina official Yusri, who goes by one name, was arrested and detained by police but no formal charges have yet been brought against him.

Police said Mr Yusri alerted two navy contractors about the shipping schedules for Pertamina's ships, from which small amounts of fuel were then robbed undetected for years. "After being informed about the fuel, the ship will stop at the middle of its journey and some of the fuel will be taken," senior police commissioner Rahmad Sunanto told reporters last week.

Pertamina and the Indonesian navy could not be immediately contacted for comment.

Pertamina allows cargo losses of up to 0.30 per cent on its ships carrying fuel from refineries to ports.

Police started investigating the case after a tip-off from the financial crimes agency that found bank transactions worth 1.3 trillion rupiah (S$143 million) from an Indonesian civil servant, who authorities say is related to Mr Yusri.