Indonesia arrests 11 for alleged corruption over palm oil exports

JAKARTA – The Indonesian Attorney-General’s Office said it had arrested 11 people, including officials from the customs office, for alleged corruption aimed at avoiding mandatory domestic sales of crude palm oil and paying export taxes.

The 11 people arrested included two lower-level officials at regional customs offices in Bali and Riau provinces, an official at the Industry Ministry and eight corporate executives, said Mr Anang Supriatna, a spokesman for the Attorney-General’s Office, in a statement issued late on Feb 9.

The executives and the companies they work for were not named in the statement.

The suspects are alleged to have classified exports of crude palm oil (CPO) as by-products of crude palm oil between 2020 and 2024, with losses to the state estimated at between 10.6 trillion rupiah (S$797.61 million) and 14.3 trillion rupiah, Mr Supriatna said in the statement.

“This classification manipulation was carried out with the aim of avoiding the CPO export curb, so that commodities that are essentially CPO could be exported as if they were not CPO and be exempted or relieved from the obligations imposed by the government,” Mr Supriatna said.

Indonesia has a Domestic Market Obligation for palm oil that requires exporters to sell a portion of their production to the local market as a prerequisite for obtaining export permits, to secure domestic cooking oil supply and stabilise prices.

It also imposes export levies on palm oil products, with rates for crude palm oil being the highest, while refined products incur lower rates.

The three state officials were allegedly receiving kickbacks “to smooth the administrative and supervisory process of exports”, Mr Supriatna said without giving further details.

The suspects were accused of violating an anti-corruption article in the country’s Criminal Code, under which they could face a maximum sentence of life imprisonment. REUTERS