Indonesian court fines palm oil giant for tax evasion

Channel News Asia

JAKARTA: Indonesia’s Supreme Court ordered a major palm oil company to pay more than $390 million to the state for tax evasion, a judge said on Friday, in a case likely to set a precedent in the graft-ridden nation.

The court found Asian Agri and more than a dozen of its subsidiaries guilty of “deliberately not filling tax forms properly between 2002 and 2005”, marking the country’s first prosecution in a major corporate tax case.

Head judge Djoko Sarwoko told AFP said the company was ordered to pay back state losses of 1.26 trillion rupiah ($130.5 million) and was fined an additional 2.52 trillion rupiah to be paid within a year.

The case is seen as breakthrough in Southeast Asia’s largest economy, where sweeping tax reforms introduced in recent years have been met with hostile resistance from big business.

Sarwoko said that the ruling – made on December 18 but only publicised this week – would set a precedent for at least nine major tax crime cases in the pipeline.

Asian Agri is one of Asia’s biggest palm oil producers, exporting three million tonnes of palm oil in 2011 with more than 160,000 hectares of plantations on the island of Sumatra, according to its website.

It is a subsidiary of Royal Golden Eagle (RGE), a Singapore-based conglomerate of palm oil, pulp and oil and gas firms owned by Sukanto Tanoto, Indonesia’s seventh-richest tycoon, according to Forbes.

Environmental groups have also long accused RGE’s pulp and paper company Asia Pacific Resources International (APRIL) of logging on protected carbon-rich peatland in Sumatra.

The Asian Agri case began in 2006 when a former financial controller at the company accused of embezzling money from the firm reported that the company had evaded tax.

The case was thrown back and forth between the Tax Office and the Attorney-General’s Office, raising criticisms that government institutions and law enforcers were reluctant to address major tax crimes.

“Big multi-national companies are not unattached to political and business operations. That’s why tax cases have proceeded at a snail’s pace,” Firdaus Ilyas from Indonesia Corruption Watch (ICW) said.

Ilyas said that ICW research showed resource-based companies were the most likely to evade tax in Indonesia.

A report released this month by Washington-based Global Financial Integrity ranked Indonesia ninth for illicit financial outflows among the world’s developing nations, losing $109 billion in crime, tax evasion and corruption between 2001 and 2010.

Transparency International ranks Indonesia 118 in its transparency index, one of the lowest of 174 countries, assessed on par with Madagascar and Egypt.

– AFP/de

 

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About endoftheicons

The Leuser Ecosystem on the island of Sumatra in Indonesia is in grave danger. Local politicians want to allow logging, mining and palm oil plantations in this vulnerable area. Sumatran orangutans, rhinos, elephants and tigers are already hanging on by a thread. They will not survive the destruction of the Leuser Ecosystem.

3 responses to “Indonesian court fines palm oil giant for tax evasion”

  1. Judy says :

    About time the courts started to show the PO companies they cannot get away with breaking the law.Let’s hope this case DOES mark a start of other companies being fined.The massive amounts indicated must surely damage the wallets of these companies-hopefully it will damage their progression in further plantation ownership.Anything to help the Orangutans and all the other endangered animals is good news for me & many many others!Maybe 2013 is going to be a good year-after all it is The Year of The Orangutan!Let’s hope so!:o)

  2. Judy says :

    Oh dear!What a shame-NOT!This should lead the way forward in telling these companies that they are NOT above the law.At last the courts are starting to take notice of illegal activities.Now how about prosecuting more PO companies for illegal ‘slash & burn’? Also illegal logging-trafficking,harming & killing of Orangutans and other endangered species.A start but a long way to go!

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