Indonesia’s Infamous Palm Oil Sector (Archival)

03 January 2013

Indonesia’s first large-scale prosecution of a corporation over tax evasion has ended with the Supreme Court in Jakarta ordering the palm oil company PT Asian Agri to pay IDR1.26 trillion (USD130.5m) in unpaid tax, as well as a fine of double that amount. Also, the company’s former tax manager, Suwir Laut, has been sentenced to two years in jail.

The court found that between 2002 and 2005 the tax forms of 14 companies controlled by PT Asian Agri had contained false data as a deliberate strategy to evade tax. Supreme Court spokesman Ridwan Mansyur was quoted in the media as emphasising that although tax evasion was is seen as an “administrative affair,” the Supreme Court judges regard it as a crime. The country’s Corruption Eradication Commission is now considering whether to investigate other company directors.

Investigation of PT Asian Agri began in 2006, following allegations raised by a former financial controller at the company. The company has indicated that it may ask for a case review, while lawyers representing Mr Laut have complained that PT Asian Agri wrote to the tax office several times four years ago to ask for a tax ordinance, but had received no reply.

PT Asian Agri is one of the biggest palm oil producers in Asia, and Indonesia is the world’s top exporter of the commodity. Palm oil is used in items such as food, soap, detergents and biofuels.

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