Trafigura Employee Named in Pertamina Oil Graft Investigation

 

Commodity trader and shipowner Trafigura has been named in past scandals in Angola, Ivory Coast, Brazil, Myanmar and Mexico, and one of its employees is now implicated in Indonesia's oil-import fraud scandal as well. A sales manager of the Switzerland-based commodities giant has been detained in connection with an investigation into suspicious oil trading at state petroleum firm Pertamina, a scheme that spanned five years and allegedly cost the Indonesian state at least $12 billion. 

Last Thursday, Indonesia's attorney general named nine new suspects in the sprawling case, doubling the size of the existing list. Prosecutors allege that the suspects were involved in a scheme to improperly import fuel and oil; one of the accused is a business development manager at Trafigura's Indonesian operating company, identified only as "MH." Trafigura said in a statement that it is providing the employee with legal representation, and awaits more detail on the specifics of the allegations. 

Also named in the attorney general's announcement was Mohammad Riza Chalid, a well-known Indonesian businessman with a controversial past. Chalid owns shipowner PT Navigator Khatulistiwa and terminal operator PT Orbit Terminal Merak. An international manhunt for Chalid is said to be under way, and he is believed to be in Singapore. 

Prosecutors allege that Pertamina - which has a near-monopoly on fuel sales in Indonesia - was improperly importing foreign oil and fuel, even though domestic sources were available. The state oil company is required by law to first source its products domestically, then resort to foreign suppliers only if there is no alternative. In this case, adequate domestic supplies existed, but Pertamina bought foreign imports anyways, prosecutors allege. The second part of the scheme allegedly saw Pertamina fraudulently sell a low-grade fuel blend to motorists as "premium" gas at inflated prices. The third and last component was an alleged scam to inflate the cost of Pertamina's petroleum shipping. Each step in this chain cost money for the Indonesian state - Pertamina's owner - while enriching the participants, according to prosecutors.  

Top image: Akhmad Fauzi / CC BY SA 3.0