Indonesian Trade Official Arrested for Cooking Oil Corruption

Indonesian police recently arrested Dirjen Daglu, the director-general of foreign trade at the Indonesian Trade Ministry, for his alleged involvement in a corruption scheme that saw crude palm oil meant for cooking illegally exported out of Indonesia during the nation’s ongoing cooking oil shortage, Indonesian news site Coconuts Jakarta reported on Tuesday.

Police in Indonesia arrested Daglu in recent days along with three other suspects from the private sector implicated in the same corruption crime.

“The four suspects will be detained for the next 20 days separately at Salemba Prison in Central Jakarta,” Coconuts Jakarta revealed on April 19.

Indonesian Attorney General S.T. Burhanuddin announced the criminal charges against the four suspects during a press conference on April 19.

“The acts committed by the suspects resulted in state economic losses and an increase in prices as well as a scarcity of cooking oil, causing a decrease in household consumption and small industries that use cooking oil making people’s lives difficult,” the chief prosecutor said, as quoted by Indonesia’s Detik news website.

Indonesian authorities suspect Daglu and his fellow suspects violated a number of articles of Indonesia’s Trade Law, “including restrictions on the export and import of certain commodities, as well as the Trade Ministry’s Decree concerning the amount of oil distributed for domestic needs and the domestic price obligation,” according to Coconuts Jakarta.

The news outlet referred to actions taken by Indonesia’s federal government in February and March meant to increase the nation’s domestic supply of cooking oil amid a worsening shortage of the commodity. The measures included requiring Indonesian palm oil companies to increase their numbers of obligatory domestic sales and placing a temporary cap on cooking oil prices.

“The world’s biggest exporter of the edible oil has required companies to sell 30% of their planned export volume of palm oil products, up from 20% imposed in January, under a so-called domestic market obligation (DMO) aimed at ensuring local supply amid soaring cooking oil prices,” Reuters reported on March 17.

Indonesia’s Ministry of Trade additionally raised the ceiling for palm oil export taxes and levies in mid-March.

“[T]he ceiling of palm export tax and levy would be raised … from a combined maximum of $375 per tonne to between $575 to $675 per tonne. For every $50 increase in the palm oil reference price, the levy will be raised by $20,” Indonesian Trade Minister Muhammad Lutfi said at the time.

“The maximum CPO [commodity pool operator] levy would be applied when prices reach $1,500 per tonne. Indonesia’s reference CPO price for March stood at $1,432.24 per tonne,” Reuters noted at the time.