Former Indonesian minister arrested in sugar corruption probe; state allegedly lost over US$25 million

JAKARTA: A minister who served under former President Joko Widodo during the latter’s first term in office was on Tuesday (Oct 29) named as a suspect in a corruption case involving sugar imports that was alleged to have caused state losses worth some 400 billion rupiah (US$25.5 million). 

Local media reported that former Trade Minister Thomas Lembong was arrested by the authorities for his suspected involvement in a graft case involving sugar imports managed by his then-ministry between 2015 and 2016. 

Mr Thomas served as Indonesia’s Trade Minister between August 2015 and July 2016. 

He was accused by the Attorney General’s Office (AGO) of issuing an import permit for 105,000 tonnes (105 million kilograms) of red sugar crystals in 2015. This, they allege, was despite him knowing that there was a domestic surplus of the commodity, local media reported. 

The move was said to have violated a 2004 trade and industry ministerial regulation which stated that only state-owned enterprises (SOE) are allowed to import raw sugar.

The AGO has since also denied claims that Mr Thomas’s arrest was politically motivated. 

An investigations director from the AGO, Mr Abdul Qohar, said that the process was carried out in accordance with relevant procedures.

“Whoever the perpetrator is, when solid evidence is found, the investigator will designate the individual as a suspect,” he was quoted as saying by local media Tempo. 

Mr Thomas’s arrest was made following an investigation that started in October last year, involving 90 witnesses. The former minister was detained at the Salemba Detention Centre in Jakarta on Oct 29 along with another suspect, known to be the business development director of a state trading firm PPI.

“At the time, the suspect, as trade minister, granted the import license without first coordinating with the relevant state agencies,” Mr Abdul Qohar said, as quoted by The Jakarta Globe. 

In January 2016, Mr Thomas allegedly signed a letter, ordering PPI to become a state-owned firm (SOE) in order to fulfil the national sugar needs and stabilise the commodity’s price in the country. 

PPI was also tasked to work with national sugar producers to produce 300,000 tonnes of white sugar. It worked with at least eight private sugar companies despite the 2004 ministerial regulation.

Both Mr Thomas and PPI’s business development director are suspected to have known about the PPI’s cooperation with these private companies. 

AGO investigators also claimed that PPI had bought refined sugar from private firms, despite these companies selling the commodity directly to consumers for 16,000 rupiah per kilogram, higher than the highest retail price of 13,000 rupiah per kilogram, resulting in state losses in the sale. 

“We estimated the state loss incurred, (it was) done by experts which took a long time because it is not a simple and ordinary case,” Mr Abdul Qohar said at a press conference in Jakarta on Oct 29 which was also broadcasted on the AGO’s Youtube channel. 

The alleged corruption by the suspects amounted to 400 billion rupiah (US$25.5 million) in state losses. The profit obtained by the private companies should have gone into state trading firm PPI, the AGO said. 

The prosecutor added that the import licence was granted to a private company identified as PT AP, although only state-owned companies are authorised to procure the commodity from foreign sources under the 2004 trade and industry ministerial regulation. This was also done despite a ministerial coordination meeting concluding that the national stock of the commodity was already in surplus.

Local media reported that Mr Thomas was a close ally of Mr Widodo, and was said to have been an economic advisor and speechwriter for the former president at one point.