First Resources to contest CPO plantation seizure

10 March 2008 04:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Indonesian crude palm oil (CPO) producer First Resources said on Sunday that it would challenge in court, any government action to seize its plantation assets.

It was responding to press releases by the Corruption Eradication Commission of Indonesia (KPK) last week that it would auction off 19 of the company’s plantation and mill assets, including three subsidiaries with regard “to a court case relating to Martias, one of the founders and former shareholders of the Company”.

Martias, who is no longer with the company, was convicted of corruption in May last year for illegally granting rights to 11 companies to set up private plantations in reserved forest areas in East Kalimantan, including Bumi Sawit Perkasa, a subsidiary of the company, it said in a statement.

The three First Resource subsidiaries involved in the auction are Ciliandra Perkasa, Pancasurya Agrindo and Perdana Intisawit Perkasa, whose nearly 16,800-hectare plantations accounted for almost 22% of the firm’s total planted area in December 2007, it said.

The company said that KPK had not informed it about the proposed seizure of its properties, adding that neither the company nor its subsidiaries had been a party to the legal proceedings involving Martias.

“The seizure is presumably in order to secure payment for the penalty imposed on Martias,” it said explaining that the Supreme Court had ruled that the penalty previously imposed on Martias was insufficient and had ordered him to pay nearly $38.3m as penalty, but did not state what the original penalty had been.

“The Company has appointed a legal counsel who has advised that there is no legal basis for such actions. The Company will be challenging any such action in the courts of Indonesia”, it said.

First Resources, one of Indonesia’s largest private sector producers and processors of crude palm oil and palm kernel, said it still had “full operational accessibility to its plantations”.

The company’s shares fell further on Monday morning to S$1.01 ($0.73), after closing 35 cents lower on Friday to S$1.05.

($1 = S$1.39)

By: Arujnee J Ram
+65 6780 4359

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