Catch Me, I’ll Expose You

ON December 2 2006, Vincentius Amin Sutanto received a text message on his cellphone. The former financial controller of the Asian Agri Group (AAG), a subsidiary of the Raja Garuda Mas Group (RGM), had coincidentally turned on his cellphone, which he had kept turned off since his escape to Singapore.

He initially thought the message was from his wife in Medan, North Sumatra. Two weeks earlier they had had to separate after his attempt at embezzling US$3.1 million (around Rp28 billion) from the company was uncovered. As it turned out, his assumption was way off the mark.
Looking at the calling number, +65-9815-xxxx, he realized it was from someone in Singapore. “I want to help. You can’t stay running forever and leave your family to suffer the consequences of your actions. So, please contact me,” read the message in English.
Although the message sounded quite sympathetic, Vincent did not trust it right away. Moreover, after checking, he had no record of the number. So, he decided to respond to the call from a public telephone.
His suspicions turned out to be right. When the call connected, the voice on the other end was that of a man who claimed to be a Mr. Goh. He introduced himself as an employee from a security agency hired by Sukanto Tanoto to find Vincent and arrest him. Sukanto is none other than the boss of the RGM Group.
Goh warned Vincent that he would not be able to escape because the Singapore Police as well as AAG were pursuing him. “Singapore is a small place. You will be arrested within a short time,” said Goh as told later by Vincent. Panicked by the threat, Vincent hung up the phone and immediately rushed back to his hotel.
THIS is just one part of the long story of Vincent’s escape and pursuit to Singapore. It all started mid-November last year when the 43-year-old-man defrauded the AAG to the tune of US$3.1 billion, a crime which also involved Hendri Susilo, a friend from junior high school days, and Ferry Sutanto, his younger brother.
The story caused quite a commotion because it occurred at AAG, which happened to be the flagship of the second largest company at RGM, owned by Sukanto Tanoto. The company, which produces palm oil, cocoa and rubber, owns some 150,000 hectares of land and has become one of the largest companies in the world.
Thanks to this gold mine of his, last year Forbes magazine even crowned Sukanto the richest person in Indonesia. His wealth is estimated at US$2.8 billion or around Rp25.5 trillion.
Vincent defrauded the company by sending a fictitious transfer order to the Fortis Bank (Singapore) that requested a transfer of US$3.1 million from AAG Oils & Fats Ltd (British Virgin Islands) to the Panin Bank in Jakarta.
In the order, Vincent forged the signatures of two AAG financial authority holders in Singapore, Kueh Chin Poh and Ong Chan Hwa. As it turned out the recipient of the hot money was PT Asian Agri Jaya and PT Asian Agri Utama, two fictitious companies established by Hendri in 2004.
Vincent was able to do this with ease, thanks to his powerful position within AAG. His last job was as the group’s financial controller, which had extremely broad powers including financial control and management, accounting, taxation and legal affairs.
With these overlapping powers, many of the “important keys” to the company’s inner workings lay in his hands, including AAG’s various endeavors to avoid its obligation to pay taxes to the state.
When he fled to Singapore, Vincent also ran away with the company’s data and turned this into a bargaining chip. Through a number of Sukanto’s right-hand people at AAG, he was even able to “request a pardon” for the fraud.
According to Tjandra Putra, the head of RGM’s Legal Division, Vincent threatened to make the company documents public if his request was not granted. When visiting Tempo’s offices on January 5, the Asian Agri officials also showed us evidence in the form of an email from Vincent with the subject: “Don’t Push Me Too Far.”
Also interesting is that in the email, Vincent also stated his disappointment over the company’s behavior in asking his wife, Ismiarti, to freeze his bank account. When asked about this, AAG’s legal manager, Hadi Susanto was quick to deny the accusation.
The company, he said, had only suggested freezing the account because it was initially presumed that Vincent had been abducted by a syndicate, which could have depleted his bank account. “The freezing [of the account] was done by Vincent’s wife herself,” he said.
But a Tempo source tells another story. After the case was uncovered, the company did indeed move quickly to trace the money and cover up Vincent’s “rash act.” In addition to requesting that the account be frozen, the company also raided his house and even seized documents and a computer belonging to Vincent, who incidentally lived at the housing complex owned by AAG in Medan.
The top executives at AAG were understandably upset because the data Vincent took with him was no laughing matter. They ranged from daily transaction records to company finances, bank deposit slips to the flow of funds into Sukanto’s personal safe. He also held plans on the company’s tax payments.
Even more shocking is the common thread running across the hundreds of authentic documents, indicating years of effort by the Sukanto business group to evade its tax obligations to the state.
And the amounts were not insignificant. Since 2002 alone, the total amount of unpaid taxes seems to be around Rp1.1 trillion. This figure was obtained by calculating AAG’s total corporate income tax of as much as 30 percent from company profits that were intentionally transferred overseas (around Rp3.6 trillion).
“Pak Vincent had already reported these suspicions of tax manipulation and corruption to the KPK (Corruption Eradication Commission),” said Mikael Marut, Vincent’s attorney. Mikael also asserts that, “Because this was in the state’s interest, Pak Vincent asked for legal protection.” KPK spokesperson Johan Budi S.P. has confirmed that the commission received the report. “Our team is still investigating it,” he said.
In broad terms said a Tempo source, there was manipulation of taxes through profit transfers to AAG-affiliated companies overseas in places such as Hong Kong, the British Virgin Islands, Macao and Mauritius. Three types of methods were used: fictitious costs, fictitious hedging transitions and pricing transfers. The aim was no less than to reduce recorded profits in order to minimize tax payments.
Most prominent are the fictitious costs—complete with fictitious receipts for auditing purposes. Annually, fictitious cost entries could be as much as US$10-20 million. Once, they even reached US$60-70 million. However, after being warned by the auditor that this method was too crude, it was then done through another mechanism, transfer pricing, that is selling products to overseas affiliated companies at a low price, before reselling them to the real purchaser at the genuine market price. By this means, the company managed to incur low tax rates in Indonesia.
These fictitious costs at AAG were known as Jakarta costs, because a team in Jakarta planned them. Payments were recorded as cost for scores of AAG’s subsidiary companies in Medan. Payment checks were also issued, for example to build roads and cut grass.
Strangely, it was precisely these monies that went into a private account in the name of Haryanto Wisastra and Eddy Lukas (abbreviated as HAREL) at Permata Bank, which was then shifted to Eddy Lukas and Djoko Oetomo’s (ELDO) account at Bank Bumiputera. The three are known as being people trusted by Sukanto.
Need proof? One piece of evidence are the outlays made by 11 AAG units on November 1, 2001. The total amount spent on that date was some Rp20.9 billion. On the same day, an identical amount also went into the ELDO account. “From this evidence, it is strongly suspected that the costs were indeed fictitious,” said the earlier source.
Eddy, the Director of AAG, denies the charges. According to Eddy, all of the transactions have been internally audited and by the tax office, “It’s impossible that there were fictitious costs.” Moreover he says, there were not many such cases.
However, when Tempo again showed Eddy the transition record of the HAREL account at Bank Bali (now Permata Bank) for December 2002, containing records of 16 entries for that month of as much as Rp92 billion, even Eddy was astonished. “We cannot confirm [this], it must be studied properly,” he said evasively.
There is a good possibility that the funds were eventually channeled into Sukanto’s own pockets. The evidence being that after the funds were converted into dollars, there were a large number of deposits from the HAREL account into Goalead Ltd (Hong Kong). And its connection with Sukanto is clearly evident. The First Island Trust Company Ltd (owned by the Sukanto family) also once requested that AAG dividends be deposited into Goalead.
There are suspicions of other tax irregularities committed by AAG through the transfer of pricing data. The modus operandi was to sell crude palm oil (CPO) at low prices to affiliated companies in the British Virgin Islands, Hong Kong and Macao.
But five of the Hong Kong companies are actually just paper companies. All that exists is one person to answer the phone. From financial reports that have already been audited, it is known that before 2004 these companies did not even register any income. Strangely, in the Asian Agro Abadi International Ltd financial report audited by the offices of Ernst & Young, it cites a significant number of transactions carried out with these Hong Kong companies.
Another method of evading taxes which the Sukanto Group has been accused of, uses fictitious CPO hedging transactions and foreign currencies. Transaction hedging is a sale and purchase forward contract between two parties at a jointly agreed price.
The same source also suspects that these hedging transactions may also be fictitious. Transactions should only be on paper and made based on backdating. This method enables forward contract transactions to be made in such a way that the Indonesia-based companies would always incur a loss and must therefore transfer money to an affiliated overseas company.
Eddy flatly denies the charges, saying that all transactions were carried out based on market prices that fluctuate. “Is that manipulation?” he asked curtly. Moreover, he says, the sales were still within the range of the standard export price set by the government. So they couldn’t just do as they please and agree to a price that is way different from government stipulations. “So, that information is incorrect, [to say that] we always incur losses or carry out transfer pricing,” he said. With regard to tax planning, AAG, through a six-page dossier sent to Tempo, stated that it is a part of business planning that is commonly put on hold. “The thing that must be avoided is tax evasion.”
However, when again shown AAG’s financial report, this time Eddy lapsed into silence. There it states that for three consecutive years, an AAG unit suffered financial losses in forward transactions. There can only be two explanations: there was a shady deal in the transactions or the companies under the AAG flag don’t do so well during forward transactions.
No clear or direct answer has yet been provided by the AAG management. Confronted with all these documents, Tjandra Putra was only able to say, “It’s up to you, believe Vincent’s information or our explanation.”


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