Three Chinese Sinopec Oil Executives Sought in $800 Million Fraud Case — China’s anti-corruption watchdog opened case on Sinopec in 2014 but troubles persist

Reuters

Tue Mar 21, 2017 | 3:38am EDT

By Fergus Jensen and Cindy Silviana | JAKARTA
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Indonesian police said on Tuesday Interpol has issued red notices, the closest to an international arrest warrant, for three Chinese executives suspected of fraud linked to a more than $800 million Sinopec oil terminal development in Indonesia.

China Petroleum and Chemical Corp, or Sinopec, is the second major Chinese state oil firm in less than three years to find staff facing allegations of corruption in Indonesia, where the resources sector is riddled with graft and legal and contractual uncertainty.

“The three red notices have been published for those wanted people,” said National Police spokesman Boy Rafli Amar.

Indonesian authorities filed a request for Interpol assistance on Feb. 21 regarding the three executives, suspects in the alleged embezzlement of an undisclosed sum of money from the West Point Terminal project, Amar said. He identified the three as West Point Terminal finance director Zhang Jun, chief executive Feng Zhigang and chairman Ye Zhijun.

A Sinopec spokesman declined to comment. Reuters has not yet been able to find telephone numbers or email addresses for the three executives, so has been unable to contact them for comment.

Chinese Foreign Ministry spokeswoman Hua Chunying said she had seen reports about the red notices, but was not aware of specifics.

Interpol’s General Secretariat press office said in an emailed response to questions on the matter that it did not “comment on specific cases or individuals except in special circumstances”.

A red notice is Interpol’s highest alert and is a request to locate and provisionally arrest an individual pending extradition. It is not an international arrest warrant as Interpol cannot compel any member country to arrest an individual who is the subject of a red notice.

Indonesia, an archipelago of some 250 million people rich in resources, is routinely ranked by watchdog Transparency International as one of the world’s most corrupt countries.

Former Indonesian energy minister Jero Wacik is serving an eight-year prison term for involvement in extortion and kickbacks worth about $840,000.

SERIES OF SETBACKS

Defrizal Djamaris, a lawyer representing West Point Terminal’s 5-percent stakeholder, PT Mas Capital Trust (MCT), said MCT reported suspicions of fraud on the project to local police in 2015.

The red notices were issued because the three executives had left the country and “not cooperated” with local police investigations, Djamaris said. The police’s Amar did not confirm this.

The West Point Terminal was touted to be Southeast Asia’s largest and was initially expected to be operational by mid-2016, but has faced a series of setbacks including a lawsuit filed by Indonesian shareholders in November.

The project in Indonesia’s Batam free trade zone to the south of Singapore is 95-percent owned by Sinopec Kantons Holdings, a subsidiary of Sinopec.

Sinopec Kantons bought into the project in January 2012, aiming to develop a 2.6 million-tonne storage facility worth more than $800 million.

The project was delayed by several years due to slow demand for tank space, Reuters reported. An official at Indonesia’s energy ministry said the downstream operations permit for the West Point Terminal expired in late 2014.

Sinopec’s only other Indonesian asset is an 18-percent stake in Chevron’s deep water project, bought in 2010.

Sinopec Kantons, which is one of Sinopec’s smallest subsidiaries, was not immediately available for comment.

(Reporting by Fergus Jensen, Cindy Silviana and Wilda Asmarini in JAKARTA, and Meng Meng and Michael Martina in BEIJING; Writing by Ed Davies; Editing by Paul Tait and Joseph Radford)

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The Indonesia Expat

The development of an oil depot on Batam by China-based Sinopec Group was recently halted due to a dispute between Indonesia-based PT Mas Capital Trust and Sinomart KTS Development Ltd (a subsidiary of Sinopec). The two companies formed a joint venture to build a fuel depot on the island in 2012. Recently, Sinopec representatives fell under suspicion of embezzling company money.

The dispute emerged because Sinomart appointed a general contractor for the project, but allegedly did not get consent from PT Mas Capital Trust. The contractor who was appointed was more expensive than others and was not procured transparently, according to PT Mas Capital Trust’s attorney. This was seen as a violation of the agreement between the companies.

The importance of the project to Indonesia’s economy has prompted the government to take action. Through a special economic policy task force controlled by the maritime ministry, the government asked Indonesian National Police headquarters to intervene and launch an investigation. The probe aims to discover whether China-based oil and gas company Sinopec is guilty of criminal wrongdoing on Batam.

“It’s true that we asked police headquarters to take over the case from Kepri’s Regional Police so that we can retrieve information more easily,” explained task force official Purbaya Yudhi Sadewa, as quoted by BeritaSatu.

Sadewa stated that Sinomart’s oil depot project worth US$850 million was halted due to criminal activity. Officials commented on the joint venture, saying the halted project caused Sinomart’s local representatives to leave Indonesia, which in turn led to a halted investment.

By stepping out from Indonesia, Sinomart’s representatives did not acquiesce to the regional police’s push to investigate the case. Sadewa said WG IV is currently doing its best to optimize the search for solutions, as the investment remains important to the country’s economic decision making.

With all this in mind, Sadewa claims the government would not intervene on an internal dispute between the two companies of the joint venture. Moreover, the case was already brought to the International Court of Arbitration by PT Mas Capital Trust’s attorney.

Trisakti University’s criminal law expert Abdul Fickar Hadjar said that WG IV must have a clear reason in recommending the Criminal Investigation Agency of Police Headquarters to take over cases normally handled by Kepri’s Regional Police.

Previously, Kepri’s Regional Police set two of PT West Point Terminal’s directors and one of its commissioners as suspects.

Through PT West Point Terminal (the name of the joint venture), Sinopec Group said it wanted to build a fuel depot on Batam. The three representatives from the project who left Indonesia are accused of embezzling around US$1.5 million.

http://indonesiaexpat.biz/news/foreigners-batam-embezzlement-flee-indonesia/

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Reuters

China uncovers power abuses, nepotism at Sinopec

Feb 7, 2015  China’s anti-corruption watchdog said on Saturday that it had uncovered evidence of graft at China Petrochemical Corp (Sinopec Group), warning the state-owned oil giant to take strong action to eradicate kickbacks, nepotism and theft.

Sinopec, the parent company of China Petroleum & Chemical Corp , must take steps to stop “power-for-money dealings” and prevent the loss of state assets, the Central Commission for Discipline Inspection (CCDI) said.

Some executives are suspected of corruption in areas of project construction, supply, sales, joint-ventures, and overseas operations, the agency said in a statement on its website (www.ccdi.gov.cn/).

It also said businesses set up by families and relatives of managers have profited from their connections.

The statement quoted Sinopec Chairman Fu Chengyu pledging to “take real and tough actions and severely punish corruption”.

China has stepped up inspections, focusing on strategic firms, as it prepares to carry out its most ambitious reform of state-run industrial conglomerates in nearly two decades.

President Xi Jinping has warned that corruption is a threat to the Communist Party’s survival and has vowed to go after powerful “tigers” as well as lowly “flies”. (Reporting by Kevin Yao; Editing by Simon Cameron-Moore)

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One Response to “Three Chinese Sinopec Oil Executives Sought in $800 Million Fraud Case — China’s anti-corruption watchdog opened case on Sinopec in 2014 but troubles persist”

  1. daveyone1 Says:

    Reblogged this on World Peace Forum.

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