Fraudulent transactions made just before merger of BW and GEH into EHP and sale to Felda
A due diligence report by KPMG for FGV in relation to the Eagle High acquisition, which was sighted by IPOM, highlighted how the Rajawali Group which is controlled by Indonesian tycoon Peter Sondakh was given advances amounting to USD39 million by Eagle High. Of the USD39 million, USD26 million was given to the Rajawali Group as an interest free advance.
The KPMG report also stated that although agreements were entered into between the subsidiaries of Eagle High and the Rajawali Group for the ‘purchase of equipment and palm oil products’, no actual transactions have taken place. This clearly indicates that the Rajawali Group is blatantly taking the cash from Eagle High to put into its subsidiaries, under false pretense and through fraudulent non-existent contracts.
Further, the management of Eagle High has said that there is no certainty that these advances will be repaid to Eagle High. Clearly, these advances and the nature in which they are structured are both unethical and illegal.
These fraudulent transactions were entered into just before the merger of PT BW Plantation TBK and Green Eagle Holdings Pte Ltd into Eagle High and prior to the sale of Eagle High to Felda. Were these advances repaid prior to Felda’s acquisition of Eagle High? Did Felda’s acquisition price take into account these advances and was it set-off accordingly? If it was not set-off/taken into account, Felda has effectively paid an extra USD26 million for Eagle High.
One also has to wonder why the cash strapped Eagle High, who has trouble repaying loans, has high payables that are past due and has not filed or paid taxes since 2013, would make such huge interest free advances to the Rajawali Group?
Is this common practice within the Rajawali Group whereby the pockets of its shareholders are lined with funds from its subsidiaries through fraudulent contracts – regardless of the financial state of the subsidiary?
With the rumoured sale of FGV to Eagle High (and thus Rajawali), the already controversy ridden FGV will be directly linked to the Rajawali Group and may be forced to partake in such illegal practices. Will the Malaysian powers that be stand up and block this sale or will a blind eye be turned once again because of Peter Sondakh’s strong political connections in Malaysia?
As president Jokowi goes around warning the big Indonesian private corporates to play fair and pay their taxes, support the local capital market by listing on the Indonesia Stock Exchange not Singapore and invest in Indonesia to grow jobs – actions of connected Taipans like Peter Sondakh and Martua Sitorus show they do not have Indonesia’s best interest, only self-interest.