Indonesian firms accused of palm oil fraud supplied European energy majors Eni and Neste, raising serious questions about biofuel supply chain integrity and sustainability pledges.
BANGKOK: Indonesian companies under investigation for a major palm oil fraud scheme supplied European energy giants, including Italy’s Eni and Finland’s Neste, a joint investigation has revealed.
The findings cast fresh doubt on oversight within the global biofuel sector. Experts say the case highlights persistent vulnerabilities in supply chains where palm oil, linked to deforestation, is fraudulently labelled as a sustainable waste product.
Indonesian authorities allege local firms conspired with officials to mislabel palm oil as palm oil mill effluent (POME), a waste byproduct that attracts lower taxes. The alleged fraud, which involved bribery, is said to have cost the state millions in lost revenue.
For European customers, the scandal threatens hard-won sustainability commitments. Both Eni and Neste have publicly removed palm oil from their supply chains, and the European Union will ban its use in biofuels from 2030.
Eni and Neste received multiple shipments described as POME from the implicated Indonesian companies. There is no suggestion the European firms had any knowledge of or involvement in the alleged fraud.
Eni stated it had no direct contracts with the accused companies and received shipments through an accredited supplier, Enviq. The Italian firm said Enviq “immediately suspended all operations with the companies involved in the investigation”.
Neste said it instructed its own supplier to exclude the implicated firms after the probe was announced. The Finnish company added that its analysis of periodic samples from 2023 to 2025 shipments were “consistent with palm-derived waste”, not palm oil.
The investigation by AFP and SourceMaterial identified three companies linked to the arrests made by Indonesia’s attorney general’s office last month. Eleven people, including customs officials, were detained for allegedly defrauding the government between 2022 and 2024.
One implicated individual is Tony, a director of Tanimas Edible Oils and shareholder in Green Product International. His firm was the source of multiple POME-labelled shipments to both Eni and Neste between 2023 and 2024.
The other companies named are Surya Inti Primakarya and Bumi Mulia Makmur. All three company directors remain in custody, and none of the firms responded to requests for comment.
Campaigners say the case exposes a systemic failure in verification. “Disguising palm oil as waste products like POME… has been far too easy for suppliers and traders,” said Cian Delaney, biofuels campaigner at Transport and Environment.
Eni’s supplier was certified by the International Sustainability and Carbon Certification (ISCC), an EU-approved verifier. An ISCC spokesperson said Surya Inti Primakarya is “currently excluded from recertification” and Bumi Mulia Makmur was “previously excluded”.
Green Product International, however, still holds a valid ISCC certificate according to the online registry. The ISCC did not respond when asked if this accreditation would be re-examined.
Other companies supplied indirectly by Green Product International include Swiss trader Kolmar, Spanish oil major Repsol, and American multinational Cargill. Kolmar declined to comment, while Repsol and Cargill did not respond.
Allegations of POME fraud have circulated for years, driven by high demand for sustainable fuel feedstocks and tax differentials. Some analyses suggest POME use in the EU and Britain exceeds global supply, indicating widespread mislabelling.
Ireland has already ended incentives for POME in biofuels, with Germany set to follow next year. James Cogan of biofuel maker ClonBio argued verification is so problematic that any POME shipment should be treated with suspicion.
“I would challenge any POME or POME-based biofuels processor to publish their volumes, sources and paperwork, to allow public and independent scrutiny,” he said.
The Sun Malaysia
