PTT palm oil deal under agency's probe

PTT palm oil deal under agency's probe

Company seeks NACC help to ensure transparency

The probe on PTT Plc's investment in a palm oil plantation in Indonesia remains under investigation by Thailand's National Anti-Corruption Commission (NACC) at the request of PTT. The company seeks to find out if the investment decision was made by executives for their personal benefit.

A worker unloads bunches of palm fruit at an oil palm crushing factory in Krabi province. PTT Group asked the National Anti-Corruption Commission to continue its investigation into its investment in a palm oil company in Indonesia in 2008. PATIPAT JANTHONG

Yesterday Panpree Pahitanukorn, the former chairman of PTT Group, told media an internal investigation last year probed the investment in a palm oil deal in Indonesia and might have found evidence of wrongdoing at the executive level. He said the committee reported the outcome and sought the approval of the board earlier this year for measures to punish the wrongdoers.

However, Mr Panpree, who left his position this May, said the board was cautious about punishment. PTT wants the NACC to investigate to ensure transparency.

An NACC official said yesterday the case is still under investigation. PTT chief executive Pailin Chuchottaworn declined to comment.

The transaction took place in 2008 as PTT's subsidiary PTT Green Energy (PTTGE) paid US$14.725 million for a 95% stake of Indonesian palm oil company PT Mitra Aneka Rezeki.

The probe was started in 2012 by the chief executive, said Mr Panpree, but he declined to name the people under investigation.

Industry analysts criticised the deal as overpriced, but Nipit Isarankura, acting president of PTTGE, backed the deal, insisting the evaluation price of the assets was close to the purchase amount.

At the same time as the acquisition, PTT had decided to sell its palm oil business in Indonesia, worth an estimated $300-400 million, saying it was a non-core business, though no deal had been made.

A former senior PTT executive who requested anonymity agreed with the NACC probe because it would make the case more transparent and acceptable to the public, but he urged the public to be fair to PTT's executives as all investments carry risk so the investigation should focus on the intent of the decision-making rather than pointing a finger at someone for making a decision.

"Anyone can make a mistake no matter how good your research. Good executives just make right decisions more often than wrong ones," the source said. "If you blame someone for taking a chance and failing, don't expect to see any more investment."

He added the investment made sense, as PTT succeeded in investing palm oil in Malaysia and land prices in Indonesia are now rising.

State-controlled PTT is one of several Thai companies that expanded aggressively in recent years, but has scaled back investments. Recently, the new chairman Piyasvasti Amranand said PTT will need a business revamp after a disappointing return on investments.

PT Mitra Aneka Rezeki has licences to operate 14,000 hectares of palm oil plantations in West Kalimantan. In April 2008, PTT also bought a 95% stake in PT Az Zhara, which owns licences to operate 40,500 hectares of palm oil plantations on Borneo.

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