As Wilmar Looks, PPB Falls too!

Wilmar International, the world’s largest listed plantation company, said yesterday it was looking into media reports that it had colluded with tax officials to obtain fraudulent tax refunds.

Two Indonesian newspapers, quoting Indonesian lawmaker Bambang Soesatyo from the Golkar Party, said Singapore’s Wilmar had received or was due to receive total “questionable” tax refunds worth 3.6 trillion rupiah (US$385mil) over the three years from 2007 to 2009.

”We are aware of the report, and we are looking into the matter,” a spokesman for Wilmar said, without elaborating.

The Jakarta Globe and the Jakarta Post reported Soesatyo as saying that the initial allegations were contained in an internal tax directorate report that said Wilmar manipulated its financial statements and then cooperated with someone in the tax department to approve the rebates.

The Indonesian tax office was not immediately available for comment outside normal business hours.

UBS analyst Andreas Bokkenheuser said in a research note that if the reports were substantiated the amounts would have a material impact on Wilmar’s earnings.

”The total restitutions of US$385mil for 2007-2009 accounts for 21% of our full-year net profit estimate. Under Indonesian tax law, the Tax Directorate can impose a penalty of up to four times the outstanding amount,” he said.

Wilmar, which has oil palm plantation assets in Indonesia and Malaysia and plans to start a sugar plantation business on Indonesia’s Papua island, is owned by Malaysia’s Kuok Group.

The allegation came as the country’s tax authority vowed it would continue a tax investigation into Indonesian coal miner PT Bumi Resources, in what is seen as a litmus test of the government’s commitment to reform.

Bumi Resources is owned by the family of Golkar party chairman Aburizal Bakrie. 

So,what price integrity and high ideals?

It's over to you, captains of industry as the ball is in your court!

Achtung! And they All Fell Down...

All Angela Merkel did was to issue an "Achtung" warning to halt the potential contagion effect from the miracle-less Greek gods at Germany's financial borders. And they all fell, euro, stock markets,commodities and global confidence.

Let us read this Reuters filing today.

"The euro fell to a fresh four-year low today after Germany moved to sharpen financial regulation, driving down commodities and Asian stock markets as investors stampeded out of riskier assets.

Asian stocks fell sharply, as did industrial metals, on worries that the German ban on naked short-selling of some securities, coupled with strengthening financial regulation in the United States, would derail the global economic recovery.

High-yielding currencies like the Australian and New Zealand dollars also fell.

“Germany just switched off the financial lights in Europe,” said a senior forex trader at a European bank in Singapore.

Naked short sales of euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany’s 10 leading financial institutions will be prohibited, a spokesman for Germany’s finance ministry said.

The euro slipped as low as US$1.2143 on trading platform EBS, its weakest level since April 2006 and taking it losses so far in 2010 to more than 15 per cent. It later recovered slightly to around US$1.2193.

The MSCI index of Asia-Pacific shares outside of Japan was down 1.74 per cent at a three-month low at 384.36 points. It has fallen almost 4.0 per cent since the start of the week.

Japan’s Nikkei average fell 1.65 per cent to a three-month low on the regulation worries and as the weak euro dragged on exporters.

“Germany’s move to regulate naked short selling has heightened uncertainty about the trading environment of financial markets, leading investors to avoid risks,” said Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets.

The Australian dollar fell to an eight-month low at US$0.854, with charts suggesting more losses as investors dumped high-yielding currencies. The kiwi was down 0.6 per cent at US$0.6854 Australian shares also hit an eight-month low.

London three-month copper dropped US$135 to US$6,565 a tonne, or over 2 per cent. Zinc prices in Shanghai fell more than 5 per cent, while London nickel fell 4.7 per cent on the fall in the euro.

Crude oil futures fell to a seven-month low, reflecting falls in other markets.

US Treasuries gained on a flight to safety. The yield on the benchmark 10-year note eased to 3.33 per cent from 3.49 per cent late two days ago.

Gold also gains on safe-haven bid. Spot gold rises US$5 an ounce from New York’s close to US$1,224.7. 

What a way to go.

Goodbye Greece, Hello Angela!