A joint investigation by AFP and SourceMaterial has uncovered that Indonesian companies under investigation for palm oil fraud supplied major European energy corporations including Italian energy giant Eni and Finnish sustainable aviation fuel leader Neste. The revelations expose significant vulnerabilities in biofuel supply chain oversight and verification systems.
The ongoing Indonesian probe alleges that local companies conspired with government officials to systematically mislabel palm oil as palm oil mill effluent (POME), a waste byproduct subject to lower taxation. This fraudulent relabeling scheme allegedly defrauded Indonesian authorities of millions in tax revenue while simultaneously undermining corporate sustainability commitments.
Both Eni and Neste confirmed receiving multiple shipments described as POME from Indonesian suppliers now implicated in the investigation. The European Union, which plans to ban palm oil in biofuels from 2030 due to deforestation concerns, faces renewed scrutiny over its certification systems. Environmental campaigners note that the case demonstrates how easily suppliers can circumvent sustainability protocols.
Indonesian authorities have arrested 11 individuals, including customs officials, alleging the fraud occurred between 2022 and 2024. Through trade data analysis and document review, investigators identified three companies—Green Product International, Surya Inti Primakarya, and Bumi Mulia Makmur—as having supplied the mislabeled products to European markets.
The International Sustainability and Carbon Certification (ISCC) system, which certifies EU palm oil imports, has excluded some implicated companies from recertification while others maintain valid certifications. Additional companies supplied by the Indonesian firms include Swiss trader Kolmar, Spanish oil major Repsol, and American multinational Cargill.
Industry experts emphasize that verification mechanisms have proven inadequate to prevent such fraud, with some calling for greater transparency and independent scrutiny of POME supply chains. Ireland has already ended incentives for POME use in biofuels, with Germany set to follow in 2025.