Indonesia - new council member suspect in cigarette fraud case..

September 16, 2009 - The Malang customs and excise office (KPPBC) has busted a syndicate that produced and distributed cigarettes bearing improper excise stickers, an official said Thursday, September 10th. The syndicate allegedly involved a recently-elected member of the Malang Legislative Council.

Head of the KPPBC's intelligence and execution section, Rudi Hery Kurniawan, said that during a raid held earlier this week the team had arrested four suspects and seized millions of cigarettes. "The cigarettes were about to be shipped to Sulawesi when we seized them. They were heading to Surabaya's Tanjung Perak Port in two trucks," Rudi said.

The four suspects, Rudi said, were identified only as JM and, who were driving the trucks, S, who allegedly managed the factory and N, who owned the misused excise number. N, from the Indonesian Democratic Party of Struggle (PDI-P), was recently sworn in as a councilor at Malang municipal legislature. He owns the Dollar cigarette factory, which produces the Actor Super and DL Super cigarettes that were seized by the KPPBC.

When asked for comment, N said that the cigarettes seized by the KPPBC were indeed produced in his factory. But, he said, the factory was currently being rented and operated by a third party.

Rudi said that during the raid his team found thousands of packs of Actor Super and DL Super cigarettes, containing 16 sticks each, bearing improper excise stickers.

The stickers, he said, were not for factory-made filter cigarettes but for traditional Indonesian hand-made kretek cigarettes, which contain coarsely cut tobacco mixed with cloves.

The different products have different rates of excise. The excise for a pack of handmade kretek cigarettes is Rp 40 (US$.004), substantially less than Rp 135 that must be paid on a pack of factory made filter cigarettes.

Despite his claims to the contrary, the police have linked the stickers, which came from Kudus, Central Java, as well as Pasuruan, Kalianget and Gresik, East Java, to N.

The operation, Rudi said, could have caused the state losses of up to Rp 444 million.
"Anyone who misappropriates excise stickers faces a sentence of between a year and five years in prison or a fine of twice as much as the value of the due excises at the minimum and 10 times of them at the maximum," Rudi said.

Reference: New council member named suspect in cigarette fraud case, Wahyoe Boediwardhana , The Jakarata Post - MALANG, 9/11/2009.

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