Agrifood conglomerate PPB and its 18.8%-owned Wilmar, one of the world’s leading palm oil producers and agribusiness group, are both controlled by Malaysia’s richest individual Robert Kuok.
Wilmar’s subsidiary Yihai (Guangzhou) Oils & Grains Industries Co Ltd (Guangzhou Yihai) was found guilty of contractual fraud by the Huaibei Intermediate People’s Court on Wednesday.
The court ordered Guangzhou Yihai and Yunnan Huijia Import & Export Co Ltd to jointly bear losses amounting to 1.88 billion yuan (RM1.1 billion). It also imposed a fine of one million yuan (RM583,000) on Guangzhou Yihai.
Guangzhou Yihai was sued by the public prosecutor in January 2024 as an accomplice in contract fraud related to palm oil trades between state-owned Anhui Huawen and privately-owned Yunnan Huijia. The alleged fraud led to a 5.2 billion yuan loss (RM3 billion) for Anhui Huawen.
The Wilmar unit denies the allegations and said it would appeal the verdict.
“Since the case will be appealed, the financial impact of the judgement on the Wilmar group and the company is uncertain,” Wilmar said in a filing with the Singapore Exchange (SGX) yesterday.
Graft case in Indonesia
The fraud case in China comes on the heels of another legal setback faced by Wilmar in Indonesia, where the country’s Supreme Court ruled against its subsidiaries in a corruption case.
In April 2024, prosecutors brought charges of harming state finances, unauthorised profits and harming the business sector against five of Wilmar’s subsidiaries.
The charges stem from alleged corrupt actions taken by these subsidiaries in 2021 during a shortage of cooking oil in the Indonesian market.
A lower court had cleared Wilmar of the charges, but the Supreme Court overturned the acquittal last month, resulting in the company losing a 11.9 trillion rupiah (RM3 billion) security deposit, deemed as compensation to the state.
PPB’s shares have fallen as much as 7.2% over the two trading sessions since Wilmar’s unit was found guilty in China. It closed at RM11 today, valuing the group at RM15.65 billion.
Wilmar remains PPB’s key profit contributor, contributing RM992 million or nearly 75% to its total profit before tax of RM1.33 billion in FY2024.
The company was founded by Kuok in 1968 as Perlis Plantations Bhd to cultivate and mill sugar cane in Perlis. It has since diversified into oil palm, food production, waste management, film distribution, property investment and development.
The company went public in 1972, coinciding with Kuok shifting the focus of his business outside Malaysia, especially to Singapore, where Wilmar is headquartered.