An investigation by AFP and SourceMaterial has revealed that Indonesian companies targeted in a palm oil fraud probe supplied European firms, including Italian energy giant Eni and Finnish sustainable aviation fuel leader Neste. The links raise fresh questions about supply chains in the biofuel sector, experts said, and follow persistent allegations of fraud involving palm oil products used as fuel feedstocks.
There is no suggestion that Eni, Neste or other companies supplied by Indonesian firms implicated in the probe had knowledge of or involvement in fraud. The Indonesian probe alleges that local companies and government officials conspired to pass off palm oil as a waste byproduct called palm oil mill effluent (Pome), including by offering bribes.
Palm Oil Fraud Explained
For the Indonesian government, this is a financial issue – the higher tax on palm oil means labelling the product as Pome allegedly defrauded authorities of millions of dollars in revenue. For customers, the allegations threaten sustainability pledges. Palm oil has long been associated with deforestation, and both Eni and Neste have officially removed it from their supply chains.
The European Union will ban its use in biofuel from 2030. Both Eni and Neste received multiple shipments described as Pome from Indonesian companies accused of mislabelling palm oil as a waste byproduct. Experts and campaigners said the alleged fraud illustrated the sector’s oversight problems.
Impact on Sustainability
“The EU rightly decided to phase out palm oil biofuels in 2019 because of its links to deforestation,” said Cian Delaney, biofuels campaigner at environmental NGO Transport and Environment (T&E). “But disguising palm oil as waste products like POME… has been far too easy for suppliers and traders. Verification and certification of these imports is clearly failing,” Delaney said.
Eni said it had no direct contracts with the accused companies and received shipments through an accredited supplier who “immediately suspended all operations with the companies involved in the investigation”. The supplier, Enviq, did not respond to requests for comment.
Neste also said it had instructed its supplier to exclude implicated companies from its supply chain after the Indonesian investigation was announced. It said analysis of periodic samples from shipments between 2023 and 2025 were “consistent with palm-derived waste”, not palm oil.
Some key points to note about the palm oil fraud include:
- 11 people, including customs officials, were arrested in connection with the fraud
- The alleged fraud involved labelling palm oil as Pome to avoid higher taxes
- Eni and Neste received shipments from Indonesian companies implicated in the probe
- The European Union will ban the use of palm oil in biofuel from 2030
Indonesia has long suspected Pome fraud and last year, temporarily limited exports after trade data recorded volumes far exceeding the estimated available supply. Then last month, Indonesian authorities arrested 11 people, including customs officials, accused of defrauding the government between 2022 and 2024 by labelling palm oil as Pome.
