July 21, 2017 / 11:20 AM / a month ago

Shares in Indonesia's Tiga Pilar fall as police probe rice sales

SINGAPORE, July 21 (Reuters) - Indonesian police have confiscated more than 1,000 tonnes of rice over alleged false labelling by a unit of food manufacturer PT Tiga Pilar Sejahtera Food, causing its shares to tumble 25 percent to a 14-month low.

Police had been investigating the unit, PT Indo Beras Unggul. They raided a warehouse in Bekasi near Jakarta over accusations it had bought lower quality rice labelled as premium rice when sold to consumers, national police spokesman Rikwanto said in a statement.

Police were looking at whether laws, including the consumer protection law and the food law, had been broken, he said.

If found guilty, employees could face up to five years in jail and the company could be fined up to 2 billion rupiah ($150,000).

"We can confirm that our subsidiary PT Indo Beras Unggul (IBU) in Bekasi was recently inspected by Indonesian authorities. The company is fully cooperating and transparent with all of the relevant officials and is also undertaking an internal and external review to ascertain the facts," Tiga Pilar said in a statement, adding it took "its commitment to its customers and obligations under the law very seriously".

A spokesman for Indo Beras declined to comment.

The repackaged rice was sold at 20,000 rupiah per kilogram whereas it should have sold for 9,000 rupiah, online news portal Tempo.co reported, citing police.

National Police Spokesman Setyo Wasisto said a food task force had been set up with its main target to look at rice prices since the grain is a big component of inflation in Indonesia.

He said the task force comprised mainly police officers, but was working with the agriculture ministry, the trade ministry and the anti-monopoly agency (KPPU).

Wasisto said the investigation began three weeks ago and could examine the practices of other food companies.

"If there are others doing this we'll take action," he said.

Tiga Pilar shares closed at 1,205 rupiah, their lowest since May 2016.

$1 = 13,320 rupiah Additional reporting by Bernadette Christina Munthe; writing by Fergus Jensen in Singapore; editing by Ed Davies and Jason Neely

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