JAKARTA (TheInsiderStories) – PT Bukit Muria Jaya, a global cigarette paper supplier owned by Djarum Group, agreed to pay a fine of US$1.56 million for knowingly selling the cigarette paper to North Korea between 2016 and 2018. The company owned by Indonesian richest family, Hartono, is also ready to comply with the Deferred Prosecution Agreement agreement with the United States (US) justice department.
The manufacture also agreed a settlement agreement with the department of treasury’ Office of Foreign Asset Control. As reported, the company was convicted had done irregularities that resulted in accusations of 28 trade violations related to US sanctions on North Korea.
In addition, the US government has agreed to postpone the prosecution for 18 months. After that time, the country will look into the possibility of dropping the charges that have arisen over allegations of conspiracy to ship products to customers in North Korea.
In an official statement released in this week, Bukit Muria acknowledges and accepts responsibility for the crime it has committed, and agrees to pay a fine commensurate with the wrongdoing as requested by DPA. The packaging company also agreed to run a compliance program designed to prevent and detect violations of US sanctions laws and regulations.
The unit of Djarum will also report regularly to the US justice department in carrying out the program. The company is committed to reporting all kinds of violations of relevant US law to the the department and working together to investigate these violations.
The brothers, Robert Budi Hartono and Michael Bambang Hartono reported have a net worth of $38 billion. Apart from the owners of PT Bank Central Asia Tbk (IDX: BBCA) and cigarette maker Djarum, the both also have electronic and real estate businesses.
The business success journey of the brothers began when they took over the cigarette business managed by their father, Oei Wie Gwan, after passing away in 1963. Oei himself started making Djarum cigarettes from a place of business in Kudus, Central Java, where he mixed tobacco with real clove spices.
After taken over, they rebuilt and modernized the company. They set up a research and development center to make new kretek cigarette blends, including cigars and cherry-flavored varieties. The brothers started exporting their cigarettes in 1972.
Currently, around 60,000 workers at their factory in Kudus are still hand-rolling Djarum kretek cigarettes. Hartonos also created their first machine-rolled kretek, Filter Djarum, in 1976. They introduced the machine-rolled Djarum Super, which is now one of the country’ most popular brands.
Based on government statistics, tobacco products are the number three item in food-related household expenditure in Indonesia after processed food and rice. The fifth largest tobacco market in the world by number of cigarettes sales is the only country in Asia that has not signed the World Health Organization Framework Convention on Tobacco Control.
In 2002, Robert and Michael partnered with Farallon Capital, a hedge fund based in San Francisco, bough 51 shares of Bank Central Asia, the country’ largest financial services company by market value, for an estimated $860 million, through the Farindo Investasi holding vehicle. Farallon then sold the remaining shares in the bank to Hartono in 2009. They also expanded into property and in 2004.
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