The conglomerate appears to be concealing its involvement in the heavily forested region through offshore mechanisms.
One of Indonesia’s largest conglomerates, the Salim Group, has likely acquired four palm oil concessions in West Papua using a complex network of shared directorships and offshore companies, new research suggests.
Online watchdog awas MIFEE reported in May it had uncovered evidence that the four plantations — PT Rimbun Sawit Papua, PT Subur Karunia Raya, PT Bintuni Agro Prima Perkasa and PT Menara Wasior — were under the Salim Group’s control after discovering directorship and shareholding links that are not declared in the Salim Group’s stock exchange filings.
The organisation said the use of shell companies and offshore mechanisms appeared to be an attempt to distance the Salim Group from association with contentious projects and maintain a veneer of responsibility while quietly flouting its own sustainability guidelines, which include a ban on converting ecologically important High Conservation Value areas.
Deeds for the four concessionaires obtained by awas MIFEE show the firms all share addresses associated with the Salim Group, while many of their directors have previously worked for the conglomerate, which was founded by the late Liem Sioe Liong, also known as Sudono Salim, a prominent beneficiary of General Suharto’s decades-long New Order regime.
Despite the links with the Salim Group, the four companies have not been registered as subsidiaries of Indofood Agri Resources (IndoAgri), the company’s agribusiness division and a listed company on the Singapore Stock Exchange, or indeed any other publicly traded Salim Group firm, the research shows.
The Salim Group appears to have reacted to this challenge by picking and choosing which of its plantation assets [it integrates] into its publicly listed businesses, and carefully shielding the more problematic concessions behind layers of shell companies and offshore firms.
online environment watchdog awas MIFEE
IndoAgri is the third-largest private producer of crude palm oil and while other major producers, such as Wilmar and Sinar Mas, have cancelled expansion plans in heavily forested Papua, no such pledges have been made by the Salim Group.
“The Salim Group appears to have reacted to this challenge by picking and choosing which of its plantation assets [it integrates] into its publicly listed businesses, and carefully shielding the more problematic concessions behind layers of shell companies and offshore firms,” the organisation reports.
Selwyn Moran of awas MIFEE said it was only in the last five years that Papua had become a frontier region for palm oil expansion, endangering vulnerable ecosystems, many of which had not yet been surveyed by ecologists.
“There are also serious concerns for the indigenous people of Papua. In most, if not all existing palm oil plantations, local indigenous communities living nearby have complained that the plantations have brought them no benefit,” he said, “and instead they have lost the forest they depended on for their subsistence — the sago palms which are their staple food, the animals they hunt, and other forest products which they sell.”
Despite being less exposed to international supply chains than its competitors, IndoAgri has attempted to placate critics of its practices by joining the Roundtable on Sustainable Palm Oil and publishing regular sustainability reports, which awas MIFEE said was evidence of “greenwashing.”
But the evidence suggests the conglomerate continues to invest in plantations in the Papua region, Moran said.
Satellite images taken in February of the Rimbun Sawit Papua concession in Fakfak district show roads have been constructed in much of the southwest of the plot, while a recruitment firm has been hired to source some 1,200 migrant workers from Java. Apparent shell companies — PT Palmandiri Plantation and PT Sawit Timur Nusantara — registered to known Salim Group addresses in Jakarta bought a majority stake in the company in 2011.
“Apart from the direct habitat loss, an influx of people to the area as workers would also put stress on the surrounding forest, as more people would go hunting wildlife such as cassowaries, song birds and forest marsupials like cuscus,” said Moran.
In the Kebar Valley, about 100 kilometers west of Manokwari city, Bintuni Agro Prima Perkasa was granted a permit for 19,369 hectares in September 2014 after it was bought out in July of that year by PT Cahaya Agro Pratama, which also has a significant stake in Rimbun Sawit Papua, while several of its directors have links to other Salim Group enterprises.
North of Bintuni town, Subur Karunia Raya holds a permit to develop 38,700 hectares of what was once state forest land, where work was reportedly started late last year. A Salim Group-linked company holds almost all of the shares, the remainder being owned by its director, Rapman Hutabarat, who is also on the board of Rimbun Sawit Papua. Several other directors and commissioners hold positions at other Salim Group-linked firms.
Of the four plantations, the 28,280-hectare concession held by Menara Wasior is to date the most noteworthy for the outspoken opposition of the local Mairasi and Miere tribes of Teluk Wondama district. The memory of a bloody 2001 assault on the local communities by security forces working for two logging companies has left many traumatised and, along with ongoing confrontations with loggers, has contributed to widespread opposition to the plans. The firm, as with the others, is registered to the same address as a company that has numerous Salim Group-linked directors on its board.
Edi Suryanto, a Salim Group representative, referred questions to Muhammad Waras, sustainability manager for PT Salim Ivomas Pratama, the Salim Group’s palm oil arm. At the time of writing Waras had not responded to requests for comment.
Jago Wadley, senior forest campaigner at the London-based Environmental Investigation Agency (EIA), said the links presented in awas MIFEE’s research had highlighted the “fundamental risks” to the sustainability policies of Salim Group customers such as Wilmar and Golden Agri Resources, which have pledged to eliminate deforestation and rights abuses from their supply chains.
“Companies that violate the policies of their customers risk losing their customers. EIA urges progressive palm oil buyers to send a clear message to palm oil barons that they will no longer tolerate mass deforestation and land grabbing where such practices undermine their own corporate reputations and customer base,” he said.
Moran of awas MIFEE said the Salim Group’s apparent interests in West Papua were not uncommon.
“Across Indonesia, palm oil companies have been guilty of bulldosing community lands just as they have flattened biodiverse forests. People, biodiversity, and the global climate are often the victims. Papua is no different. Responsible buyers are seeking to distance their supply chains from such outcomes, while some of the palm oil barons that supply them seek to continue business-as-usual expansion.”
Except for Menara Wasior, the Salim Group-linked concessions have all obtained permission to develop the land from the forestry ministry, which has promised to audit existing licenses in the wake of last year’s fire and haze crisis, after which President Joko Widodo declared a moratorium on new palm oil permits.
“If the government does review permits for plantations which have not yet started planting, it must also conduct a full review of active plantations,” said Moran.
“It should recognise that the way permits have been allocated in recent years, characterized by a lack of transparency, frequent irregularities, inadequate social and environmental impact assessments and a failure to allow local indigenous communities to freely decide the future of their ancestral land, have meant that several existing plantations are subject to ongoing disputes which are continuing to seriously affect those local communities.”
This story was published with permission from Mongabay.com