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Palm oil company Bumitama under fire for clearing rainforest, endangering orangutans

Multiple allegations have been made against the Indonesian palm oil producer for setting up illegal plantations, violating its own commitments to stop clearing forests and misrepresenting its membership in the RSPO.

Clearance for oil palm plantations near Tanjung Puting National Park

Clearance for oil palm plantations near Tanjung Puting National Park. An excavator constructs a canal in recently cleared land in an oil palm concession owned by PT Andalan Sukses Makmur (PT ASMR) concession, a subsidiary of Bumitama Agro Ltd. The area is near Kumai Seberang village, next to Tanjung Puting National Park in Central Kalimantan. Taken 09/11/2013 © Ulet Ifansasti / Greenpeace

Bumitama Agri, an Indonesian palm oil producer, is breaking the law by clearing forests and developing plantations without the proper licenses, a coalition of NGOs said in a report released on Nov. 21.

The groups have called on financiers to either force Bumitama to shape up or cut ties with the company and with global palm oil traders such as Wilmar and IOI that do business with Bumitama.

“Most consumers of packaged foods don’t know that they are contributing to the illegal destruction of rainforests,” said Jeff Conant, international forests campaigner at Friends of the Earth, one of the groups behind the report.

“But financiers who invest in palm oil – with full knowledge of the industry’s corrupt and rapacious way of doing business – have no such excuse.”

“We call on all financiers of Bumitama, Wilmar and IOI to pressure these companies to clean up their acts, or to withdraw their financing,” Conant said in a media release accompanying the report.

The 22-page report, “Commodity Crimes,” accuses Bumitama of setting up “ghost estates” – or plantations that lack valid permits – in Indonesia’s West Kalimantan province on the island of Borneo.

According to the report, Bumitama entered into deals with illegal plantations knowingly. The company even acknowledged ahead of its 2012 initial public offering that managing and harvesting palm fruits from a plantation operating without a license was part of its expansion plan.

The report also claims that Bumitama is clearing forests in critical orangutan habitat despite promises made earlier this year by the company to halt all development on that concession until an assessment could be made.

Friends of the Earth, Forest Heroes and SumOfUs investigated two plantation companies managed by Bumitama, PT Gemilang Makmur Subur and PT Ladang Sawit Mas.

Both of these companies are owned or managed by PT Bumitama Gunajaya Agro (PT BGA), a Bumitama subsidiary that is a member of the Roundtable on Sustainable Palm Oil, an organization aiming to improve practices in the palm oil industry by requiring members to meet social and environmental standards.

According to the report, the companies they investigated were not only breaking Indonesian law in their operations but also violating RSPO standards.

Peatland forest clearance for palm oil. Excavators clear intact peatland forests and build drainage canals in an oil palm concession owned by PT Andalan Sukses Makmur, a subsidiary of Bumitama Agri Ltd.

Peatland forest clearance for palm oil. Excavators clear intact peatland forests and build drainage canals in an oil palm concession owned by PT Andalan Sukses Makmur, a subsidiary of Bumitama Agri Ltd. Taken 11/13/2013 © Kemal Jufri / Greenpeace.

‘Ghost estates’

Bumitama currently manages 7,911 hectares of palm oil plantations in Ketapang district in West Kalimantan through PT Gemilang Makmur Subur. This includes 7,305 hectares of land outside the PT GMS concession area, much of which falls inside Sentap Kancang Forest Reserve.

Bumitama gained control of the PT GMS plantation in November 2011, when it was agreed that the company’s subsidiary PT BGA would manage the plantations and maintain the exclusive right to buy and sell palm oil produced from its concessions.

PT GMS, then known as PT Golden Youth Plantation Indonesia, or GY Plantation, had been purchased earlier that year by two companies also owned by the Hariyanto family, the controlling shareholders of Bumitama Agri.

GY Plantation was already operating thousands of hectares of unlicensed plantations when the Hariyanto family acquired the business. In June 2004, GY acquired an 18,300-hectare location permit – a permit that gives the license holder preliminary rights to the land but does not allow it to begin development.

Some 63 percent of this concession overlapped with the Sentap Kancang Forest Reserve, land managed by the Ministry of Forestry. In order for this land to be developed as plantations it would need to be rezoned, however the Ministry of Forestry never approved this rezoning and GY never received the land use license (HGU) – the final permit needed to begin development.

However, despite the fact that GY lacked the final permit and that the majority of its concession overlapped with protected forests, it went ahead with development and cleared 5,694 hectares of forests between 2004 and 2011.

The concession was eventually declared illegal and the local government was forced to issue a new concession to the company, this time only 2,330 hectares. GY had already planted nearly 4,200 hectares of oil palms, but only around 20 hectares of of the planted land fell within the new concession area.

The unlicensed “ghost estate” (“kebun hantu”) should have been transferred back to the Ministry of Forestry. Instead, GY’s parent company V.S. Industry sold the illegal plantation to the Hariyanto family.

In total, the Hariyanto family acquired nearly 7,000 hectares of developed land from V.S. Industry, according to the report. Since Bumitama took over management of the plantation, an additional 1,003 hectares have been developed, over half of which are outside its concession.

The NGOs claim in the report that Bumitama was well aware that its actions were legally questionable. Bumitama disclosed the legal problems associated with the GY plantation in its prospectus for its public offering in
April 2012, stating that the Hariyanto family would bear the liability risk.

Peatland forest clearance for palm oil. Excavators clear intact peatland forests and build drainage canals in an oil palm concession owned by PT Andalan Sukses Makmur

Peatland forest clearance for palm oil. Excavators clear intact peatland forests and build drainage canals in an oil palm concession owned by PT Andalan Sukses Makmur. Taken 11/13/2013 © Kemal Jufri / Greenpeace

Orangutans at risk

The report also investigated PT Ladang Sawit Mas, a subsidiary of PT BGA that also operates in Ketapang district in West Kalimantan. PT LSM was also previously owned by V.S. Industry and was purchased by Bumitama in October 2011.

In May 2012, the company began clearing land inside its concession near Gunung Palang National Park, the Sentap Kancang Forest Reserve and the Gunung Tarak Forest Reserve.

The 9,300-hectare concession, which the report says was issued in violation of normal concession protocol, includes over 8,000 hectares of natural forest and falls inside the buffer zones of the nearby national park and forest reserves.

This area also contains a population of nearly 2,000 endangered Bornean orangutans. On April 8, International Animal Rescue (IAR) filed a complaint with the RSPO after the group rescued four orangutans from land clearing sites inside the concession.

In response to the complaint, Bumitama pledged on April 18 to stop clearing land in its PT LSM concession until high conservation value/social impact assessment studies had been carried out. However, according to the report, satellite imagery shows Bumitama cleared an estimated 500 hectares of land in the concession, mostly forests and peat swamps, between May and September.

Further allegations

Just one day after the report’s release, Greenpeace released a series of photos showing that another Bumitama subsidiary, PT Andalan Sukses Makmur (PT ASMR), was clearing peat forests outside Tanjung Puting National Park in Central Kalimantan, including areas identified as high conservation value (HCV) in an assessment of the concession.

Tanjung Puting National Park is an important orangutan habitat in Indonesia, home to a population of orangutans studied by researcher and conservationist Birute Galdikas, who was trained by Louis Leakey along with Jane Goodall and Dian Fossey.

In a blog post on Nov. 11, Greenpeace also said that Orangutan Foundation International (OFI) and Friends of the National Parks Foundation (FNPF) have documented the remains of several orangutans in different locations along the border between PT ASMR and another palm oil plantation owned by BW Plantation, another RSPO member.

A number of orangutan “graveyards” have been discovered near the two plantations since March this year. In August, Greenpeace and FNPF found an orangutan skull inside PT ASMR, along with three other skulls near the border between the two plantations. Three more collections of bones were found by FNPF in October.

The Central Kalimantan Natural Resources Conservation Agency (BKSDA) is investigating a number of these cases.

“BKSDA Central Kalimantan is working together with the police to uncover the cause of the orangutan deaths,” Hartono, a BKSDA official in Pangkalan Bun, Central Kalimantan, told Mongabay-Indonesia on Nov. 9, adding that several sites where bones had been found did fall inside the concession areas of the two companies.

FNPF, together with Friends of Borneo, also filed a complaint against PT ASMR with the RSPO in September this year.

PT ASMR is owned by Bumitama Sawit Lestari, which is not currently an RSPO member. However, in response to the complaint, the RSPO sent a letter to Bumitama requesting the company’s RSPO membership be transferred to the parent company, Bumitama Agri, rather than its PT BGA unit.

In the letter, the RSPO points out that Bumitama group states on its website and in its annual report that it is a member of the RSPO and applies RSPO standards in its operations.

This, the letter stated, “clearly indicates” that Bumitama group is taking advantage of the RSPO membership of its subsidiary and “giving the impression that the entire stable of companies within the group is RSPO complaint.”

Clearance for oil palm plantations near Tanjung Puting National Park

Clearance for oil palm plantations near Tanjung Puting National Park. The concession, next to Tanjung Puting National Park in Kumai District, Central Kalimantan, is habitat for numerous endangered species including orangutans and proboscis monkeys as well as ramin. Taken 11/13/2013 © Kemal Jufri / Greenpeace

Bumitama response

On Nov. 21, the day the “Commodity Crimes” report was released, Bumitama issued a statement to clarify issues related to four RSPO complaints that had been filed against Bumitama units, including the complaint against PT ASMR filed in September and the complaint against PT LSM that was filed in April, as well as two other complaints that had been filed against Bumitama units.

In the statement, Bumitama Agri said it had conducted its own investigation and found that there were “compliance gaps” in its adherence to certain RSPO standards. However, Bumitama denied that it had destroyed forests or killed any orangutans.

The company also said it had taken steps to stop all planting activities on the plantations where complaints related to orangutans and deforestation had been raised. Bumitama also said the business group intended to work towards full compliance with RSPO standards and that the group “is and remains committed to RSPO Sustainability.”

On Nov. 22, one day after issuing the statement, Bumitama also sent a response to the RSPO’s earlier letter regarding transferring membership from PT BGA to Bumitama Agri. In the response, Bumitama agreed to transfer its membership from PT BGA to the entire business group.

CITATION: FrIends of the Earth US, WalhI-FrIends of the Earth IndonesIa, Forest Heroes, and Sum of Us. Commodity Crimes: Illicit Land Grabs, Illegal Palm Oil and Endangered Orangutans. Nov 2013.

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