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Indonesian agribusiness giant APRIL outed in Paradise Papers

Drainage canals bisect a peatland planted with acacia trees in Indonesia's Riau province. Photo by Rhett A. Butler

  • Leaked corporate records reveal the offshore dealings of APRIL, one of Indonesia’s largest pulp and paper companies.
  • APRIL is one of 12 Asian forest-products giants that appear in the Paradise Papers.
  • APRIL is owned by the super-rich Tanoto family.

Indonesia’s second-largest pulp and paper firm routed billions of dollars through a network of offshore shell companies, likely to minimize its tax burden in the Southeast Asian country, where it has drained vast swaths of carbon-rich peatland in order to establish vast timber estates.

The company, APRIL, also sought the removal of an environmental condition from a $600 million loan it received from major banks in 2011.

The revelations were published last week by the International Consortium of Investigative Journalists (ICIJ) as part of its reporting on the Paradise Papers, a leak of 13.4 million files that shine new light on how the world’s richest individuals and corporations hide their wealth in secrecy jurisdictions. Most of the documents come from the Bermuda-based law firm Appleby. They were leaked to a pair of reporters at the German newspaper Süddeutsche Zeitung and then shared with the ICIJ and its media partners around the world.

“[APRIL] has shuffled billions of dollars through a web of offshore companies stretching from the Cook Islands in the South Pacific to the British Virgin Islands in the Caribbean. … Experts told ICIJ that such arrangements often shift taxable profits away from jurisdictions that bear the social costs of resource exploitation to others that simply charge lower taxes,” the article reads.

“They also said that the use of shell companies in loan transactions enables banks to claim only limited involvement with natural resources companies that flout environmental laws. When loans are provided to offshore subsidiaries, identifying responsible parties and holding them to account becomes much harder.”

A drainage canal cuts through a Sumatran peat forest being cleared for pulpwood production. Photo by Rhett A. Butler/Mongabay.

APRIL is controlled by the billionaire Tanoto family, whose patriarch, Sukanto Tanoto, rose to prominence during the 32-year regime of dictator Suharto. When Suharto held power, Indonesia lost an area of rainforest larger than Thailand, as conglomerates like APRIL ate through its natural wealth with the strongman president’s consent. Suharto topped Transparency International’s list of the world’s most corrupt leaders in 2004.

Under consumer pressure, APRIL announced in 2015 that it had stopped deforesting. To feed its mills, it now sources timber grown on huge plantations in Sumatra and Borneo, where it is often mired in conflict with local communities.

In a statement, APRIL said it follows all the rules in the jurisdictions where it operates, and cares about the environment and people more than profits.

“RGE operates on the 5Cs business philosophy, which states that whatever we do must be good for the Community, good for the Country, good for the Climate, good for Customer, then only will it be good for the Company,” Royal Golden Eagle, the Tanoto-owned firm that manages APRIL, said in a separate statement.

ICIJ deputy director Marina Walker tweeted, “Many of the offshore structures revealed in the #ParadisePapers are legal — and that, precisely, is the scandal.”

Greenpeace said it wasn’t surprised by the news about APRIL’s offshore dealings.

“April likes to publicly claim in its PR that its ‘good for the community’, yet here it is depriving the Indonesian Government of tax revenue by siphoning funds offshore. The company’s double standards are beyond outrageous,” Rusmadya Maharuddin, a forest campaigner with the NGO, said in a statement.

Indonesia’s state-run conservation efforts and even its law enforcement regime are notoriously underfunded. A massive nature reserve in Borneo where a new population of critically endangered helmeted hornbills (Rhinoplax vigil) was recently discovered is patrolled by just three forest rangers, according to a scientist working there. Budget cuts at the environment ministry were cited as a reason that President Joko Widodo is running behind on his campaign pledge to rezone 127,000 square kilometers of land to be managed by local communities.

“Every dollar locked up in a tax loophole is people’s money stolen from protecting Indonesia’s rainforests and peatlands,” Rusmadya said.

The ICIJ wrote that APRIL is one of a dozen Asian forest-product giants that appear in the Paradise Papers. Their names are likely to be revealed in coming weeks as the organization continues to publish its findings.

 

Banner image: Drainage canals bisect a peatland planted with pulpwood trees on Indonesia’s main western island of Sumatra. Photo by Rhett A. Butler/Mongabay.

 

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