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How one of Indonesia’s biggest companies cut a secret deal to plant oil palm in Borneo

An expanse of oil palm trees in Seruyan district, 2017.

In the leadup to the release of the second installment of Indonesia for Sale, our series examining the corruption behind Indonesia’s deforestation and land-rights crisis, we are republishing the first article in the series, “The Palm Oil Fiefdom.” This is the first part of that article, which can be read in full here. (Baca juga dalam Bahasa Indonesia.)

Indonesia for Sale is co-produced with The Gecko Project, an initiative of UK-based investigations house Earthsight.

Prologue: Jakarta, 2007

On Nov. 29, 2007, on the tenth floor of a marble-clad office block in Jakarta, the scion of one of Indonesia’s wealthiest families met with a visitor from the island of Borneo.

Arif Rachmat, in his early 30s, was heir to a business empire and an immense fortune that would place him among the richest people in the world. His father had risen as a captain of industry under the 32-year dictatorship of President Suharto. After a regional financial crisis in 1998 forced the dictator to step down, Arif’s father had founded a sprawling conglomerate, the Triputra Group, with businesses ranging from mining to manufacturing.

Arif had come of age as one of the most privileged members of the post-Suharto generation, attending an Ivy League university and cutting his teeth in a U.S. blue-chip company. He had recently returned home to join the family firm, taking charge of Triputra’s agribusiness arm. Now he meant to position it as a dominant player in Indonesia’s booming palm oil industry.

Arif Rachmat

Arif’s visitor that Thursday was Ahmad Ruswandi, a chubby young man with glasses and a propensity to break out into a nervous smile and giggle. A contemporary of his host at the age of 30, Ruswandi came from a different place, but could have been forgiven for thinking his fortunes were on the rise as he rode the elevator up the Kadin Tower.

Ruswandi’s father, Darwan Ali, was chief of a district in Indonesian Borneo named Seruyan, putting him at the vanguard of a new dawn of democracy in Indonesia. Darwan was among the first of the politicians chosen locally to run districts across the nation, after three decades in which Suharto had held the entire country in a tight grip. These politicians, known as bupatis, were afforded vast new powers, including the ability to lease out almost all of the land within their jurisdictions to whomever they deemed fit to develop it.

Darwan Ali, left, and his son Ahmad Ruswandi

The bupatis had a choice. They could attempt to usher in economic development while safeguarding the rights of the people they represented. Or they could repeat the sins of Suharto, who had plundered Indonesia’s resources in an orgy of crony capitalism.

The scene in the Kadin Tower would give some indication of the direction Darwan had taken. As the afternoon rush hour descended on the capital, his son Ruswandi sold Triputra a shell company with a single asset, a license to create an enormous oil palm estate in Seruyan. The license had been issued by Darwan himself, who was now in the midst of an expensive reelection campaign. It was not the first shell company Ruswandi had sold, and he was not the only member of the family who would cash in on Seruyan’s assets.

Over the past nine months, The Gecko Project and Mongabay have investigated the land deals that were done in Seruyan during its transition to democracy. We followed the trails of paper and money, tracked down the people involved and talked to those affected by Darwan’s actions. It was a journey that took us from law firms in Jakarta to a prison in Borneo, from backwater legislatures to villages that stand like islands amid a sea of oil palm.

Indonesia’s Seruyan district on the island of Borneo, which is shared between Indonesia, Malaysia and Brunei.

These deals played a part in one of the greatest explosions of industrial agriculture the world has ever seen. In a few short years after Darwan and dozens of other bupatis assumed authority, plantations multiplied throughout the archipelago nation. The resulting destruction of Indonesia’s tropical rainforests catapulted it toward the top of the list of countries fueling climate change.

This agricultural surge is routinely cast as an economic miracle, rapidly bringing income and modernity to undeveloped regions. In this narrative, expansion was planned, controlled and regulated. The harm to the environment was an unfortunate side effect of the moral imperative of development.

But there is another version of the story, one that played out through backroom deals and murky partnerships. In this story, unaccountable politicians carved up other people’s land and sold it to the children of billionaires. Farms that fed the rural poor were destroyed so that multinationals could produce food for export. Attempts to reign in the bupatis were undermined by their ability to buy elections with palm oil cash, and they came to be known, in a nod to Suharto, as “little kings.”

Darwan’s Seruyan deals, while vast, represent a fraction of the total. Their significance lies in what they tell us about how the system was gamed, to allow district chiefs to exploit natural resources, subvert democracy and turn the state into a force that acts against rural people. By delving into his story, we expose the inner workings of a system that can be seen in operation across the country.

Today, the actions of bupatis like Darwan reverberate throughout Indonesia, as conflict and deforestation continue in lands they ceded to companies. Understanding the corruption that occurred in this fragile period may hold the key to ending the crisis.

The cover image for ‘The Palm Oil Fiefdom.’

Banner image: A sea of oil palm in Seruyan. 

Read the rest of the story here. And then follow Mongabay and The Gecko Project on Facebook (here and here in English; here and here in Indonesian) for updates on Indonesia for Sale. You can also visit The Gecko Project’s own site, in English or Indonesian. Read the article introducing the series here.

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