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Palm oil giant’s claim it can’t control Liberian subsidiary a ‘red herring,’ NGO says

Palm oil fresh fruit bunches in Indonesia. Image by Rhett A. Butler/Mongabay.

One of Indonesia’s biggest family-owned firms is facing fresh criticism over its alleged failure to comply with its sustainability commitments as part of its palm oil operations in Liberia.

Golden Agri-Resources (GAR), the main palm oil arm of the vast Sinarmas conglomerate, which is owned by the billionaire Widjaja family, was the subject of a series of complaints filed to the Roundtable on Sustainable Palm Oil (RSPO) in late August by a group of NGOs including the Forest Peoples Programme (FPP).

The FPP alleges that GAR continues to fail to comply with RSPO standards, while its subsidiary Golden Veroleum Liberia (GVL) has withdrawn from the RSPO after it was ordered to stop building a palm oil mill located on contested land in the West African country.

GVL’s withdrawal from the RSPO while its parent company remains a member raises serious ethical questions, according to the FPP. That Agus Purnomo, a senior executive at GAR, also sits on the RSPO board has added to concerns over possible conflicts of interest in the RSPO’s treatment of GAR.

GAR is a member of the RSPO, the largest association for ethical production of palm oil, a commodity found in everything from chocolate to laundry detergent. Companies that join the RSPO are not supposed to destroy rainforests and grab land from indigenous and other rural communities. Membership in the RSPO allows GAR to sell its palm oil at a premium to buyers who care about sustainability, especially in Europe.

According to Liberian NGOs, GVL was “pushing ahead with its development despite the refusal of the Blogbo community to cede their lands to the company, despite their complaints to the RSPO, despite their complaints being upheld by the RSPO Complaints Panel and despite the Panel upholding the stop-work order it had issued, after overruling an appeal by GVL against the Panel’s decision,” the FPP said in a statement.

An oil palm plantation is seen from above in Indonesia. Image by Rhett A. Butler/Mongabay.

The latest GVL-focused complaint was one of five filed last month against Sinarmas entities by the FPP, which also include claims that the corporation controls more than 1,000 square kilometers (386 square miles) of land in Indonesia, in excess of the RSPO and legal Indonesian “land ceiling”; and that Sinarmas has not provided local communities with oil palm smallholdings, despite being ordered years earlier to do so; as well as other complaints related to land grabbing and opaque corporate structures in Indonesia.

In a statement to Mongabay, Wulan Suling, a GAR spokeswoman, said GAR had “no management control” over GVL despite being a majority investor, adding however that the company’s own social and environmental policy extended to all suppliers and investments.

“[A]s such we are applying the same approach to GVL as we do with any supplier not in compliance with the [policy], that is we have registered a grievance and engaged with GVL management to develop their announced action plan in a time-bound manner to ensure they achieve compliance with the [policy]” she said.

Regarding Agus’s membership of the board of the RSPO, Wulan said: “As GVL is not a subsidiary and GAR has no management control of the entity there is no conflict of interest … in this regard.”

Tom Lomax, coordinator of the FPP’s legal and human rights program, called the issue of management control a “red herring.”

“As lead investor, nobody is in any doubt that although GAR may not have direct management control, it has the capacity to exercise decisive influence over GVL on the basis of its financial stake,” Lomax wrote in an email. “If it doesn’t exercise that control it is because it is choosing not to.”

He added, “GAR’s apparent support for GVL’s disingenuous reasons for leaving the RSPO (that GVL can better comply with the spirit of the RSPO standard by relinquishing its membership) serve to discredit the RSPO, which in itself places GAR in breach of the RSPO Code of Conduct.”

An RSPO spokesman did not respond to requests for comment.

Marcus Colchester, senior policy adviser at the FPP, said the five complaints filed against Sinarmas together “show a systematic effort to dodge their responsibilities in different ways.”

Sinarmas has also come under fire for its plantation operations in the pulp and paper sector, where it is alleged to be using opaque corporate structures to hide forest destruction by its subsidiaries in Indonesia. In the wake of those revelations, the Forest Stewardship Council, which is similar to the RSPO, announced it had suspended plans to endorse the conglomerate’s main pulp and paper arm, Asia Pulp & Paper.

Mina Beyan, of the Liberian NGO Social Entrepreneurs for Sustainable Development, said GVL had unfairly acquired land from local communities and that locals were pleased to learn that, after a detailed investigation of GVL’s activities in Liberia, the RSPO had upheld its decision that the complaints were valid.

“GVL was told to stop the land grab, but they refused. And now they have walked out of the RSPO,” she said in a statement. “This delinquent behavior challenges the very fabric of RSPO. Are RSPO standards only to be observed in the breach?”

An orangutan in Indonesia. The ape’s population is swiftly declining as its forest habitat is cleared to make way for development, especially in the plantation sector. Image by Rhett A. Butler/Mongabay.

A 2013 investigation by the FPP in Indonesia found that GAR was “cheating people out of their lands” in violation of RSPO standards, which require members to respect customary land rights and only acquire land with residents’ free, prior and informed consent. The RSPO reviewed the evidence and determined that GAR should freeze all expansion and land acquisition at all 18 operations sites covered by the complaint.

NGOs have since called for GAR’s RSPO certificates to be suspended and for GAR itself to be suspended from the roundtable’s board of governors.

“This is a blatant attempt by GVL and GAR to evade their obligations to the RSPO,” said James Otto of the Liberia-based Sustainable Development Institute. “They use their RSPO membership to attract investment and to market their palm oil but when their bluff is called they just walk away from their responsibilities.”

Banner: Palm oil fresh fruit bunches in Indonesia. Image by Rhett A. Butler/Mongabay.

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