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Indonesian palm oil firm hit with $1.8m fine for 2015 fires

Fires raze Jambi's protected peat forest Londerang. Image by Elviza Diana/Mongabay Indonesia.

  • Indonesia’s environment ministry has won a long-awaited court judgment and $1.8 million fine from a palm oil company that experienced fires on its concession in 2015.
  • The company, PT Kaswari Unggul, had challenged the initial administrative sanctions issued in the wake of the burning, and continued to stonewall against the ministry’s efforts to hold it responsible for the burning.
  • Ironically, the company’s resistance to the sanctions, which would have compelled it to introduce fire-prevention measures on its land, may have contributed to fires flaring up on the same concession again this year.
  • The ministry has welcomed the recent judgment, but has yet to collect on any of the combined $224 million it’s been awarded in similar cases, thanks to legal stonewalling and a Byzantine court bureaucracy.

JAKARTA — An Indonesian court has fined an palm oil company $1.8 million for fires that occurred on its concession in 2015, capping a four-year ordeal by the government to bring the firm to justice.

The South Jakarta District Court ruled on Dec. 10 that PT Kaswari Unggul, a subsidiary of Jakarta-listed Bakrie Sumatera Plantations, was responsible for the fires that burned 129 hectares (319 acres) of its land in Sumatra’s Jambi province in 2015, and ordered it to pay a fine of 25.5 billion rupiah.

“We see the verdict as evidence that land and forest fires constitute an extraordinary crime,” said Rasio Ridho Sani, the head of law enforcement at the Ministry of Environment and Forestry, which brought the case against the company.

The ruling and fine mark the latest chapter in a long-running battle between the ministry and Kaswari. Shortly after the 2015 fires, the ministry imposed administrative sanctions on the company and several others. But Kaswari challenged the sanctions by reporting the ministry to various government agencies, including the national ombudsman and the office of the president, according to Jasmin Ragil Utomo, the ministry’s director of civil litigation.

“Kaswari is a company that’s naughty,” Jasmin said. “Instead of carrying out the administrative sanction, they reported [us] everywhere.”

The company’s resistance culminated with a complaint filed at the State Administrative Court in May 2017, seeking to nullify the administrative sanctions. Kaswari argued that it was the victim of the 2015 fires, which it said had started in an unlicensed forest area more than a mile from its plantation and had spread out of control.

“There’s no reason whatsoever for PT Kaswari Unggul to burn its oil palm plantation that’s still very productive,” the company said in a statement in 2016. “In fact, PT Kaswari Unggul suffered a lot because of the fires that destroyed oil palm trees that were still very productive. There’s no economic benefit at all, such as insurance claim, because [the plantation] wasn’t insured.”

The administrative court rejected the company’s complaint in October 2017.

For flouting the administrative sanctions, the environment ministry proceeded to bring a civil lawsuit against the company, as well as a criminal complaint. The criminal case is currently being heard at court.

“If they had just complied with the administrative sanctions [in 2015], they wouldn’t be facing these heavier [fines],” Jasmin said.

Burning in Jambi’s protected peat forest Lorendang where restoration efforts by WWF-Indonesia and the Peat Restoration Agency take place. Image by Elviza Diana/Mongabay Indonesia.

Burning again

Those initial sanctions, which called for, among other things, rehabilitation of the burned area and introduction of fire-prevention measures, could also have prevented a repeat of the disaster.

Instead, the same concession experienced fires across 11.6 ha (29 acres) this year, prompting the environment ministry to seal off parts of the concession and put Kaswari on a list of repeat offenders.

As it did with the earlier fires, Kaswari blamed this year’s burning on fires that spread from outside its concession. Sugeng Rahayu, the company’s head of agronomy, said the fires originated from the nearby Londerang protected peat forest, where WWF and the government’s Peatland Restoration Agency (BRG) have been working to restore degraded peat areas.

The Londerang peat forest is surrounded by five oil palm plantations and two logging concessions.

Rasio said all concession holders in Indonesia, including Kaswari, are liable for fires in their concessions, regardless of where the burning started. That same concept was adopted by the Jakarta court in its recent ruling against Kaswari.

Rasio said the environment ministry would continue going after companies with fires on their land, regardless of how long ago the burning occurred.

“We can trace trails and evidence of previous fires with the support of experts and technology,” he said. “Land and forest fires are a serious crime because they directly affect the public health, economy, ecosystem degradation over a long period of time.”

The ministry has to date taken 17 companies to court over fires, winning judgments against nine of them with combined fines of 3.15 trillion rupiah ($224 million), Jasmin said. He added more lawsuits were planned in 2020 over this year’s fires, which were the worst since 2015.

However, the government has yet to collect any of the fines, thanks to a combination of legal stonewalling by the companies and a Byzantine court bureaucracy that renders rulings practically unenforceable.


Banner image: Fires raze Jambi’s protected peat forest Londerang. Image by Elviza Diana/Mongabay Indonesia.


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