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Experts slam massive ‘discount’ in fines for Indonesian palm oil billionaire

A Duta Palma oil palm plantation in Riau is seen from the air. Image courtesy of Greenpeace.

  • Environmental experts have criticized an Indonesian court ruling that extends a palm oil billionaire’s sentence for corruption by just one year while slashing his fines by nearly 95%.
  • The country’s highest court of appeal upheld the initial conviction of Surya Darmadi for conspiring with a local official to illegally obtain licenses for his oil palm plantation, but cut his fines from $2.7 billion to just $144 million.
  • Experts who testified in Surya’s prosecution say the latest ruling sets a bad precedent for future law enforcement against corruption and environmental crimes in the country.
  • And without fines, they warn, there can be no efforts to recover the carbon-rich and biodiverse peat ecosystems in Sumatra that Surya’s plantations destroyed.

JAKARTA — Experts have slammed a court ruling that significantly slashes the fines imposed on Indonesian palm oil billionaire Surya Darmadi, even as it increased his jail sentence, in the biggest corruption case in the country’s history.

The Supreme Court, Indonesia’s highest court of appeals, ruled in a Sept. 14 decision to uphold Surya’s earlier conviction of conspiring with a local official to illegally obtain licenses for his oil palm plantations. It extended his original 15-year prison sentence by one year.

However, the court cut the 41.9 trillion rupiah ($2.7 billion) in various fines and damages that a lower court in February had ordered Surya to pay. He now owes the state 2.23 trillion rupiah ($144 million).

The reasoning behind the drastic reduction in fines, which local media have dubbed a massive “discount,” is unclear. Ketut Sumedana, a spokesman for the Attorney General’s Office, Ketut Sumedana, said prosecutors hadn’t received a copy of the court ruling yet and thus weren’t able to learn more about the reasoning behind the judges’ decision.

Bambang Hero Saharjo, a forestry lecturer at the Bogor Institute of Agriculture (IPB) who testified as an expert witness for the state, said the Supreme Court ruling deals a blow to law enforcement in the country.

“As an expert who verified, went to the field and calculated the losses, I feel sad and concerned,” he told Mongabay. “We wanted the burden of the [environmental] damage to fall on those who responsible for it, but the Supreme Court removed that responsibility. It’s as if the court ruling legalizes all the damage done [by Surya’s illegal plantations].”

The ruling makes it unclear who should be responsible for the state losses, including environmental damage, caused by the corruption, Bambang said.

An audit by the state Development Finance Comptroller (BPKP) estimated 4.9 trillion rupiah ($317 million) worth of environmental damage caused by Surya’s illegal plantations. Gadjah Mada University (UGM) economist Rimawan Pradiptyo, who also testified as an expert witness in the trial, came up with a figure 15 times that amount.

His calculation, which assessed the degradation of soil and water quality in Surya’s plantations, showed the state would have to spend at least 73.9 trillion rupiah ($4.8 billion) to recover the environment and forest ecosystems.

Besides environmental destruction, Surya’s illegal plantations also left a trail of social destruction by disenfranchising Indigenous communities. Two of Surya’s companies operate on tropical peatlands, known for being one of Earth’s most efficient terrestrial carbon stores; hectare for hectare, they can store up to 20 times more carbon than tropical rainforests.

“[The forested landscape] has totally changed,” Bambang said. “From annual satellite monitoring, we can see there’s no forest left standing. They’ve all been replaced by oil palm trees. There’s no canal blockings [to maintain peat moisture] and groundwater level monitoring devices either. There were even fires [in the illegal plantations].”

Indonesian palm oil tycoon Surya Darmadi waits to hear his verdict at the Jakarta corruption court in February 2023. Image by Indra Nugraha/Mongabay Indonesia.

From his illegal plantations, Surya is alleged to have earned 600 billion rupiah ($39 million) per month over the course of nearly two decades. In 2016, he was ranked by local business publication GlobeAsia as the 28th-richest individual in Indonesia, with a net worth of $1.45 billion.

With the Supreme Court ruling now ensuring that Surya gets to keep much of that wealth, there’s no sign of a recovery plan for the ecosystems destroyed by his plantations.

“Once peatlands are cleared, then the damage will continue as long as there are no efforts to recover the ecosystems,” Bambang said.

And the cost to recover the damage will continue to rise the longer nothing is done, making it even more difficult and costly to restore the ecosystems to their original function, he added.

Boyamin Saiman, coordinator of the Indonesian Anti-Corruption Community (MAKI), an independent watchdog group, said the Supreme Court judges had been too conservative in their ruling. He said they’d failed to keep up with the changing trajectory of law enforcement in the country, which is increasingly focused not just on punishing criminals but also recovering state losses caused by the crimes.

“If we’re talking about [the fight against] corruption, the direction should be toward [recovering] state losses. These losses are real and felt by lots of people,” Boyamin said as quoted by local media.

He added he’s worried the ruling will set a bad precedent in future cases, with judges opting not to fine criminals to pay for the state losses incurred by their crimes. If that’s the case, then it’ll be more difficult for the state to roll back the damage caused by illegal activities, Boyamin said.

Bambang said several corruption cases are currently being processed that have similar characteristics with Surya’s case.

“It’s reasonable for us to demand accountability [in these cases], but Surya’s ruling sends a message that it’s OK [to destroy the environment],” he said.

And while the Supreme Court did add one year to Surya’s prison sentence, that doesn’t make up for not fining him to the utmost, said Rony Saputra, legal director of environmental NGO Auriga. Extending his sentence while slashing his fines essentially means the court values every additional day that Surya has to spend in prison at 110 billion rupiah ($7.1 million), he said, which is an unrealistic sum.

“What instead needs to be increased is the amount of fines, so that it can be used to improve the function of the forests [damaged by Surya’s plantations],” he said as quoted by Tempo.


Banner image: A Duta Palma oil palm plantation owned by tycoon Surya Darmadi in Riau is seen from the air. Image courtesy of Greenpeace.


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