The Palm Scribe

Plantation Company Responds to the Anti Forest-Mafia Coalition’s Allegation

A well-known plantation company has responded to The Anti Forest-Mafia Coalition’s accusation that the company is involved in the practice of misuse of nominee structures with timber suppliers, saying that it will investigate and take appropriate action with the help of a third-party auditor.

The Anti Forest-Mafia Coalition press conference

The Anti Forest-Mafia Coalition reveals a practice of misuse of nominee structures between timber suppliers and the Asia Pulp & Paper (APP) company, a Sinarmas Group subsidiary.

“APP Sinar Mas will involve third-party auditors to review all forestry businesses in Indonesia, to determine if any of APP Sinar Mas employees are involved in the ones that have a conflict of interest with us,” APP Sinar Mas Director Suhendra Wiriadinata said in the company’s press release.

Syahrul Fitra, a researcher from the non-governmental organization Auriga in a press conference held on Wednesday (30/3), said that the misuse could create a negative impact on the wood market price.

“Out of the 27 existing timber suppliers, 24 are indicated to be part of APP’s industry line,” said

“When things like this occur, they are usually hiding something. They may fix prices which can cause harm to the market,” he said. An investigation of the plot of ownership of 24 timber supplier companies reveals eight names, seven of whom have worked or are still working for PT Wirakarya Sakti and PT Arara Abadi. Both companies are recognized by APP as its affiliated companies.

In the press release received by The Palm Scribe, Wiriadinata ensures that all supplies received by APP are made in alignment with the Forest Conservation Policy (FCP).

“We are always upholding the Forest Conservation Policy throughout our supply chain, and will not hesitate to discipline and break ties with any suppliers that violate the Forest Conservation Policy without exception,” he said, adding that all APP suppliers’ information can be accessed publicly.

Meanwhile, the Indonesian Legal Aid Foundation (YLBHI) representative Rahma Mary highlighted the environmental damage and legal impacts of this finding.

“The forest destruction is centered to several people and from the legal side, they can escape from all responsibilities. The Government should thoroughly check the operational license first,” she said on the same occasion.

Related to the statement, the Indonesian Forum for the Environment (WALHI) Research, Policy and Legal Advocacy Department Head Zensi Suhadi added that the Government needs to take firm and necessary measures to understand this issue more deeply.

“This shows that our forests are easily controlled by companies, while the communities find it difficult to use them. Whom do Indonesia’s forests belong to?” he said.

Suhadi also added that the issue is not only about environmental issues, but it has also expanded and regarded as a political problem. “These things are connected to the current political constellation, as it can control the pricing,” he said, urging the Ministry of Finance to examine the entire transaction flows of the 24 companies.

The Anti Forest-Mafia Coalition has also demanded APP to sign Presidential Regulation No. 13/2018 regarding the corporate regulatory framework of the prevention and eradication of money laundering by March 31, 2019. The APP is also required to disclose all affiliated shareholders and ownership identities, and release financial statements for all industrial forest (HTI) concessionaires supplying timber to APP in Indonesia.

APP has not responded to the request.

The Anti Forest-Mafia Coalition consists of 10 non-governmental organizations — Indonesian Forum for the Environment (WALHI), Indigenous Peoples Alliance of the Archipelago (AMAN), Community and Ecological Based Society for Law Reform (HuMa), Agrarian Reform Consortium (KPA), Institute for Policy Research and Advocacy (ELSAM), Sawit Watch, Epistema Institute, Indonesia Corruption Watch (ICW), Auriga, and The Global Network for Public Interest Law (PILNET).

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