Tuesday, 1 January 2008

Corporate violations

Corporate violations

The StarOnline 1st January

THE litmus test of the integrity of the Roundtable on Sustainable Palm Oil (RSPO) probably lies in its handling of the first complaint filed against Wilmar International Ltd.

Three non-governmental organisations (NGOs) lodged the complaint last September with the RSPO and also the private investment arm of the World Bank, the International Finance Corporation.

The complaint surrounds the behaviour of three Wilmar-related companies operating in West Kalimantan since 2005, as revealed in the publication Policy, Practice, Pride and Prejudice – Review of Legal, Environmental and Social Practices of Oil Palm Plantation Companies of the Wilmar Group in Sambas District, West Kalimantan by Friends of the Earth (Netherlands), Lembaga Gemawan and KONTAK Rakyat Borneo.

The 98-page report said that Wilmar violated an Indonesian law that requires the approval of an Environmental Impact Assessment before planting begins, and that it had cleared forest beyond its allocated borders and without permits and consultation with local communities.

The report also noted that Indonesian authorities are suing Wilmar for intentional and systematic illegal burning of forests to clear land for plantations.

The expansion of oil palm plantations theatens to destroy what is left of Indonesia’s forests.All the purported offences are against the RSPO Principle and Criteria that promotes environmentally and socially responsible oil palm cultivation, as well as Wilmar’s own Corporate Social Responsibilities policies.

The Wilmar Group was created by Malaysian tycoon William Kuok Khoon Hong and Indonesian palm oil businessman Martua Sitorus in 1991. Wilmar is one of the largest global players in the edible oil sector. It is listed on the Singapore stock exchange with a turnover of US$5.3bil (RM18.5bil) last year.

After the recent takeover and merger of the plantation-based Malaysian Kuok Group and the American agri-business Archer Daniels Midland, the group is expected to handle at least a quarter of the global palm oil output.

Wilmar’s customer base includes major consumer products companies like Cargill, Unilever, Nestle and Procter & Gamble. It is developing its bio-energy sector through the construction of three biodiesel plants in Riau.

The complainants also highlighted the role played by multinational banks and the World Bank in financing Wilmar. The OCBC Bank, Dutch’s Rabobank, the CIMB Group and Britain’s Standard Chartered Bank are the main financers. The complainants criticised Rabobank and Standard Chartered for ignoring their own codes of conduct against unsustainable palm oil by giving out loans to Wilmar.

In accordance with RSPO statutes and bylaws, a Grievance Panel was established to address the complaint. The panel has received a response to the charges from Wilmar, as well as additional information from an Executive Board member, Indonesian NGO Sawit Watch.

The panel met on Nov 18 to address the complaint. RSPO president Jan-Kees Vis is tight-lipped on the outcome of the panel’s decision, stating only that “the recommendations will be conveyed to Wilmar.”

Sawit Watch and affected communities are pressing for a suspension of Wilmar’s membership in the RSPO. Until press time, the RSPO website has yet to post an official statement on the decision.