Groups demand financial, human rights probes into palm conglomerate Korindo

A road cuts through one of Korindo’s oil palm plantations in Papua.
Mongabay |  7 July 2020

Groups demand financial, human rights probes into palm conglomerate Korindo

by Hans Nicholas Jong 
JAKARTA — Activists have called on the Indonesian authorities to probe the finances of the Korindo Group, a privately owned conglomerate, in the wake of an investigation that exposed a $22 million “consultancy” payment made by the company. They’re also pressing for the protection of the rights of Indigenous communities affected by the company’s oil palm operations.
The investigation, a collaboration between Mongabay, The Gecko Project, the Korean Center for Investigative Journalism-Newstapa and Al Jazeera, examined the irregularities around the payment and the role it played in the rapid expansion of Korindo’s oil palm plantations in Papua province, in the far east of Indonesia.
The payment was made to a shadowy figure as Korindo secured the rights to large swaths of land in the province. Korindo has given conflicting explanations for the payment, first describing it as a consultancy fee paid to this “expert” who helped it gain the requisite land rights, but later describing it as part of a “straightforward share purchase transaction.”
Anti-corruption experts who reviewed the payment said it matched a typology of corruption schemes in which sham consultants are used as a front to channel bribes to government officials. Korindo has denied paying bribes, but Edi Sutrisno, the director of the NGO TuK Indonesia, said the national anti-corruption agency, known as the KPK, should step in.
“The KPK must immediately investigate and take this matter seriously, investigating, coordinating and collaborating with law enforcement networks in other countries,” he said.
The investigation published by Mongabay and The Gecko Project on June 25 also detailed how Korindo had failed to deliver on widespread promises made to Indigenous Papuans to convince them to give up claims to their land. It revealed that the presence of the military and police had suppressed the ability of Papuans to express their opposition to the conglomerate’s operations.
In a statement released on June 29 in response to the investigation, Korindo said it has “contributed significantly” to development in the region and has “a strong commitment to respecting the community rights.”
The conglomerate described the findings relating to the “consultancy” payment as “false news.”
“We have followed the financial terms and regulations exercised and enforced by the Indonesia authorities,” the company said. “There never was any suspicion of illegal activities raised by the Indonesian government’s financial authorities.”
On July 1, TuK and other NGOs, including the Indonesian Forum for the Environment (Walhi), staged a demonstration outside the KPK headquarters in Jakarta to add their voices to the call for an investigation.
“We have to stand with Papuan communities whose forests have been destroyed because decisions on politics, policy and law enforcement begin here in Jakarta,” said Tubagus Soleh Ahmadi, the director of Walhi Jakarta who coordinated the demonstration. “As urban folks who benefit from the oxygen that forests in Papua help provide, we feel the need to fight for this too.”
TuK had uncovered details of the payment in Korindo’s financial statements and previously reported them to the KPK. The agency has declined to say whether it has opened an investigation.
Edi said the KPK should work with law enforcement in other countries to probe the payment, given that it was processed through the banking systems of at least two countries, including the U.S.
The NGOs also protested outside the office of state-owned Bank Negara Indonesia (BNI). The bank is the biggest lender to Korindo, according to research published in 2018 by TuK and the U.S.-based NGO Rainforest Action Network.
Korindo, which has been logging Indonesia’s rainforests since the 1970s, is BNI’s sixth-biggest client in the agricultural sector, receiving 2.8 trillion rupiah ($195 million) in loans in 2017.
Edi said BNI should reconsider its financing for Korindo in light of the recent revelations and the company’s track record of human rights violation.
BNI’s “sustainability strategy” requires its clients to give “due regard” to “the issue of deforestation, the potential for overlapping with surrounding community lands.”
“If we’re referring to BNI’s policy, then the bank should provide no more loans to Korindo because the facts are hard to dispute,” Edi said.
Human rights concerns

On July 3, more than 120 NGOs from Indonesia and other countries urged the government, Korindo’s business partners and financiers, and other agencies to protect Papuans from human rights abuses in the wake of the publication of Al Jazeera’s documentary based on the investigation.
In a letter, the NGOs said they were “gravely concerned for the safety of impacted communities and individuals” featured in the documentary, which looks at the operations of both Korindo and another South Korean-owned conglomerate, POSCO International, operating near Korindo’s concession.
The letter calls for “immediate attention and diligence in preventing further human rights abuses associated with the operations of the Korindo Group and POSCO International.”
The NGOs cited the recent case of Papuan farmer Marius Betera, who died hours after allegedly being beaten by a police officer at a Korindo field office, where he had gone to complain about Korindo’s destruction of his banana farm.
The letter also urged security services, including the police, to protect people’s rights instead of acting in the interests of companies.
In a statement on its website, Korindo said it would “work with residents and local authorities to conduct a thorough and meticulous investigation and find out exactly what happened” leading up to Marius Betera’s death.
The Forest Stewardship Council (FSC), which has certified some of Korindo’s forestry operations, urged the company to appoint an independent third party to evaluate all allegations of human rights abuses and to prevent such an incident from happening again.
“The company agrees to this,” FSC said. “In addition, the company is to provide access to remedy for affected parties.”
FSC itself has investigated Korindo in the past and found “clear and convincing evidence” that Korindo violated the rights of Indigenous peoples in Papua by failing to properly consult local communities about plans to convert their land into oil palm plantations and by providing unfair compensation to the communities.
Anselmus Amo, a pastor with the Papuan Indigenous rights organization SKP-KAMe, said Indigenous communities weren’t able to freely decide on ceding their land to Korindo because of the presence of security forces and government officials during meetings between locals and the company.
“The company entered [Papua] without obtaining the free, prior and informed consent [of Indigenous communities],” he said. “They just informed [their intention to establish plantations] while bringing the government and security forces. For villagers, the presence of many security officers gives pressure. This condition is what made the people decided to give up their ancestral lands without free consent.”
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