Indonesian civil society writes to Banks: APRIL failing to implement its own policy

The environmental coalition Jikalahari and the network of local communities of Riau province, JMGR, have sent two letters to banks, one each to Credit Suisse and ABN Amro, to share some concerns over what is happening on the ground in APRIL’s concessions in the Riau Province (in Sumatra, Indonesia).

Credit Suisse has committed to help its customer APRIL to deliver a visible change in its activities. ABN Amro also has business with APRIL, and last May was involved in a new deal with this company for US$800 million, through a syndicated loan.

According to the local communities, the APRIL group and its subsidiary PT RAPP has been so far unable to implement its own policy, to comply with regulations in Indonesia regarding peat protection and peat management or to implement regulations regarding setting aside areas for local communities’ livelihood trees.

APRIL subsidiaries illegally keep building canals, planting in burned peatlands that should be restored, and even forbidding official inspection teams to visit their concessions. Social conflicts with local communities are not being addressed, as the company promised they would be, and its agreements are violated by the plantation companies.

Furthermore, business-as-usual peat management is draining large areas of peatlands in the Kampar peninsula, releasing huge amounts of CO2 every year and creating risks of new waves of fires. Last year’s peat fires caused the death of 5 Riau residents; 3 of which were children, and more than 87,000 people suffered from respiratory diseases, while the county suffered $935m of damage. Six APRIL subsidiaries have been investigated by the Police Department in relation with the fires, but still the company has failed to stop draining peat. This practice will also cause soil subsidence, leading to extensive flooding in the rainy season, while the dry season is affected by fires.

The civil society groups have asked the banks to make sure that their clients will be able to prove full compliance with laws and regulations, to promptly address social conflicts and to stop draining peat.

The letter_to Credit Suisse
The letter to ABN Amro

APRIL supplier fined for illegal logging

A timber supplier of APRIL in Riau was fined by Supreme Court in August trial to pay compensation amount to 16.2 trillion (US$1.19 billion) for illegal logging and environmental destruction occurred during 2004-2006 in Pelalawan district, Riau province. PT Merbau Pelalawan Lestari, an APRIL timber supplier since 2003, was found guilty conducting illegal logging of 5,590 hectares and environmental destruction of 1,873 hectares of its concession.
Report from Supreme Court website last week that quoted by media said that PT Merbau Pelalawan Lestari, an APRIL timber supplier since 2003, was found guilty conducting illegal logging of 5,590 hectares and environmental destruction of 1,873 hectares of its concession.
The losses calculated by the Ministry of Environment and Forestry that MPL should pay are Rp 12 trillion and Rp 4 trillion from the two plots deforested respectively (cnnindonesia.com, 18 Nov). It is the biggest fine that a company must pay to the government in forestry related court in the country.
The court ruling concluded that MPL breached the law by clearing forest outside its timber plantation license (IUPHHJ-HT) that released by Pelalawan District Head in 2002. The APRlL timber supplier had cleared 7,466 hectares based on its annual work plan in 2004, 2005, and 2006.
The judges ordered PT MPL to pay compensation to the Ministry of Environment and Forestry. The company was tried first in 2008 by Pekanbaru District Court when they won. At Pekanbaru High Court in 2014, the company also won the lawsuit.

Bambang Hendroyono, Secretary General of Ministry of Environment and Forestry told media last week that the fine would be allocated for Riau forest restoration as well as the State loss caused by the illegal logging (cnnindonesia.com, 17 Nov).

Corruption Eradication Commission (KPK) hailed the decision of Supreme Court. Laode Muhammad Syarif, deputy chairman, said it was the court ruling was a great decision. “MA [Supreme Court] court ruling against PT Merbau Pelalawan Lestari is an impressive jurisprudence. If environmental [case] can implement it, there should be corruption case can do too,” he said as quoted as saying by cnnindonesia.com (18 Nov).

PT MPL is one of 14 timber companies in Riau that their cases closed by the Riau Police in 2008. They are affiliated to two pulp giants, APP and APRIL. PT MPL is also related to corruption cases that jailed Pelalawan District Head Azmun Jaafar and Riau Governor Rusli Zainal.
Woro Supartinah, coordinator of Jikalahari, said that APRIL should be responsible to for MPL penalty whether to pay compensation or other actions due to the giant company received illegal logging timber from MPL’s operation. “From moral and ethical perspectives, APRIL should tell its customers and public honestly that they have produced pulp and paper from illegal logging sources,” she said. “Not by denying their affiliation as they announced reactively to the court ruling.”
In a press statement APRIL said it stopped sourcing fiber from PT MPL since February 2005. APRIL also denied that MPL was not its affiliate.