Thursday, November 09, 2017

Paradise Papers for APRIL

An investigation by the International Consortium of Investigative Journalists (ICIJ) reveals that APRIL has shuffled billions of dollars through a web of offshore companies. Big banks such as Credit Suisse and ABN Amro have continued to lend to April’s offshore subsidiaries despite environmentalists’ concerns and the banks’ own sustainability policies.
The leaked documents, known as the Paradise Papers, were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ) and 94 other media partners.
Here follow the full article published in the ICIJ website



Leaked Records Reveal Offshore’s Role In Forest Destruction

How lawyers and big banks help one of Asia’s largest paper companies expand despite poor environmental record and social conflicts.
On the island of Padang, in the heart of Indonesia’s industrial logging country, a group of teenagers pointed to the charred remains of sago palm trees – the remnants of the fires that have scorched the archipelago nation’s lush forests for two decades.
“There’s a sense of anger,” said Alvin, 15, who grew up in the village of Bagan Melibur. “The effects of forest burning and deforestation are enormous” for both humans and animals, he said.
In 2015, the fires were so intense across the island chain that a bitter haze blanketed much of Indonesia and drifted as far as Thailand. Airline flights were grounded. Children wore protective masks to school. Studies linked smog levels to at least 19 deaths and respiratory problems in as many as half a million people. Indonesia’s meteorology agency called the unbreathable murk “a crime against humanity.”
The fires that produced the smog were a result of a prolonged dry season and slash-and-burn practices used to clear Indonesia’s lush peatland forests to make way for palm oil and pulpwood plantations. In the fires’ wake, environmental groups lashed out at the industrial players involved in clearing Indonesia’s forests, including Asia Pacific Resources International Holdings Ltd., also known as April, one of the world’s largest pulp and paper producers.
A leak of offshore records now reveals that April, like some other natural resources companies, owed its ability to thrive and log huge sections of Indonesia’s tropical forests, in part, to a global network of elite bankers, lawyers and accountants that helped it navigate corporate and tax challenges.
A fire on Padang Island, as captured by a local student. With deforestation, the island has become more fire-prone.
The documents come from the offshore law firm Appleby and corporate services provider Estera, two businesses that operated together under the Appleby name until Estera became independent in 2016.  They show how the Bermuda-based law firm Appleby and brand-name banks such as Credit Suisse and the Netherlands’ ABN Amro have continued to help April structure its operations despite questions about the company’s environmental record.
Internal records from Appleby underline concerns of scholars, advocacy groups and government officials that the offshore financial system contributes to the expansion of companies involved in leveling forests and other practices that contribute to global climate change. Compounding the problem is the fact that Indonesia, home to the world’s third-largest expanse of tropical forests, has the highest rate of deforestation.
The leaked documents, now known as the Paradise Papers, were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ) and 94 other media partners.
An ICIJ analysis of the documents found that April is one of a dozen Asia-based forest products companies that have used the services of Appleby, which calls itself “one of the world’s largest providers of offshore legal services.” April has shuffled billions of dollars through a web of offshore companies stretching from the Cook Islands in the South Pacific to the British Virgin Islands in the Caribbean, ICIJ’s review found.
“April does not comment publicly on the details of its financing arrangements,” a company spokesperson wrote in an email.
April is a member of the Royal Golden Eagle Group, one of Asia’s largest resource conglomerates. Based in Singapore, RGE employs more than 60,000 people around the world, producing paper, palm oil and other products. The conglomerate is closely held, and financial information about it is scarce.
RGE says that it provides “strategic advice and comprehensive business process outsourcing” to April and other companies in the group and that each is “independently run, owns its assets, and manages its finances autonomously.”
No one doubts who controls all of it: Indonesian billionaire Sukanto Tanoto, who rose from modest circumstances to become one of the country’s most-powerful and best-connected figures.

Tanoto took over the family business of supplying spare parts to the oil and construction industries in 1967, according to the company’s website, and he soon won contracts from a state-owned oil and gas company. He founded RGE in 1973 and then moved into the forestry business as a plywood manufacturer.

The late Indonesian President Suharto, the dictator who took power in 1967, spurred development by encouraging massive exploitation of the country’s natural resources. He declared that the nation’s forests – covering roughly three-quarters of all Indonesian land – were state-owned, brushing aside indigenous communities’ claims to ownership. Forest concessions were split among family members, business partners and loyalists. By the end of the Suharto era, which lasted into the 1990s, about 100 million acres of Indonesia’s tropical forest – an area the size of Germany and the Netherlands combined – had been stripped of trees by clear-cutting.
Tanoto opened his first pulp and paper mill with a ceremony attended by Suharto and his Cabinet. Over the years, his companies benefited from generous government subsidies provided to the forestry sector, including royalties paid to the government that have been kept artificially low since the 1990s, according to Indonesia’s Corruption Eradication Commission and forestry researchers.
Tanoto moved into palm oil, energy and a fiber used to make rayon and cellophane as the country rode the mid-1990s economic boom to become an “Asian tiger.”
Around the same time, RGE began moving its financial dealings to tax havens, according to records reviewed by ICIJ, setting up corporate entities in zero- or low-tax jurisdictions and moving capital offshore.
In September 1994, the first pieces of what would become the April group emerged with the formation of two companies in Bermuda, a key outpost in the offshore financial system. Those firms retained Appleby for administration and legal services Within a year, one of those Bermuda entities, also known as April, was listed on the New York Stock Exchange.  According to secret documents used in ICIJ’s 2013 “Offshore Leaks” investigation, a Singapore-based offshore services provider called Portcullis TrustNet helped RGE set up a company in the British Virgin Islands and two firms in the Cook Islands. One of the Cook Islands companies was PEC-Tech Ltd., an engineering firm that became an active player in Tanoto’s pulp and paper operation.
For some of the corporations created through Portcullis, Tanoto signed contracts that authorized a third-party company to execute transactions on his behalf. Tanoto, an ethnic Chinese citizen of Indonesia, signed the authorizations with his Chinese name, Tan Kang Hoo.
The 1997 Asian financial crisis sent the Indonesian economy into a tailspin and forced Suharto from power. The economic shock forced the delisting of April, staggering under $1.3 billion in debt, from the New York Stock Exchange in 2001.
The government of President Megawati Sukarnoputri stepped in to rescue the country’s resource industry. The Indonesian Bank Restructuring Agency and national and international creditors restructured April’s and its competitors’ debt.  According to reports by Indonesian forestry experts, April agreed to expand its pulp operations on the major Indonesian island of Sumatra in exchange for the restructuring.


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