'Fake' permits underpin world’s biggest palm oil project in Indonesian Papua

20.12.2019

Deforestation at the Tanah Merah oil palm project in Indonesia’s Papua province. Photo: Nanang Sujana for Earthsight/The Gecko Project

  • 83sq km of forest has already been illegally cleared since, but officials reportedly seek to allow plantations to continue operating if companies “fix their permits.”
  • The environmental licence for a vast connected sawmill complex is also deemed to have been faked, and the newly built facility has been ordered to cease operations.

All seven plantation business licences (IUPs) underpinning the world’s biggest palm oil development – in Boven Digoel in Indonesia’s Papua province – were faked, according to officials responsible for issuing them, The Gecko Project and Mongabay have reported.

The Papuan official whose signature is on the IUP permits reportedly wrote to the Papua Governor and Ministry of Agriculture in February 2013 testifying that it had been forged, but no action was taken.

Despite the apparent official acknowledgement that the seven IUP permits are fakes, officials from the agency concerned – the Papua investment agency (BKPM) – reportedly told The Gecko Project and Mongabay that the two companies already operating illegally can continue if they apply for real permits.

In a separate though connected development, local NGO Pusaka revealed in late-November that officials from the Boven Digoel investment agency have similarly concluded that the environmental license (AMDAL) justifying a vast sawmill complex that processes timber from the plantations was also faked.

News of the faked plantation and sawmill permits came out just days before Indonesia announced it had filed a complaint with the World Trade Organisation (WTO)against the European Union’s Renewable Energy Directive II. The Directive phases out quotas for palm-based biodiesel due to deforestation connected to plantation development.

Faked Plantation Permits

The Tanah Merah oil palm project centres on the clearcutting of seven plantations covering 2,800sq km of largely primary forest in Papua’s Boven Digoel, and was the focus of The secret deal to destroy paradise, Earthsight’s 2018 collaboration through The Gecko Project with news outlets Tempo and Mongabay.

The whole Tanah Merah project has been mired in secrecy. All seven plantation permits were purportedly issued to companies controlled by the Menara Group, headed by the politically well-connected Indonesian businessman Chairul Anhar. 

The original ownership and control of the companies were hidden behind proxies, found by Tempo to include chauffeurs and cleaners, all of them unaware that their identities had been used. 

Anhar is related through his children’s marriages to both the previous Deputy Prime Minister of Malaysia and the current Minister of Home Affairs of Indonesia. He has also been photographed with both countries’ current leaders.

Four of the seven Indonesian companies were then sold to and remain majority owned by anonymised shell companies in secrecy jurisdictions in the Middle East. Two were sold to a Malaysian stock-exchange-listed firm with connections to Indonesia’s ex Police Chief and ambassador to Malaysia, Dai Bachtiar.

Other key permits for all seven plantations were issued from a prison cell by an official jailed for corruption, and indigenous landowners were reportedly beaten into submission to accept the concessions on their land.

According to the Gecko Project and Mongabay the allegation that the IUP permits had been faked was raised by Jamal Tawurutubun, the head of licensing at the Papua investment agency, in a May 2019 meeting in Jakarta with senior officials of various government ministries and representatives of four of the plantation firms.

Mr Tawurutubun reportedly told the Gecko Project and Mongabay that the seven permits – purported to have been issued by his agency in 2011 – first came to the agency’s attention when copies began circulating in 2013. Agency officials had known nothing of them until that point.

The seven IUPs bore the signature of then head of the Papua investment agency – Purnama, now retired. Mr Tawurutubun has reportedly said that on learning his signature was on the permits Purnama wrote to the Governor of Papua and the Ministry of Agriculture in February 2013 testifying that he had not signed them and that his signature had been forged.

However, no action was apparently taken, and months later one of the plantation companies – PT Megakarya Jaya Raya (MJR) – began clearing forest to develop one of the concessions, and over the ensuing years a second firm – PT Kartika Cipta Pratama (KCP) – also began clearing forest.

About 83 square kilometres has been cleared across the Tanah Merah concessions to date, all apparently illegally.

Purnama’s successor as head of the Papua investment – Jhoni Way – reportedly told The Gecko Project and Mongabay that the forgeries may have been facilitated by someone in the investment agency.

Nonetheless, despite repeatedly alleging the permits were faked, officials in Papua’s investment agency now appear to be seeking to allow two of the companies that have begun operating to continue developing the plantations – if they apply for the permits properly.Jhoni Way reportedly said, “the most important thing is they fix their permits.”

The two companies concerned – PT MJR and PT KCP – have since said that their IUPs are “genuine and not falsified.” Earthsight analysis shows that a small block of land within a third Tanah Merah concession was cleared in late 2018, not long after the Earthsight/Mongabay/Tempo story made headlines. It seems possible that this was an effort to create further ‘facts on the ground’ and defend against the possibility of the license being revoked.

The Timber Complex

The Gecko Project/Mongabay article exposing the official secret of the faked IUPs followed hot on the heels another allegation from Papuan officials of faked permits linked to the Tanah Merah Project, brought to light in a 23 November press release from the NGO Pusaka.

Pusaka’s release revealed how on 5 November 2019 the head of the Boven Digoel investment agency, Mr Djukmarian, wrote to the directors of PT Tulen Jayamas Timber Industries (PT TJTI) ordering them to cease operations at their newly built timber complex.

Land cleared for the sawmill at the Tanah Merah project. Photo: Nanang Sujana for Earthsight/The Gecko Project

Mr Djukmarian’s letter – seen by Earthsight – acknowledges that the environmental permit (AMDAL) possessed by PT TJTI had been “declared false” in an 8 March written “statement” from the head of the Boven Digoel plantation office, Ir Wempy Hutubessy, and that “it was submitted to PT Tulen Jayamas Timber Industries to stop all activities in the field.”

An environmental permit is legally required prior to the issuance of a sawmill licence, and on the basis of the allegedly faked environmental permit PT TJTI was issued its licence in 2015.

PT TJTI is a key element of the Tanah Merah project. The vast sawmill and plywood complex it has built in the project area is designed to process the estimated $6 billion of timber expected to be cut during forest clearance over the seven concessions.

PT TJTI is majority owned by Shin Yang – a Malaysian logging and plantation company plagued by allegations of environmental and human rights abuses and corruption in its home country, and now seeking a foothold in Indonesia. Stock exchange filings have previously identified Malaysian palm oil firm Pacific Inter-Link (PIL) – a subsidiary of Yemeni commodities trading house Hayel Saeed Anam Group (HSA) – as a shareholder in the mill project. 

Despite the credible allegations of faked permits at both the TJTI sawmill complex and the plantations supplying it, both have been certified as legally compliant under Indonesia’s mandatory timber legality assurance system – the SVLK. 

And while it is unknown whether the mill has complied with the stop work order, clearance in the associated concession has certainly continued since, as the latest satellite imagery analysis by Earthsight reveals (see image below).

Sentinel 2 satellite images of continuing deforestation within PT Megakarya Jaya Raya, Indonesian Papua. Credit: Sentinel Hub EO Browser

PIL/HSA are also alleged to be majority owners of four of the seven Tanah Merah plantations held in shell companies in Middle East secrecy jurisdictions, although both groups deny any ongoing involvement. The matter remains the focus of a Greenpeace and the Environmental Investigation Agency complaint lodged with the Roundtable on Sustainable Palm Oil (RSPO) against PIL, which is a member of the sustainability body.

How Indonesian officials and certification schemes adjudicate the allegations of structural fraud underpinning the biggest oil palm development in the world remains to be seen.

Indonesia has pledged a review of oil palm permits handed out prior to the suspension of all new oil palm plantation permits in 2018, and the forest and land use sectors make up a considerable quota of Indonesia’s commitments to reduce emissions at UN climate summits.

The Gecko Project and Mongabay suggest that the Tanah Merah project is a crucial test case for the Indonesian President Joko Widodo’s permit review. They also point out its importance for global efforts to stem climate change.

For now, most of the pristine forest remains. But if the illegal project is allowed to continue, it is estimated that it will release more carbon than Belgium does in a year.

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