7th May 2014
The complaint brought against IOI Plantations, a founding member and current Executive Board Member of RSPO, has been one of the most lengthy in the RSPO Complaints System. IOI entered the plantation scene in Sarawak in 2006 via a Joint Venture with state-owned Pelita for an estate in Baram.
In 2009, Grassroots participated in the Palm Oil Monitoring Initiative (POMI) and as a result, was involved in the documentation of the land conflict between IOI and the village of Long Teran Kanan (LTK). This case would test the efficacy and effectiveness of RSPO’s Complaints System. The Sarawak case was accompanied by another complaint made against IOI’s operations in Ketapang, Kalimantan Barat, which was accused of operating without due legal procedures and destroying forests. The complainants in Indonesia called for IOI’s certificates to be suspended until they rectified the transgressions.
In LTK, the village wanted IOI to compensate them for the loss of their lands and livelihoods, with the eventual aim of returning the lands to the community. Attempts at mediation have been ineffective so far, with complainants citing fundamental concerns regarding the management of the case; including concerns over conflicts of interests within RSPO’s Complaints Panel, and allegations that IOI has not negotiated in good faith – making any attempt at a mediated resolution tipped in favour of the company. The LTK-IOI case has raised questions on RSPO’s governance, weaknesses in RSPO’s Complaints System and IOI’s behaviour when challenged on their sustainability claims.
IOI Plantations – RSPO Executive Board Member, major Malaysian palm oil industry actor
As a leading Malaysian palm oil producer, IOI Plantations has become a key player in the sector, including downstream investments, notably owning Loders Crooklaan in the Netherlands; one of the key refineries supplying the EU, as well as 183,207ha of land planted with oil palms in Malaysia and Indonesia. IOI claims that it is a founding member of the RSPO and has several operations certified as conforming to RSPO’s standards leading to the award of the Certified Sustainable Palm Oil (CSPO) certificate. IOI has also played a very active role in the governance of RSPO through its role on the RSPO Executive Board (EB). A snapshot of IOI’s financial performance and position is provided below. IOI has a public policy statement on sustainable palm oil and corporate social responsibility.
Kampung Long Teran Kanan Baram — Sarawak village having dispute with IOI’s Pelita estate
Kampung Long Teran Kanan (LTK) is located in Baram, Miri District, Sarawak, Malaysia. Established originally earlier, the 1960s saw the arrival of a group of Kayan from upstream in the Baram to settle along the current location of LTK. The land area was ceded to the present LTK community through customary (and later legally ratified) laws by the existing Berawan community. Generations have worked and managed their land resources there, including family farming plots as well as broader forest areas that are integral to their culture as well as being a primary source for protein and medicines. After the Pelita estate was established on their lands and land clearing activities began, the community sought legal action as a final resort in 1997. A community map was completed by the village in 2002. The Sarawak Lands and Survey Department compensated the community when Petronas (the Malaysian national oil company) wanted to build a pipeline through their customary land.
Sarawak government / Pelita – Joint-Venture holder of IOI Pelita estate
Sarawak, Malaysia’s largest State, is on the island of Borneo. Controversial for the way it has courted international NGO criticism on issues of deforestation and land rights abuses, Sarawak has become spotlighted by groups like The Sarawak Report, and Bruno Manser Fund on these issues and widespread corruption that comes from the very top of government, ex-Chief Minister (and now Governor) Taib Mahmud. On land rights issues particularly, Sarawak has gained a negative reputation of grabbing Native Customary Rights (NCR) land. One of the poorer States in Malaysia, Sarawak has seen its vast forests intensively logged and converted for dams, plantations and other developments.
Roundtable on Sustainable Palm Oil – sustainability certification scheme owner
The Roundtable on Sustainable Palm Oil (RSPO) was started in 2004 to create a global standard for sustainable palm oil that reflects the balance of interests between industry, environmental and social groups. The RSPO’s Complaints System is the primary body tasked with receiving, addressing and managing grievances and complaints made against RSPO’s members. The IOI case presents one of RSPO’s longest-standing open cases.
Entries for new docs, statements, media pieces, campaign calls, etc.
- Download meeting report:
17 November 2009 Physical Meeting Record IOI Rinwood & Tinjar community-BSi.pdf
SGS became the lead auditor for IOI’s RSPO certification and subsequently responded to public complaints against RSPO that were gathered during the public consultation period for the audit.
March – April 2010
Friends of the Earth Netherlands / Milieudefensie produced a report titled “Too Green to be True” on IOI’s activities and breaches of RSPO’s rules for their operations in Ketapang, West Kalimantan, Indonesia. The allegations include IOI operations not adhering to Indonesian laws, RSPO partial certification rules and IOI’s own CSR policy. In addition, the report presented information that claims IOI cleared forest land, areas outside its concession, peat lands and used fire to prepare land – all contravening IOI’s own CSR policy, national laws and RSPO rules. This led to a series of rebuttals between IOI and Milieudefensie on the report. IOI’s response to the report dismissed all the allegations made against them. It insists the interpretation of laws and processes is valid while strongly denying involvement in illegal land clearing, land conflicts or deep peat planting. IOI also referenced its HCV report to dispute Milieudefensie’s claims about deforesting adjacent forest areas.
- Download IOI response letter to Milieudefensie:
26 March 2010 IOI Response to Too Green to be True-FoE copy.pdf
Milieudefensie posted a public rebuttal to IOI’s response, providing specific arguments to counter IOI’s claims and demonstrate the legitimacy of their allegations. On legality, it was pointed out that IOI in fact did not adhere to the actual process of land and plantation acquisition but instead, selectively obtained permits. IOI’s claims on deforestation were questioned based on publicly available data presented in the rebuttal that showed land use change consistent with the original allegations against IOI.
- Download Milieudefensie’s summary reaction to IOI’s response:
20 April 2010 Milieudefensie on IOI’s reaction-summary.pdf
- Download Milieudefensie’s full rebuttal of IOI’s response:
14 april2010 Milieudefensie reply to IOI.pdf
- Download Court judgement summary:
25 March 2010 Miri High Court Judgement Brief.PDF)
- Download news article on Court judgement:
1 April 2010 Court Voids Malaysian Palm Oil Giant’s Leases on Native Lands – ENS article.html
The complainants and community were buoyed by the decision of the Court. There was a sense that since IOI had mentioned that they would not appeal this case no-matter the outcome, an environment conducive to a negotiated out-of-court settlement now existed. This would pave the way for direct negotiations between the community and company to begin resolving the long-standing conflict.
Frustration in the community came to a head by July as it appeared IOI had simply neglected its own obligations and agreements to negotiate. In addition, IOI’s continued operations and profiting from the disputed land was a controversial point for the community, who viewed this as a disrespectful act in the face of legal recognition that in fact the land was owned by the community and not IOI. In July, LTK filed a police report against IOI for carrying out business as usual on the land that was ruled in March to be the legal land of the community.
A research team that included LTK’s lawyers, local NGOs, POMI partners, researchers and journalists were invited by LTK village to visit and view the case first-hand. The team visited the village, land areas, IOI’s operations office as well as held discussions with families and met with villagers to gather the views and issues for the case.
The solicitors for IOI wrote to LTK’s representatives seeking information with the intention of compensating LTK for releasing the disputed land. It was also officially revealed through the lawyers’ letter that in fact IOI went back on their promise and were set to appeal the ruling of the Miri High Court in March. In spite of this clear and fundamental breach to the agreements between the parties, the representatives for IOI (the lawyers) expected LTK and their representatives to negotiate out-of-court – knowing full well that the position of LTK to negotiate on fair and equal terms would be compromised and left vulnerable.
- Download the letter to HNL & Co.:
20 September 2010 Letter to Messrs. HNL & Co. – Lay Anyie case.pdf
The Nut Graph, independent news site, published an on-the-ground report on the plight of the community of LTK. IOI again responded by strongly denying wrongdoing in their rebuttal.
As part of SGS’s work on auditing IOI’s operations according to the certification rules of RSPO, SGS completed a report on IOI’s new plantation developments against the RSPO New Plantings Procedure. This report focussed on IOI’s Indonesia operations in Ketapang, where Milieudefensie had previously reported on the issues and conflicts caused by IOI.
The report made the following findings:
- The community have limited access to community land due to the continued occupation by IOI.
- Community relations were poor. IOI does not possess the capacity or resources to address on-going tensions between the community and company.
- The conditions of roads to the village are very poor and in urgent need of repair.
- The sole water catchment area for LTK is planted with oil palms by IOI, evidence of application of weed killers, and siltation of water intakepoint jeopardising the water resources for the village.
- Poor maintenance of riverine areas, including the lack of buffers between river and plants as well as poor maintenance of some culverts
- Examples of haphazard and unsafe management of agrochemicals on the IOI estate.
- The neglectful state of housing for foreign workers, including unsanitary and unsafe conditions for the housing.
- The discovery of a grave-site used by foreign workers to bury deceased on community land that was undisclosed. This raised questions on working conditions as well as worker safety and welfare.
- Land cleared in the disputed area that was done without consultation with communities through neither a Social Impact Assessment nor the conduct of High Conservation Value assessments.
- Evidence of government recognising the legitimacy of LTK’s existence through providing a public health clinic as well as building and running of a public school in the village. Victims of a fire in the village received government compensation for rebuilding LTK homes while compensation was paid to LTK for accessing it to build a gas pipeline.
- The report then concluded that the IOI had seriously breached the following RSPO rules: RSPO Code of Conduct Article 2.3 (on open, transparent actions and commitment to conflict resolution) and RSPO Certification Systems 4.2.4 (land conflicts, HCV and labour issues requirement for partial certification).
- RSPO Code of Conduct, part 2 on ‘transparency, reporting and claims,’ article 2.3: Members will commit to open and transparent engagement with interested parties, and actively seek resolution of conflict
- RSPO Certification Systems 4.2.4 (c) regarding partial certification requirements, which are: there are no significant land conflicts, no replacement of primary forest or any area containing HCVs since November 2005, no labour disputes that are not being resolved through an agreed process and no evidence of non-compliance with law in any of the non-certified holdings.
The demands of the complainants were laid out in 9 direct actions provided in the recommendations section of the Grassroots report. They include:
- IOI should withdraw its pending appeal against the decision of the Miri High Court unilaterally.
- IOI should act upon fulfilling the conditions of the EIA for the estate as contained in the letter of undertaking to the NREB.
- IOI should suspend all operations in the disputed lands, especially any land clearings.
- IOI should prioritise and begin in earnest, direct negotiations with the community of LTK for the compensation of lands or the return of lands to community members who have legitimate claims. Such a process should be done through a transparent and mutually agreed process that allows community members to negotiate through their own representatives and arbitrated through a suitably agreed process that is equitable to both communities and company.
- IOI should rehabilitate and protect LTK’s water catchment area and water intake point, including rehabilitating the catchment area as well as ensuring strict control over access into the area and demarcation of the catchment through a joint exercise with community.
- IOI should improve its management of agrochemicals, riverine zones and solid waste.
- IOI should improve staff housing conditions to ensure safe, sanitary and livable conditions for all workers.
- IOI should exhume the deceased and rebury them in a suitable burial ground for workers at a site that is decided in consultation with the community.
- IOI should complete road repairs.
The report and complaint resulted in a meeting between the representatives of LTK and IOI on the sides of the RT8 meeting in Kuala Lumpur. Agreement was met verbally to negotiate a compensation settlement while IOI would investigate the claims made in the Grassroots report.
March – April 2011
- Download BRIMAS press release & attachments:
16 March 2011 Attachment 4,5,6 BRIMAS PR, Police reports and pictures.docx
- Download letter by stakeholder to RSPO:
21 March 2011 Stakeholder Letter (only) to RSPO re IOI grievance and RSPO systems.pdf
The blockade and issues regarding IOI were brought to light by Rainforest Action Network (RAN) as they sought to raise the case with IOI’s major customers like Cargill in the United States. This led to IOI posting a response refuting the claims made by LTK. IOI claimed that the rights to the land could be “extinguished” through compensation (which had not been done at the time of IOI’s response). IOI also accused the village of not cooperating on submission of claims.
- See IOI’s response
2 April 2011 IOI Response to RAN article.pdf)
- See media statement and article on Free Malaysia Today news site
- The current and ongoing certification process of all IOI group’s activities will be suspended with immediate effect.
- IOI group will be given a period of 28 days from the date of this letter to revert with an acceptable solution to these matters, which preferably should be mutually agreed by parties involved.
- IOI group is expected to with immediate effect and agreed in advance with RSPO, to publish a statement on their corporate website indicating the two measures stated above.
The decision was enforced by RSPO’s formal letter informing Grassroots (as the complainant) of the decision of the Grievance Panel. This included a suspension of IOI’s certificates and 28-days for a commonly acceptable solution plan from IOI. IOI then released responses to RSPO’s decision. While IOI stated it accepted the RSPO decision, the company continued to accuse the community and supporting NGOs of being uncooperative.
- See RSPO’s public announcement on the case:
5 April 2011 Announcement by RSPO GP on IOI Breach of RSPO CoC & CS.pdf
- Read NGO coalition press release on the decision:
5 April 2011 Text of Press release NGOs on IOI.pdf
April – May 2011
- See RSPO’s letter to LTK regarding IOI’s plan:
4 May 2011 RSPO letter to complainant Long Teran Kanan on IOI.pdf
- Investment forecast assessment of IOI’s case by MIDF:
6 May 2011 Investors view of IOI grievance (MIDF).pdf
Following the proposal put forth by IOI, a meeting was held on 9 May between IOI Pelita and the community of LTK. The meeting did not make serious headway as there was no compromise on key conditions. Following this, claims were made by IOI that LTK had resorted to violence and other unsubstantiated “facts” on the case by IOI.
On 31 May 2011, RSPO-accredited Certification Body (CB) Moody International was contracted by IOI to provide an independent assessment of the claims and case. The report appeared to only focus on Grassroots’ report “Industry Oppresses Indigenous People” as a rebuttal commissioned by IOI. However it is worth noting Moody raised key issues of compliance on a few allegations as well as underscoring the key role IOI has to play in ensuring relations with the community are managed well.
By the second half of 2011, a mediator had been appointed with support from RSPO’s Dispute Settlement Facility.
November 2011 – January 2012
March – April 2012
In March, IOI sought to fix a hearing date in its appeal against the Miri Court ruling, citing “mediation mentioned earlier is unfortunately not being able to proceed further” (sic). For the complainants, the community and supporting NGOs, it was apparent that IOI stopped following RSPO’s decisions. This move was met with ire from allies and complainants, who wrote to RSPO as the authority to act and hold its member accountable. The 14 organisations demanded that RSPO suspend all certificates issued to IOI until it demonstrates compliance to the rules and standards that IOI has prescribed to as a member of RSPO. In addition, the performance of RSPO was also raised citing how its double-standards, lack of transparency and inability to enforce itself has affected this case and the large number of other cases pending in RSPO’s Complaints System.
Responding to IOI’s move to appeal and sharp criticism of supporting NGOs, RSPO sent a new opinion of the suggested way forward for the parties to the dispute. However, it failed to address the fundamental issue of IOI’s appeal in Court. It also failed to address concerns regarding the loss of confidence amongst the community that directly affected RSPO’s suggestion that the community must back a mediation proposal, as well as the perceived inability or unwillingness of RSPO to enforce its rules on IOI. RSPO’s response to criticism by the 14 organisations was vague.
The complainants were now decreasingly aware of the decision-making process within RSPO, while consultation with the constituent groups of NGOs and community representatives was becoming less. In the interim, further negotiations led to a meeting that was chaired by RSPO’s Secretary-General in July to attempt to resuscitate the mediation proposal that was set forth by the Grievance Panel.
August – September 2012
By August, clearly frustrated representatives of the community attempted to reach out to RSPO again, raising fundamental issues related to negotiations as well as attempting to hold RSPO accountable for the implementation of its own rules regarding certification, governance and grievance procedures. The letter also pleaded with RSPO to foster improved relationships between community and company as well as to have IOI drop its appeal to demonstrate goodwill and seriousness in negotiations with the community.
In September, Forest Peoples Programme (FPP) completed their report on the case. The report provides an accurate, exhaustively researched and substantiated observation of the LTK case.
November 2012 – January 2013
In November, RSPO posted a new statement on the case. This significant event paved the road for IOI to regain certification despite not participating in and there being no progress towards negotiations. In addition, clear, pre-set conditions were abandoned. RSPO further acted in conflict and inappropriately by unilaterally declaring that IOI would be the financial contributor for the mediation process. This led to heavy criticism from the complainants. A further response from RSPO on 19 December failed to adequately address the NGO response.