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Palm oil land grab by RSPO Executive Board Member in Sarawak, Malaysia

7th May 2014

LTKbloc-1

Synopsis

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.

Background

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.

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Chronology

Note: Key events are highlighted in grey.

2009

IOIonLTKlan (sign)

November 2009

A meeting was held with the community of LTK as part of IOI’s audit exercise for RSPO certification. The meeting was conducted by certification body BSi. The meeting revealed that there were multiple and overlapping claims by LTK and neighbouring communities for which the community representatives agreed to resolve internally before reverting to IOI for settlement. IOI was recorded in the meeting report as stating: “IOI promised it will not make an appeal if it loses the case” as shown on page-2, Item (1), line-7 of the BSi report. All parties also agreed that only an out of court settlement would be followed by all parties to resolve the conflict. Several other pressing environmental issues were also raised (water catchment health) and agreement was made to address them by IOI.

2010

January 2010

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.

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.

In March, a decision was reached on the case over the Native Customary Rights claim of the village against IOI, Pelita and the Sarawak government. After over a decade in court, the community of LTK won their case against IOI and their Joint Venture partners Pelita. This judgement recognised and ruled in favour of the rights of LTK over their land. The ruling also sought the payment of compensation from the defendants to the plaintiffs for lost land.

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.  

July 2010

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.

August 2010

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.

September 2010

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.

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.

October 2010

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.

November 2010

Based on field work and community consultations in September, Grassroots published the report “Industry Oppresses Indigenous Peoples” documenting the impact of IOI’s operations on the community of LTK. The report based its analysis on the RSPO Principles & Criteria as well as other governance documents to provide evidence of clear breaches by IOI. The report was a first complete documentation of the LTK case.

The report made the following findings:

    1. The community have limited access to community land due to the continued occupation by IOI.
    2. Community relations were poor. IOI does not possess the capacity or resources to address on-going tensions between the community and company.
    3. The conditions of roads to the village are very poor and in urgent need of repair.
    4. 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.
    5. Poor maintenance of riverine areas, including the lack of buffers between river and plants as well as poor maintenance of some culverts
    6. Examples of haphazard and unsafe management of agrochemicals on the IOI estate.
    7. The neglectful state of housing for foreign workers, including unsanitary and unsafe conditions for the housing.
    8. 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.
    9. 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.
    10. 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.
    11. 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).

The report was the basis for the submission of an official complaint against IOI to RSPO. Grassroots became the primary representative for LTK in submitting the case. The complaint cites the following RSPO rules breached:

    1. 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
    2. 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:

    1. IOI should withdraw its pending appeal against the decision of the Miri High Court unilaterally.
    2. IOI should act upon fulfilling the conditions of the EIA for the estate as contained in the letter of undertaking to the NREB.
    3. IOI should suspend all operations in the disputed lands, especially any land clearings.
    4. 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.
    5. 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.
    6. IOI should improve its management of agrochemicals, riverine zones and solid waste.
    7. IOI should improve staff housing conditions to ensure safe, sanitary and livable conditions for all workers.
    8. 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.
    9. 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.

2011

The RSPO Executive Board had decided to entrust conflict resolution to IOI because IOI claimed they had a mechanism for addressing it. This was conveyed to Grassroots but there was no further action on the part of IOI after that point.

March – April 2011

Village of LTK erected a blockade to the land areas that were ruled to belong to the villagers in the 2010 Court ruling after IOI continued to enter the area to harvest in contravention of the full ruling. The blockade was preceded by attempts from LTK to get the company to stop work in lieu of the ruling and pending negotiations on a settlement. Provocation and attempts by LTK to halt operations led to 2 police reports filed against IOI by the villagers. The action of LTK was supported by an NGO coalition that pushed the claims of the community as well as action on the IOI Complaints Case with RSPO.

2011 kawasan NCR blockade

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.

April 2011

On 5 April 2011, the RSPO Grievance Panel released publicly, its decision on the IOI complaint. The key decisions of the RSPO on IOI were as follows:

    1. The current and ongoing certification process of all IOI group’s activities will be suspended with immediate effect.
    2. 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.
    3. 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.

April – May 2011

On 29 April, IOI sent a formal response to the RSPO with its suggested resolution plan. This plan was considered by the Grievance Panel that then decided to extend the timeline till 25 May 2011 to allow complainants and the community time to consider the IOI solution plan that offered a 3-month workplan to start negotiations. On 5 May IOI announced unilaterally that it had engaged with consultants to provide an opinion on the cases in LTK and Ketapang, Indonesia.

May 2011

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.

By this time, frustration with the inability of RSPO to enforce itself on IOI and confusing procedures had built up. A major issue included the recording of meetings and decisions by IOI that consistently did not reflect the views of the complainants and community. A formal response from the complainants to RSPO on IOI’s solution plan was formulated. This response not only provided detailed feedback and substantiation of ongoing and outstanding issues not addressed in the LTK case, but reminded RSPO to commit itself to addressing the separate but relevant case against IOI in Ketapang, West Kalimantan, Indonesia. The response clearly articulates the complainants’ dissatisfaction with IOI’s performance, citing key actions by IOI as stumbling blocks. It also highlighted problems associated with the lack of accountability by RSPO to hold IOI responsible for meeting obligations as agreed with the community or RSPO’s own decisions. 
LTK’s village head sent a letter on 18 May to RSPO that also outlines outstanding matters, the position of the village and concerns regarding the process adopted and led by IOI. It outlines the frustration with IOI, including IOI’s flimsy accusation of violence by LTK as well as the use of lawsuits, arrest and injunctions filed by IOI that had permanently eroded confidence in being able to negotiate.

On 25 May 2011, RSPO announced the case had made “considerable progress” and an extension was also added for 21-days for consultation. This announcement was roundly rejected by the complainants and supporting groups through an open letter to RSPO. Key to this was the disagreement that IOI’s proposed plan would allow for fair settlement of the case. Complainants also highlighted that RSPO was doing nothing to hold IOI accountable. The reaction of complainants received media attention.

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.

July 2011

In July 2011, RSPO issued a set of proposals from the Grievance Panel, aimed primarily at IOI for a revised action plan for negotiations and settlement of the case. The issue of the appeal by IOI in the judicial system that was controversial and contentious was raised and pointed as a key stumbling block from IOI preventing the community from entering a negotiation with a sense of equanimity or trust. The deterioration of relations was also recognised. A counter-proposal was sent to RSPO from IOI on 30 July. IOI simply reinterpreted points for self-preservation, ignored clear recommendations from RSPO as it drew up its own plans for how to resolve the matter. That counter proposal did not consult with complainants and the community.

By the second half of 2011, a mediator had been appointed with support from RSPO’s Dispute Settlement Facility.  

November 2011 – January 2012

The RSPO-appointed mediator completed a report on “Stage1” of its work to explore the potential for creating a mediated process between both parties to resolve the case. In the mediator’s report, it outlined the necessary conditions for mediation to begin. Fundamentally, the mediator makes the case for the need to have a mediated solution to have any hope for a long-term, sustainable solution. The Stage1 report from the mediator also highlighted the need for more internal organisation, including negotiating amongst the various factions in LTK to decide on who and how many wish to continue through a mediated process as a group and whom the representatives are. 
Subsequently, IOI sent RSPO its own interpretation of events and informs RSPO what they would do instead. IOI focused on the lack of organisation within LTK as the basis for returning to the Courts. IOI dismissed the supporting NGOs for not effectively organising the community to enable negotiations to take place. However, IOI’s own role in undermining the confidence of the community through past acts of provocation like police reports and injunctions as well as antagonistic media articles and reneging on their own promise to not appeal the March 2010 judgement has left the community unable to trust a mediated settlement would be in their interest.

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.

May 2012

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.

July 2012

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.

September 2012

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

The interim period led to little progress on actual mediated negotiations between LTK and IOI. This led to another series of communications in which the complainants and community sought to find ways of engaging RSPO on the matter, to push IOI forward in complying with agreed plans of action to reach a settlement with the LTK community. The last letter from LTK is provided.

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.

2013

April 2013

The appeal of IOI and the 2 other defendants was upheld by the Court of Appeal. The decision from 2010 had been overturned thus changing the entire conditions of the case. RSPO then sent a letter to IOI informing them that the 1 April 2013 court decision would not affect on-going activities and endorsed IOI paying for the mediation.