Why did a palm oil conglomerate pay $22m to an unnamed ‘expert’ in Papua?


The coastal town of Merauke is linked to the interior of the district by the Trans-Papua Highway, a road that winds thousands of kilometers through the Indonesian half of New Guinea. Close to the coast lies a tapestry of savannas and eucalyptus forests redolent of northern Australia. Further north, they give way to swamps and then, finally, to rich tropical rainforests.

Military posts punctuate the lowlands on the approach to Muting village with increasing frequency — one every 20 minutes, then every 10 minutes, then every five minutes. The village lies at the heart of the region targeted by agribusinesses more than a decade ago. Muting, and the string of other hamlets around it, are now ringed to the south and east by oil palm plantations. To the north lie the giant farms run by Korindo and POSCO. All of it once belonged to the clans, numbering thousands of people, that populate the hamlets, whose ancestral territories stretch deep into the plantations.

Oil palm plantations, logging concessions and villages in southern Papua, owned by Korindo and other conglomerates.

To reach Muting, we turned off the two-lane highway onto a dirt road, and drove over rickety bridges that seemed liable to break under the weight of our car. When we arrived, the local subdistrict office felt abandoned. An excavator stood in the front yard. We had come here to find out what had unfolded in the years since Korindo began its plantation expansion in the Papuan rainforest.

The village’s main road was lined with homes and stores owned by migrants from elsewhere in Indonesia. Most Papuans lived closer to the swamps, where they could fish and harvest sago starch, a staple of the local diet. In a small, simple house surrounded by sago trees on the banks of a dried-out riverbed, we found Gabriel Wauk, in his late 50s, the head of the Marind tribe in Muting, and Laurensius Omba, in his late 80s, an elder of the Mandobo tribe.

The two men told us that when the South Korean investors arrived, many locals were optimistic that the plantations would improve their lives. Korindo made a string of alluring promises to convince them to give up their tribal lands. The Papuan clans would receive cash for the lands and trees, as well as housing and education. They would even be given their own oil palm smallholdings. Korindo promised to assume many of the burdens of the state, building infrastructure and health clinics and providing electricity.

“It felt like money was growing on trees,” Gabriel told us, as cows and dogs milled around outside. “And now? We eat dirt. We beg in front of their office.”

Samela, 10, never attended school. She lived and worked on an oil palm estate owned by Korindo with her grandmother in Getentiri, a village in southern Papua. Image by Albertus Vembrianto for Mongabay and The Gecko Project.

It was a common refrain among the people we interviewed near Korindo’s plantations in southern Papua. Korindo, they said, had failed to deliver on its promises. The smallholdings and other sweeteners had not arrived.

Even Nikolaus Mahuze, who had helped Kim Nam Ku, was full of regret. “We trusted them to manage our lands,” he said. “Even though their investment has flourished, we’re suffering. Just look at our income, our rights, our environment.”

According to Korindo’s own figures, the company cleared almost 50,000 hectares (124,000 acres) of rainforest in southern Papua since 1998, before it succumbed to pressure from environmental NGOs and committed to suspend further plantation expansion in February 2017. The group’s operations had targeted a landscape identified by the WWF as a global priority for conservation due to its “exceptional biodiversity.” It included hunting grounds used by Papuans to find wild pigs, and sago groves that provided them with their staple starch.

Laura, 22, feeds a child with boiled insects, left. Grubs that live in sago palms, right, are considered a delicacy. Image by Albertus Vembrianto for The Gecko Project and Mongabay.

Part of the blame, locals said, lay with the government. Local officials had encouraged the Papuans to accept Korindo, telling them the investors would bring much-needed development. But few Papuans realized they would be signing away their customary lands for at least 35 years, the duration of an oil palm lease, after which it would likely revert to the control of the state.

“The people were like chickens without their mothers,” Leonardus Mahuze, who served as speaker of the Merauke parliament from 2009 to 2014, told us in Merauke town. “The district government should have made sure they understood, so they could think carefully before handing over their lands.”

Some Papuans had had no desire to surrender their ancestral lands to Korindo, no matter the price. But according to Anselmus Amo, a priest from Merauke, they never really had a choice.

“Suppose you don’t want to deal with the company at all,” Amo, who heads a human rights group affiliated with the Catholic Church, told us at his office in the district capital. “What then? You’ll be pressured. Labeled ‘anti-development’ and things like that. What people really fear is being labeled OPM.”

The acronym stands for Organisasi Papua Merdeka, the Free Papua Organization, a diffuse independence movement that has simmered since Indonesia annexed the region in the 1960s. In 2008, the U.N. Special Representative on Human Rights Defenders reported that Papuans exposing abuse of authority risked being “labeled as separatists in order to undermine their credibility.” Being marked as OPM can be a prelude to being imprisoned, or tortured or killed by the security forces.

Amo said the security forces were typically present at meetings between locals and Korindo. “To the people, it served as a symbol that the investors were backed by the state,” he told us. “They didn’t know the land would never be returned to them.” Korindo declined to comment on these allegations.

In most places, Korindo paid the Papuans between $5 and $10 per hectare, to give up their land rights for decades. It also agreed to pay them as little as 12,500 rupiah (around $1) for each cubic meter of timber it harvested from their lands. Korindo could export the same timber for 200 times that after turning it into plywood at its mill in Asiki, a village in southern Papua.

Samela shovels oil palm fruit bunches into a wheelbarrow on the Korindo estate.

In an interview via video conference in April, Kwangyul Peck, Korindo’s chief sustainability officer, said the compensation rates for the land were fair. “The market dictates the price, not us,” he said. The rates for trees, he noted, were set by the local government. In any case, Korindo had spent millions of dollars more on “social programs.” “When we add schools, school buses, clinics, roads, bridges, chicken farms, vegetable farms, electricity, churches, mosques, job training, inter alia, the compensation for the residents would be much bigger,” he added in an email.

In 2017, due to its clearance of a vast area of rainforest and allegations of human rights abuses, Korindo was the subject of a complaint to the Forestry Stewardship Council, or FSC, the main global organization for certifying sustainable wood. The FSC had certified a timber plantation, sawmills and a paper manufacturing plant belonging to Korindo, even as it cleared huge areas of rainforest in Papua. A panel of three forestry experts, convened by the FSC, traveled to Merauke to investigate the claims.

In its report to the FSC, the panel acknowledged Korindo’s investments in facilities that benefited the Papuans, most notably an “impressive” hospital built near Korindo’s Asiki mill. But it found that in the 10 years since 2007, the conglomerate had spent no more than $4.8 million on all of its social programs in Papua. During the same period, the panel calculated Korindo had deprived the Papuans of $300 million by underpaying for the timber harvested from their lands.

Samela, 10, and her grandmother work on the plantation.

“The activity of Korindo,” the panel wrote, “sanctioned by the Indonesian government has seen a huge and uncompensated transfer of both Forest Capital and Land Capital from the indigenous Papuan people to whom it belonged to the small group of individual shareholders who control and benefit from Korindo, principally Eun Ho Seung and Robert Seung.”

Peck described the $300 million figure as “pure fantasy” on the grounds that the panel had based its calculations on global market prices. Korindo, he said, actually sold its timber locally and had made a loss on the logging operations as it cleared land for plantations. Peck also sent a budget suggesting that Korindo had spent a further $4.5 million on healthcare between 2016 and 2020.

We sought to verify the panel’s figures using data from Korindo, the Indonesian government and other sources. We estimated that from 2000 to 2017, Korindo had exported products worth $320 million using timber harvested from its Papuan plantation concessions. We estimated that customary landowners were paid no more than around 0.5% of that figure for the raw materials. We asked Korindo how much it had paid the Papuans in compensation for timber overall, but it declined to answer.

A Papuan gathers oil palm fruitlets in Kampung Naga, a settlement within one of Korindo’s estates. Workers collect them in emptied 25 kilogram rice bags. When full, they are paid 9,000 rupiah, about $0.60.

The panel also found that Korindo had “directly benefited” from the presence of the military, which had the effect of suppressing opposition to the company’s activities and to the amount compensation offered. “This issue is systematic and found across the entirety of the company’s business operations,” it wrote. In a report published last year based on the panel’s findings, the FSC wrote that community members lived under “the threat and in some cases use of violence, in an ongoing atmosphere of intimidation.”

In 2004, the Commission for the Disappeared and Victims of Violence, an Indonesian NGO known as KontraS, published a report alleging that Korindo was making monthly security payments to local military commanders, personnel and battalions in southern Papua. “It is not clear what they have to give the company in return,” KontraS wrote in the report.

Korindo declined to answer questions sent via email about these payments. Peck denied that Korindo had any improper relationship with the military.

“We acquired those lands through legal means and with the agreement with both the Indonesian government and residents, and with proper compensation, with which they’re happy,” Peck said. “Yes, there are those who are not happy with it … but that’s not the view of all people.”

Yohanes Kame, 52, displays hunting tools he says are now rarely used.

Korindo and its supporters point to employment opportunities created by the plantations. But the FSC panel found that about 90% of the jobs with Korindo had gone to migrants from elsewhere in Indonesia, and that “very few” indigenous Papuans appeared to be in managerial positions.

In Kampung Naga, a settlement within one of Korindo’s estates in the south of Boven Digoel district, we met a Mandobo woman, B. (Her name and others have been redacted.) She said she was only 14 when she dropped out of school and began working on a Korindo plantation a decade ago, collecting palm fruit and spraying fertilizer, after her father passed away. Korindo declined to comment on whether it used child labor on its plantations.

Most months, she said, nearly half of her salary went to pay for food she bought at a cooperative within the estate. We found prices there comparable to those in a high-end grocery store in Jakarta. Sometimes, she would have to make due with little food. “In the morning, if there were no vegetables, I would just eat rice,” she told us in the back room of an empty house, where she felt it was safe to talk to a reporter. “Only rice.”

A shop in Asiki bearing the name of Korindo. Asiki is the site of the conglomerate’s sawmill and sits between two of its plantations. Image by Albertus Vembrianto for The Gecko Project and Mongabay.

In the report published last year, the FSC noted that while Korindo’s expenditure on social programs was “very welcome,” it was “not enough to compensate for the losses and damage” done to the natural resources on which the Papuans had relied, before the plantations arrived. The panel had found that by clearing sago groves and rainforest, Korindo had reduced their food supplies. Some Papuans had gone from being self-sufficient to depending on the company for food handouts. The FSC concluded that Korindo had “almost totally disregarded” the Papuans’ “rights to [an] adequate standard of living and to food.”

At a government clinic in Muting, a nurse gave us a database of health checks carried out on hundreds of children in the district between December 2014 and July 2019. Kingsley Agho, an assistant professor in biostatistics at Western Sydney University and an expert in maternal and child health, who analyzed the data for us, said it showed almost half of the children exhibited stunting, a sign that they were suffering from chronic hunger.

Friska Basik-Basik, 26, with her sons. The youngest child suffers from malnutrition. They live in Kindiki, a village near Muting. Image by Albertus Vembrianto for The Gecko Project and Mongabay.

Agho said the rate was surprisingly high among infants younger than six months who should have been exclusively breastfed, indicating that their mothers didn’t have enough food. “You’d expect it to be low” at that age, he said. “Maybe some mothers don’t have money to buy food, and if you don’t eat well you can’t exclusively breastfeed your baby.” By 2019, nearly two-thirds of the newborns were suffering from chronic hunger. Stunting at that age, Agho added, would lead to high levels of infant mortality. The data showed that at least 12 children who had been suffering from malnutrition died in the period captured.

We found K., the mother of one boy who appeared in the data, in Kindiki, a village near Muting. To reach it, we traveled two hours by boat on a river that locals said was polluted with waste dumped by the palm oil mills operating nearby.

K.’s son was born in 2014, the year PT PAL received the final permits it needed to operate. The boy’s ancestral land now fell within the concession. K., who was 24, told us he had been listless as an infant. “He wouldn’t wake up,” she said, chewing betel nut as she spoke. “He just laid on me, while I breastfed him, for about a year.”

Part 6: Following the money

This story first appeared on Mongabay

South Africa Today – Environment

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