Sinarmas Forestry company found guilty of unlawful conduct by High Court over peat fires

(foresthints.news) - The High Court of Palembang announced a ruling on August 12 which overturned the decision of the District Court of Palembang from the end of December last year. The previous ruling had found in favor of PT Bumi Mekar Hijau (BMH) in a civil suit in which it was sued for IDR 7.98 trillion (the equivalent of USD 614.35 million at the approximate current exchange rate of IDR 13,000) by the Indonesian Minister of the Environment and Forestry.

This decision by the high court comes after the Environment and Forestry Minister appealed the lower court’s ruling. The new ruling states that PT BMH did indeed commit an unlawful act with respect to the peat fires that occurred in its concession in 2014.

However, the high court decision has resulted in a lesser punishment than that originally demanded, ordering PT BMH to pay just IDR 78.5 billion in compensation (the equivalent of USD 6.04 million at the approximate current exchange rate of IDR 13,000).

Based on a number of legal documents submitted to the Environment and Forestry Ministry by PT BMH itself, which were later validated by the ministry, the company is a subsidiary of the Sinarmas Forestry group. PT BMH is actually one of several pulpwood plantation companies operating in South Sumatra that fall under the umbrella of Sinarmas Forestry.

“At the very least, the decision of the Palembang High Court is appreciated because it declares that PT BMH did commit an unlawful act related to forest fires," said Hadi Jatmiko, Executive Director of WALHI (Friends of the Earth Indonesia) South Sumatra, in a press release received by foresthints.news.

At the same time, however, WALHI also expressed its disappointment with the high court ruling in that PT BMH has been ordered to compensate only about 1 percent of the total amount for which it was originally sued by the minister.

Hadi lamented that this slap on the wrist in the form of a relatively small fine would not make other companies wary of perpetrating similarly illegal acts. “In our opinion, the high court decision is insufficient in acting as a deterrent.”

In light of this, WALHI is urging the minister to impose administrative sanctions on the Sinarmas Forestry company, specifically by revoking its permit. WALHI feels that such a punishment is justified, given that in 2014 and 2015 peat fires in the PT BMH concession destroyed as much as 160,000 hectares, more than twice the size of Singapore.

Last year, PT BMH continued to contribute to the vast haze that enshrouded the region as a result of peat fires in its concession located in the regency of Ogan Komering Ilir (OKI) in South Sumatra province.

Due to these peat fires in its concession, the minister suspended the operating permit of PT BMH. This decision seemed justified in light of a report by Greenomics Indonesia which laid bare the sheer magnitude of the 2015 peat fires in this concession.

The facts indicate that Sinarmas Forestry companies operating in South Sumatra were among the most significant contributors to last year’s haze. In an effort to tackle this problem, in early January this year President Joko Widodo designated the South Sumatra regencies of OKI and Musi Banyuasin as two of the four priority regencies in terms of peat restoration in the wake of the 2015 peat fires.

Of the Sinarmas Forestry companies which contributed to the terrible haze last year, the majority are situated in peatlands, including in peat domes, scattered among the two peat restoration priority regencies of OKI and Musi Banyuasin. These companies are suppliers of Asia Pulp and Paper (APP).

This is especially relevant seeing that APP's new mill, which is located in OKI regency and expected to begin operating by the end of this year, will rely heavily on raw materials in the form of pulpwood plantation fiber from Sinarmas Forestry companies operating in the two peat restoration priority regencies concerned. These companies, it should be reiterated, were among the greatest culprits for 2015’s suffocating haze.

The evidence for this is made quite clear by data released by the Indonesian government and several NGOs. This data shows that hundreds of thousands of hectares of pulpwood plantations controlled by Sinarmas Forestry companies were burned last year.

The Indonesian Peat Restoration Agency Chief, Nazir Foead, told foresthints.news on Friday (Aug 26) that President Joko Widodo, in a closed door meeting with a number of ministers and ministerial-level officials (Aug 12), reinstructed that management of burned areas be taken over by the state.

World Bank calculations indicate that losses caused by the forest and land fires, and in particular peat fires, of 2015 amounted to USD16.1 billion. Such an amount unquestionably had an adverse effect on Indonesia’s economic growth last year. In order to avoid a repeat of this, the issue of peat fires deserves serious attention, as is currently being shown by the President.