Exposed: Sinar Mas Caught Misleading Stock Exchange and Customers

Palm oil audit proves group breached Indonesian law

Media release - August 19, 2010
Jakarta, Indonesia, In a humiliating blow to Sinar Mas, independent auditors have asked the group publicly correct its interpretation of their recently published survey of Sinar Mas operations. In the process, the auditors confirmed Greenpeace claims that Sinar Mas is responsible for rainforest and peatland destruction.

Published today, the “clarification” also shows that Sinar Mas statements, including those made to the Singapore Stock exchange, misled shareholders and customers. Greenpeace has written to the stock exchange asking for Golden Agri Resources, parent company of audit subject PT SMART, to be investigated for providing deliberately misleading information.

"Today's announcement shows that Sinar Mas has manipulated the audit findings to try to convince shareholders and customers that they are a responsible and sustainable company. Now the truth is out. The audit shows that Sinar Mas repeatedly broke Indonesian law, RSPO rules and its own sustainability commitments," said Rolf Skar, senior forest campaigner with Greenpeace.

In its statement, auditors BSI say: "there have been elements of the report that have been misreported as it has been published and presented". Sinar Mas was asked to publish a clarification statement informing stakeholders, including shareholders, customers, Indonesian government officials and the media, of the
actual audit findings.

The statement shows how SMART wrongly claimed that it operates “responsibly and within the laws.” (2)

It also confirms that:

  • in eight out of eleven concessions audited, forest clearance was conducted without the necessary environmental permits (3).
  • deep peat forest was cleared in breach of Indonesian law. (4)
  • Sinar Mas erroneously “refutes” a claim never made in Greenpeace reports, namely that the Sinar Mas group destroyed “primary forests.” (5)
  • Sinar Mas has been engaged in widespread forest clearance without independent high conservation value assessments, in clear violation of Roundtable on Sustainable Palm Oil (RSPO) rules. (6)

Greenpeace has repeatedly shown that Sinar Mas is destroying carbon-rich peatlands and Indonesia's last remaining rainforests, including orangutan habitat, often violating Indonesian law, RSPO rules and its own proclaimed sustainability commitments (7).

"Sinar Mas has no credibility and Greenpeace continues to call on its customers to stop trading with it until it stops all peatland and forest destruction. Using smoke and mirrors and pretending be a responsible company is nothing more than greenwash," said Bustar Maitar, Greenpeace South East Asia forest team leader.

"Not only did Sinar Mas need to backtrack on its false claims about Greenpeace reports, but this statement confirms that it broke Indonesian law and cleared many forest areas before assessing their conservation value, including potential orangutan habitat,” added Maitar.

A growing list of companies, including Nestle, Kraft and Unilever have cut Sinar Mas products from supply chains and store shelves. The Indonesian Government has made commitments to cut greenhouse gas emissions that are incompatible with widespread destruction of peatlands and rainforests. Greenpeace is calling on companies and government officials to work together to ensure a proposed two-year oratorium on deforestation includes a halt to all forest clearance, including within existing concessions, and ensure immediate protection of peatlands.

Contacts:

In San Francisco, USA:
Rolf Skar, Senior Campaigner: (415) 533-2888

In Jakarta, Indonesia:
Bustar Maitar, Greenpeace Southeast Asia forest team leader, tel: +62 813 446 66 135

Photos and video available:
Emma Stoner, Greenpeace International picture desk, +44 7554 934 750
Maarten van Rouveroy van Nieuwaal, Greenpeace International video desk +31 646197322

Notes to editors:

(1) The statement is available at:
http://www.bsigroup.com/en/About-BSI/News-Room/BSI-News-Content/General/Verifying-Greenpeace-
Claims-report-BSI-Group-issues-clarification-and-summary-statement/


The audit was conducted by BSI and Control Union, supported by Professors from Bogor University. It is available at: http://www.goldenagri.com.sg/newsroom_verification.php.

The Sinar Mas group refers to a number of companies under the Widjaja family's control. These include Singapore-listed Golden Agri Resources (GAR) and its subsidiary PT SMART, listed in Jakarta, Indonesia.

(2) Sinar Mas's claims were made in their press release of 10 August. First: “SMART is not responsible for deforestation of primary forests... as claimed by Greenpeace.” Second: “SMART operates responsibly and within the laws and regulations set out by the Indonesian government.”

(3) Audit Executive summary finding 5.3.2. In Central Kalimantan all six concessions began clearance without permits. In West Kalimantan two out of five concessions did the same.

(4) BSI clarification statement, page one, point 1: “There was planting on deep peat (> 3 m) in two estates from 2005-2008 which is in breach of the Presidential Decree with regards to deep peat issued in 1990.”

(5) BSI clarification statement, “IVEX team clarification statement” point 1, “we acknowledge that the Greenpeace REPORTS had not stated that the Sinar Mas Group destroyed primary forest.”

(6) Audit executive summary 5.2 “7 out of the 11 concessions contravene RSPO P &C regarding HCV as planting was done prior to independent HCV assessment after November 2007”

(7) Greenpeace's reports on Sinar Mas: http://www.greenpeace.org/international/en/campaigns/forests/asia-pacific/Palm-oil-reports/