Sustainable Palm Oil Body Criticizes IOI for Environment and Social Damage

The nature of the grievance covers two locations and three specific matters; land dispute over native customary land leased by IOI for palm oil production in Sarawak; drained peat land on endangered wildlife habitat and clearing of forest area; and illegal deforestation and non compliance to RSPO Principles & Criteria.

4/7/2011 --- A formal letter has been sent to Malaysia's second largest palm oil planter, IOI Corp by the Roundtable on Sustainable Palm Oil’s (RSPO) stating the outcome of the Grievance Panel meeting on March 30th, 2011 that addressed complaints from green groups. The grievances were brought to the RSPO´s attention by several Non Governmental Organizations and the local community of Long Teran Kanan in Malaysia's Borneo state of Sarawak.

The nature of the grievance covers two locations and three specific matters; land dispute over native customary land leased by IOI for palm oil production in Sarawak; drained peat land on endangered wildlife habitat and clearing of forest area; and illegal deforestation and non compliance to RSPO Principles & Criteria.

The RSPO Grievance Panel has concurred that IOI has breached the following two core membership mandates and obligations:

1.  RSPO’s Code of Conduct 2.3: members will commit to open and transparent engagement with interested parties, and actively seek resolution of conflict.
2.  RSPO’s Certification Systems 4.2.4 (c): Organizations with more than one management unit and/or that have a controlling holding in more than one autonomous company will be permitted to certify individual management units and/or subsidiary companies only if 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.

Following the required procedures, the RSPO Grievance Panel has previously notified IOI of these cases and requested a response. The Grievance Panel has now produced an opinion upon review of the responses so far.

The grievance panel has come up with the following decision, that has subsequently been endorsed by the Executive Board on April 1, 2011.

In accordance with the RSPO grievance procedure:
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.

RSPO stated that failure to deliver the required proposal by the due date of May 2, 2011 will result in the group considering further sanctions against IOI, “which may include the suspension of your license for new transactions involving Certified Sustainable Palm Oil materials including GreenPalm certificates.”

IOI responded by stating that it accepts this decision and will work closely with RSPO in developing a plan to find an acceptable solution to the issue of compensation. However, IOI said it is concerned over the sustained actions by various NGOs and some online news websites which seek to mislead public opinion on the issue by repeating various false statements and unfair allegations against IOI.  Some of these false statements and allegations are:

1. The interpretation of the judgment by the Sarawak High Court (a public document) which alleges that IOI Pelita cannot continue to occupy and carry out plantation activities on the lands ; whereas the High Court did not allow the natives’ claim for a declaratory order to cancel the leases issued in favour of IOI Pelita for the lands;
2. The natives are disadvantaged and weak with no recourse to legal representation and advice;
3. As a result of this disadvantage and IOI Pelita’s alleged unwillingness to engage in discussions with them on the compensation issue, the natives have no choice but to resort to blockage on the lands and threatening harm against the safety of IOI Pelita’s workers and their family members; whereas in accordance with the procedure agreed earlier with the natives, both parties are supposed to hold another meeting to discuss the compensation issue and not to resort to unilateral or violent action.

IOI Loders Croklaan responded to the RSPO announcement by stating that the trade and supply of sustainable palm oil by IOI Loders Croklaan is in no way affected by the RSPO ruling. “The RSPO suspended the ongoing audits and certifications for IOI units to be RSPO certified, but not trade. The company feels the need to correct an inaccurate press release about IOI from Dutch NGO Milieudefensie issued today, falsely stating the sustainability certificate of IOI is suspended,” the statement concluded.

Source: RSPO, IOI