Landmark court ruling expected to serve as deterrent

Landmark court ruling expected to serve as deterrent

18 November 2016

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Indonesia —   A landmark Supreme Court ruling ordering a plantation company to pay a high fine for illegal forest clearing is expected to serve as a deterrent for companies that seek to engage in deforestation.

On Wednesday, the Supreme Court ruled that PT Merbau Pelalawan Lestari (MPL) was guilty of illegally clearing forests in Pelalawan Regency, Riau, from 2004 to 2006.

The pulp and paper company was ordered to pay Rp 16 trillion (US$1.19 billion) in fines, the highest of any case of environmental destruction in the nation’s history.

“The ministry appreciates the Supreme Court’s decision on illegal clearing carried out by PT MPL. Hopefully this ruling will have a deterrent effect on others,” the ministry’s law enforcement director-general, Rasio Ridho Sani, said.

In 2002, then-Pelalawan regent Tengku Azmun Jaafar authorized PT MPL to exploit 5,590 hectares of forest in his regency.

However, the court found that the company had cleared a total of 7,466 ha of forest in the area, meaning that it had illegally cleared 1,873 ha of forest outside of its concession. For this, the company was ordered to pay Rp 4 trillion in damages.

PT MPL’s permit was also problematic, as Azmun was sentenced to 11 years in prison by the Corruption Court in 2008 for taking bribes from MPL.

He was convicted of illegally authorizing 15 companies, including PT MPL, to exploit 120,000 ha of forest in Pelalawan between 2002 and 2003, resulting in Rp 1.2 trillion in state losses.

Bogor Institute of Agriculture (IPB) lecturer Bambang Hero Saharjo, who calculated the damages, said the Supreme Court’s ruling was in accordance with his calculations.

“We appreciate the ruling because it matches our damage calculations based on the facts in the field,” he told The Jakarta Post.

The damage includes a loss of forest functions, such as water catchment and erosion mitigation, as well as a loss of biodiversity.

The Environment and Forestry Ministry has been on a winning streak recently in environmental cases against companies responsible for deforestation and land and forest fires. Earlier this year, plantation company PT National Sago Prima (NSP) was found guilty of forest fires in its concession in Meranti Islands regency, Riau, and thus had to pay Rp 1.07 trillion in fines.

In August, the Palembang High Court in South Sumatra found pulpwood firm Bumi Mekar Hijau (BMH) guilty of illegally lighting fires in its concession in 2014.

The High Court ordered BMH, which supplies products to Indonesia’s Sinar Mas Group, to pay Rp 78.5 billion in damages, a small fraction of the Rp 7.8 trillion in damages sought by the Environment and Forestry Ministry when it first filed the civil suit against BMH last year.

However, none of the fines match the total of those slapped on PT MPL. “This is the biggest fine in our history,” the ministry’s environmental dispute settlement director, Jasmin Ragil Utomo, told the Post.

He said that PT MPL could still file for a case review at the Supreme Court. “But it won’t halt the execution [of the ruling],” Jasmin said.

He added that the court would follow up on the ruling by allowing the company to make a proposal on how it would like to pay the fines.

“We have to study the proposal first, whether the company can pay in installments or not. We have to get input from other ministries because this is non-tax state income,” said Jasmin.

PT MPL used to be a supplier to Asia Pacific Resources International Limited (APRIL), Indonesia’s second-largest pulp and paper producer.

“However, we have not sourced fiber from MPL since February 2015,” APRIL spokesperson Agung Laksamana told the Post, adding that PT MPL was not affiliated with APRIL or with Royal Golden Eagle Group.

With the recent Supreme Court decision, Agung said APRIL would immediately terminate its supplier contract with PT MPL and would not work with the company in the future.

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