In precedent-setting case, palm oil company fined $30M for destroying orangutan forest

Rhett A. Butler, mongabay.com
January 09, 2014

In a precedent-setting case, an Indonesian court has found a palm oil company guilty of violating environmental laws and ordered it to pay $30 million in fines and reparations for clearing an area of protected peat forest that is a stronghold for endangered orangutans in Indonesia’s Aceh Province.

In a ruling handed down Wednesday, the Meulaboh district court concluded that PT Kallista Alam illegally cleared and burned forest within the the protected Tripa peat swamp in northwestern Sumatra. Senior Judge Rahmawati SH ordered the company to pay 114.3 billion rupiah ($9.4 million) in compensation and 251.7 billion rupiah ($20.6 million) to restore damaged areas.

The case was seen as a test of Indonesia’s appetite for enforcing a nationwide moratorium on new plantation and logging concessions across millions of hectares of rainforests and peatlands. Kallista Alam’s activities were particularly brazen, appearing to violate the moratorium, an earlier presidential decree on conversion of deep peat areas, and the sanctity of a high conservation value area known for its orangutan population. Kallista Alam also moved forward with forest clearing without securing proper permits or sign-off from some nearby communities.

Given the circumstances, the clearing sparked international outrage with more than 1.5 million people signing various online petitions calling for greater protection of Aceh’s forests, including opposing a proposal to remove large blocks of tiger and orangutan habitat from protection. Eventually, campaigns by environmental groups pushed the senior officials in the central government and the Ministry of the Environment to call for investigations, bolstering the legal proceedings.

With the ruling, environmental campaigners now hope that the Indonesian government will step up efforts to protect forests, especially in the Leuser Ecosystem, of which Tripa is a part.

“This is a clear message to companies working in Aceh who think they can destroy protected forests and get away with it,” said Muhammad Nur, Chairman of WALHI Aceh (Friends of the Earth Indonesia), which helped lead the campaign against Kallista Alam.

“The Judge’s decision in this case clearly illustrates a move towards improved law enforcement against environmental offenders in the region,” added Kamaruddin, a lawyer for communities in the Tripa area.

Although Kallista Alam is expected the appeal the decision, the company still faces additional civil and criminal cases. According to the Sumatran Orangutan Conservation Programme, four other palm oil companies operating in Tripa run the risk of prosecution.

“Each faces the possibility of serious financial consequences as a result of their illegal clearance, burning and drainage of Tripa’s unique peat swamp ecosystem,” said the group in a statement. “Some of the company Directors and senior management also face the prospect of prison terms in cases against them for their actions on the ground.”

While the developments in Aceh are headline-grabbing, there are still questions whether the judgements will be ultimately enforced. Courts have levied tens of billions of dollars in fines against logging, pulp and paper, mining, and palm oil companies in Sumatra in recent years, but only a tiny fraction of the penalties have ever been paid. Cases may be held up for years by appeals or quietly dropped. Prosecutors are shuffled between agencies, companies change names and laws shift.

Accordingly, Graham Usher of the PanEco Foundation says it is still too early to determine whether the Tripa case is a one-off or the emergence of a broader trend of better environmental law enforcement.

“The court’s decision is indeed a huge victory, and represents one significant step in the right direction,” Usher said in a statement. But I think many more such steps are needed before we will really see a change in the behavior of companies and officials.”

Indonesia has among the highest deforestation rates in the world, with the country losing almost half of its forest cover since 1950. Over the past twenty years, deforestation has been increasingly driven by industrial activities, including conversion for oil palm and timber plantations, intensive logging, and mining.

Deforestation has left several of Indonesia’s best-known animal species at risk of extinction, including tigers, rhinos, elephants, and orangutans, all of which live in Aceh. Forest loss has also increased social conflict in some areas, especially places with forest-dependent populations.