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IOI’s response to inquiries regarding the latest Greenpeace report titled “Final Countdown”
10/10/2018Corporate Sustainability

The report’s findings are centred around two issues: IOI Corporation Berhad ("IOI" or "the Group")’s association with Bumitama and the IOI Pelita land dispute.

Association with Bumitama
The Greenpeace report refers to Bumitama, a plantation company operating in Indonesia. The report states that IOI is part-owner of Bumitama and thus the two groups should be considered linked in terms of responsibility, and that IOl's CEO is also a non-executive Director of Bumitama Agri Ltd.

While IOI is a substantial and second largest shareholder in Bumitama, our shareholding and influence is significantly less than the largest shareholder, the Hariyanto family, which has an absolute majority shareholding of more than 50% and directly controls the management of the company. Also, as a listed company on the Singapore Stock Exchange, Bumitama has hundreds of shareholders which include other palm oil companies and many international funds.

Furthermore, for the report to place a non-executive Board Director on the same level of responsibility as an executive Board Director, is not reasonable in our view.

IOI Pelita land dispute
The IOI-Pelita case is complex. It is a long running land dispute which originates from when Rinwood and Pelita (the Sarawak State Land Custody and Development Authority), formed a joint venture in 1996 and began developing oil palm estates in Tinjar, Sarawak. IOI purchased Rinwood shares in 2006 and inherited the dispute, with 90% of the planting already done by Rinwood-Pelita.

Over the last 21 years, the dispute got only more complicated. Initially it involved just four individuals and one community, but now it involves 9 communities, four ethnic groups, overlapping land claims, and the native customary rights claims that only the Sarawak state government as the landowner can decide.

Several attempts at solving the conflict failed, including through the court system, mediation by the Regent of Miri, mediation by an external mediator brought from Australia, and also the efforts of RSPO’s Dispute Settlement Facility (DSF).

The case is now being handled by RSPO’s Complaints Panel (CP). IOI is working closely with the CP and there has been a considerable effort made to resolve the conflict in a new way. Here are the key actions taken to resolve the dispute:

  • The CP and IOI developed a Resolution Plan with input from stakeholders.
  • The Resolution Plan ensures that FPIC and RSPO P&C on conflict resolution are followed throughout the resolution process.
  • The Resolution Plan also incorporates the principles of transparency and inclusivity.
  • IOI Group is responsible for the Resolution Plan implementation, with the CP guiding and monitoring the process.
  • IOI Group hired a strong stakeholder engagement team with a primary task to manage and resolve IOI-Pelita case.
  • The Resolution Plan was conditionally endorsed by the CP at the end of June 2018.
  • This allowed IOI and other stakeholders to jointly conduct a Resolution Plan socialization session with all affected communities. This 7-day long socialization programme was conducted during the first week of July 2018.
  • To follow up on the socialization program and to provide further clarification to the community leaders, a day-long workshop was conducted in Miri on August 11, 2018 with participation of local NGOs.
  • As a result of the socialization efforts, by the end of September 2018, 6 out of 9 communities gave their consent for the Resolution Plan to go ahead. The remaining 3 communities are still getting external advice on this issue.
  • Once IOI receives consent from the 9 affected communities and the CP provides a final endorsement of the Resolution Plan, IOI will start the implementation, which will take 12-14 months.
  • The following factors created new dynamics and a more conducive set up for a successful resolution of the dispute.
  • IOI Pelita hired a community liaison team who over the last 12 months managed to improve dramatically the relations with the local communities, creating basic foundations for a dialogue. This was achieved partly through an increase in CSR activities.
  • At the end of June 2018, the main complainant in this case, Grassroots, a local NGO with an 8-year long experience on the ground, decided to drop their status of a complainant and become an advisor to IOI and work side by side to seek a fair outcome for all parties involved in the dispute.
  • IOI managed to bring on board Dr. Ramy Bulan, a native of Sarawak, who is a leading expert on native customary rights and an experienced mediator. Dr. Ramy Bulan will be assisting the resolution process as a lead facilitator.
  • IOI managed to enlist the invaluable support from local NGOs who are familiar with the case and can offer the much need capacity building support to the affected communities.
  • Finally, in the course of the last several months, IOI has been regularly engaging with all the relevant Sarawak state government agencies and their officials who have been providing IOI with their guidance and who are actively supporting the process.

The above is just a summary of IOI’s efforts. More details can be found on IOI’s website where we regularly publish updates on the IOI Pelita case.

In conclusion, while we agree with the report’s statement that the dispute has still not been resolved, we feel that the report’s harsh and public criticism towards IOI over the Pelita case is not justified.