Category Archives: agriculture

Indonesia hits European Union with WTO lawsuit over palm oil

Yahoo – AFP, December 16, 2019

Indonesia has accused the European Union of discrimination against its palm
oil exports (AFP Photo/Mohd RASFAN)

Indonesia has filed a World Trade Organization lawsuit against the European Union over plans to phase out palm oil-based biofuel for cars, the trade ministry said.

The action could escalate a trade dispute between Indonesia -- the world's top palm oil producer - and the EU, which plans to end its use of biofuels by 2030, citing concerns over widespread deforestation caused by the sector.

The EU earlier imposed duties on imports of subsidised biodiesel from Indonesia saying it was needed to level the playing field for its producers.

In response to what it called "discriminative" policies against its key palm oil exports, Indonesia said it filed a complaint with the WTO last week.

"Indonesia officially sent a request for consultation on December 9, 2019 to the EU as the initial step for the lawsuit," Trade Minister Agus Suparmanto said in a statement Sunday.

Neighbouring Malaysia, the world's second-biggest palm oil producer, has also threatened WTO action against the EU.

Teresa Kok, the minister overseeing Malaysia's palm oil sector, told AFP on Monday that she will head to Europe in March, and a challenge will not be filed until after then.

She said she wanted to try to convince European officials to change course on her trip.

"I want to give my trip a chance and see whether I can avoid filing the case at the WTO," she added.

Palm oil is the world's most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics.

But environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

Iman Pambagyo, Indonesia's director general for international trade negotiations, said Jakarta had previously tried other bilateral avenues to reach an agreement, without success.

"We need to assert Indonesia's stance on EU policy," Pambagyo said, referring to the WTO complaint, and adding that he hoped for a "best solution".

Chinese Prime Minister to Visit Indonesia With Deals in Mind

Jakarta Globe, Faisal Maliki Baskoro & Reuters | April 22, 2011       

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Chinese Premier Wen Jiabao will go on
 a brief tour of Southeast Asia and sign a
number of agreements next week.
(EPA Photo/Adrian Bradshaw)     
Beijing. Chinese Prime Minister Wen Jiabao will sign a series of agreements next week covering everything from banking and energy to palm oil and infrastructure during visits to Malaysia and Indonesia, a senior diplomat said on Thursday.

Assistant Foreign Minister Hu Zhengyue said deals in Malaysia would include telecommunications and infrastructure construction cooperation, while in Indonesia there would be a greater number of documents signed, including on banking.

“The bank cooperation will probably involve many banks, not just one or two,” Hu said. “There will also be some financing [deals] for major projects.”

Other agreements to be signed in Indonesia will cover palm oil plantations and coal-fired power plants. He gave no firm details on any of the deals.

China already has close trade, economic and cultural ties with both countries. In 2009, China signed currency swaps with Malaysia and Indonesia, as part of moves to give the yuan a bigger international role.

According to Indonesia’s Investment Coordinating Board (BKPM), Chinese investment in the country during the first quarter of this year reached $28.4 million, 10th most among foreign investors. Chinese investment in Indonesia last year was $173 million, which put it in 11th place.

Zhang Qiyue, the Chinese ambassador to Indonesia, said earlier this month that there were more than 1,000 Chinese companies ready to register in Indonesia at the end of last year, with contracts estimated at $9.7 billion.

Wen will be in Malaysia from April 27 to 28 before flying to Indonesia. He plans to return to China on April 30.

Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), welcomed China’s investment but noted growing sentiment against cheap Chinese goods flooding Indonesian markets.

“I see this as a positive investment in infrastructure and manufacturing,” he said.

“However, I have seen enough agreement signings to know that dozens of these signings end up with no realization.”

Agreements tend to take a long time to take hold, he said, even failing to materialize because the Indonesian government is often unprepared with permits for the projects and land availability.

“Action speaks louder than words. Upon signing an agreement, both parties must be able to realize their intentions,” he said

“The government should also lure Chinese investment to build manufacturing bases here. China is a major importer of our raw materials, and building a manufacturing base here would give it added value and cool down tensions stemming from the flood of Chinese products.”

Erwin Aksa, chairman of the Indonesian Young Entrepreneurs Association (Hipmi), said China needed to increase its investment here, especially in areas such as infrastructure and manufacturing, to balance Indonesia’s trade deficit and improve domestic competitiveness.

“China’s specialty is in infrastructure projects, but we also need increased investment in manufacturing,” he said.

Indonesia is often seen as just an exporter of raw materials, Erwin said, so China should invest more in developing domestic industry to give it added value.

“Ideally, China should be among the top five foreign investors in Indonesia,” he said.

Former REDD+ negotiator for Indonesia sentenced to 3 years for corruption

mongabay.com, April 22, 2011

Wandojo Siswanto, one of the negotiators for Indonesia's delegation at 2009 climate talks in Copenhagen and a key architect of its Reduced Emissions from Deforestation and Degradation (REDD) partnership with Norway, has been sentenced to three years in prison for accepting bribes.

Following an investigation by the Corruption Eradication Commission (KPK), Wandojo was found guilty of receiving a bribe of about $10,000 from Anggoro Widjojo, a director of PT Masaro Radiokom, to win favorable treatment in the Ministry of Forestry's budget for the telecommunications company. Wandojo had been named in at least two other corruption probes, including a 2008 case where he admitted to taking a Rp 50 million ($4,600) kickback from lawmaker Al-Amien Nasution.

Wandojo was removed as a Special Advisor to the Minister of Forestry in September.

Wandojo's arrest and sentencing raise questions about the capacity of Indonesia's forestry ministry to manage potentially billions of dollars of payments under the proposed REDD program, which aims to reduce Indonesia's greenhouse gas emissions by shifting its development model away from one that consumes forests to one that protects forests. Several governments—including Norway, which has already committed up to a billion dollars—are supporting the initiative.

Concerns over the fate of Indonesia's REDD funds have been raised before. Critics cite the country's reforestation fund, which lost $5.25 billion between 1994 and 1998, according to Ernst and Young audit. The fund was managed by the forestry ministry.

Chandra M. Hamzah, deputy chairman at the KPK, told Reuters in September that the forestry sector is "a source of unlimited corruption."

Wandojo has been one of several figures in the investigation. In August the Corruption Court convicted Anggodo Widjojo -- the brother and business partner of PT Masaro Radiokom's Anggoro Widjojo -- for attempting to bribe officials from the Corruption Eradication Commission (KPK) with as much as Rp 5.1 billion ($566,000) in an attempt to get it to drop a corruption case against his brother. Anggodo Widjojo was sentenced to four years in prison, while his brother has been at-large since August 2008.

Kaban, the forestry minister from 2004 to 2009 and a legislator from 1999-2004, is also a person of interest in the case. Kaban has been linked to several other corruption cases, including bribe-taking for issuance of forest concessions, according to the Jakarta Post.

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Indonesia is Poised to Have Local Crude Palm Oil Reference Price

Jakarta Globe, December 12, 2010

Jakarta. Indonesia is poised to have its own Crude Palm Oil (CPO) price quoted at the Indonesian Commodity and Derivatives Exchange (BKDI), a move that may help the country manage its export duties and boost production, a Trade Ministry official has said.

Indonesia is poised to have its own Crude Palm Oil price
quoted at the Indonesian Commodity and Derivatives
Exchange (BKDI), a move that may help the country
manage its export duties and boost production,
a Trade Ministry official has said. (Antara Photo)
“The necessary preparations to use the price at the exchange as the official CPO reference price have been completed. Now we are only waiting for the issuance of a government regulation to support this policy,” Deputy Trade Minister Mahendra Siregar said on Saturday.

Making the price quoted by the BKDI as the reference price for Indonesian CPO is part of a government policy to restructure the mechanism for determining duties on export goods, he said.

Mahendra also said having a local reference maintains the prices of commodities, which in turn encourages farmers to plant more.

“By using the local reference price for local futures trading, it is expected that there will be an increase in the trade volume of local CPO physical transactions that makes our domestic futures trading deemed important,” Mahendra said.

However, he said Indonesia would still use the Rotterdam CPO reference price pending the establishment of a local futures bourse next year.

Indonesia has benchmarked the international price of its CPO to the physical market in Rotterdam, the Netherlands, with its export price reference pegged to US dollar. Indonesia, which is the world’s largest CPO producer, hopes the BKDI will replace Rotterdam as the reference for world CPO prices.

The BKDI will use two ports — Belawan in North Sumatera and Dumai in Riau — as the central delivery points for export markets. CPO prices at these delivery points will represent physical prices of Indonesian CPO.

In addition, Indonesia will use the rupiah as the reference currency in the CPO export reference prices, as proposed by the Indonesian Association of Palm Oil Traders (GAPKI).

Antara
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Santiaga Uno: Indonesia’s inspirational entrepreneur

CNN News, By Anna Coren, November 25, 2010

Indonesia's rising star of business (Watch Video)

STORY HIGHLIGHTS

  • Sandiaga Uno is one of Indonesia's wealthiest businessmen
  • His company Saratoga Capital employs over 20,000 people
  • Uno believes Indonesia has huge potential for growth
  • Poverty gap and corruption threaten the country's development, Uno says

Jakarta, Indonesia (CNN) -- Santiaga Uno is without doubt one of Indonesia's richest men.

With an estimated personal wealth of $400 million dollars and assets valued in the billions, the 41-year-old's climb to the top is an inspiration to many budding entrepreneurs.

Yet this father of two, from humble beginnings is not interested in promoting his own story but rather that of his country and its enormous potential.

Dressed in a green batik shirt, a patriotic gesture to the rich cultural heritage of Indonesia, the businessman knows how lucky he is. From his high-rise office building in downtown Jakarta, Uno speaks of the sacrifices his parents made to send him to university in the United States. It was there he discovered an interest in business that led him to a job in Canada.

"I see all these paradoxical situations. Things don't gel and it really ticks me off. We in Indonesia should do better." --Sandiaga Uno, businessman

But his dream of working overseas came to an abrupt end when the company he was working for collapsed, putting Uno out of a job. He was forced to return home, but the timing couldn't have been worse with Asia in economic meltdown from the 1997 financial crisis.

Struggling to provide for his family, Uno decided against the odds to set up his own business and with four staff in a tiny office, Saratoga Capital was born.

Twelve years later it is one of Indonesia's largest investment firms employing more than 20,000 people.

Uno believes failure is just as important as success and while he admits there were plenty of hard knocks he was confident his gamble would pay off in the long term.

"I knew when Asia came out of the crisis energy would be in high demand. So we started getting serious looking at those opportunities," he said.

And now it is energy that is his primary focus; investing in coal, oil, gas, toll roads, plantations and shipping ports.

Indonesia is going through an enormous economic boom thanks partly to its valuable natural resources. Indonesia's stock market is outperforming its neighbors and the region. Growth is expected to reach 6 percent this year and an emerging middle class is fueling domestic demand.

Despite all this success, Uno believes the country's wealth is not being evenly distributed. Around 40 million of the country's 242 million people still live below the poverty line and Uno describes this as a recipe for disaster.

"Basically if we are not careful the rich will get richer and the poor will get poorer and the gap will be the next embryo of the next unrest. So we as businessmen need to make sure the wealth is spread more equally," he said.

Uno is extremely passionate about the future of Indonesia and while he will talk up the country as the next place to invest along side China and India, he's acutely aware and critical of its pitfalls.

He says corruption is the number one problem holding his country back, a view shared by many in the international community. He says to have sustainable growth Indonesia must be attractive to foreign investors.

"I think the government is on the right track in stamping out corruption; it's moving in the right direction. But the speed and pace is not satisfactory, I think people want to see more," he said.

Another major problem is infrastructure and for Uno this has become his "personal crusade". He says anyone who visits the nation's capital Jakarta is greeted by a dilapidated international airport followed by gridlocked roads. His companies have $20 billion to invest in infrastructure projects.

"The money is there, we just need the government to sort out the land acquisition problem among other things which will require changes in the law and then we can start building the infrastructure Indonesia so desperately needs," he said.

Earlier this year, Uno was invited by U.S. President Barak Obama to attend an Entrepreneur's Summit in Washington DC. He describes how impressed he was with the U.S. President who spoke to him in Bahasa and believes the leader of the free world knows just how important Indonesia has become.

Uno says his wealth brings power -- he regularly has the ear of his president Susilo Bambang Yudhoyono -- but insists it's not about money or the people you brush shoulders with. His motivation to succeed is much greater than that.

"I see all these paradoxical situations. Indonesia has the 18th largest economy but we're ranked 122 in the world for ease of doing business. It doesn't gel and it really ticks me off. We should do better," he said.

"We are so rich in resources but we can't even produce. For example we produce coca but don't have chocolate factories. We produce crude palm oil but we don't have perfume or soap industries. So we're just exporting our raw materials without being able to process it. I think in the next four to five years Indonesia must be able to generate that expertise."

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Huge sell-off in agriculture as speculators run

October 2, 2010

Fear of high corn stockpiles and uncertainties in the outlook for sugar and cotton sparked a massive sell-off in agricultural markets on Friday, overshadowing the rally in energy and metals.

US corn futures tumbled the 30-cent trading limit in near record volume to end down 6 per cent for the session and 10 per cent for the week in an extended reaction to Thursday’s government crop report showing hefty inventories of the grain.

Soybeans fell 4 per cent on the day and wheat over 3 per cent.

Raw sugar closed down half a per cent, adding to the previous session’s drop of almost 6 per cent. Analysts said investors were worried the sweetener’s near 50 per cent gain during the third quarter had outpaced demand.

The liquidation marked a sharp reversal in trend for agricultural markets, which were among the biggest gainers in commodities during the just-ended quarter.

“I’m sure that the market had outstripped its fundamentals,” Keith Brown, a cotton broker in Moultrie, Georgia, said after US cotton futures plunged about 4 per cent from 15-year highs. “(Speculators) carried us up … now, they are feeding upon themselves like piranha trying to get out faster than the next guy.”

The 19-commodity Reuters-Jefferies CRB index settled down almost half per cent after rising as much earlier in the session, following a 2 per cent rally in oil and copper and a new record high in gold. The CRB rose nearly 11 per cent in the third quarter, its biggest gain in five quarters, with sugar being the index’s star performer.

The about-face in agriculture after the strong third quarter made some grains traders wonder if they were looking at the start of a prolonged lean period for prices. But some, like those in the sugar trade, expected a quick rebound.

“With oil so strong and the dollar weakening further, it would seem sugar will hold rather than continue the collapse, and we would expect the support to hold,” said Thomas Kujawa of Sucden Financial Sugar, who predicted the sweetener would hold at above 22.50 cents a lb. New York’s key raw sugar contract closed at 23.36 cents per lb.

Corn posted its biggest one-day drop since January 12, when the government released another bearish report on stockpiles of the grain. Chicago’s key corn contract for December finished at $US4.65-3/4 a bushel, falling the 30 cent that also contributed to its biggest weekly loss since mid-January.

Crude oil’s benchmark front-month contract in New York rose almost 2 per cent to settle above $US81 a barrel, a level not seen since August 10, as a sliding dollar caused investors to hedge in oil and metals.

Gold hit record highs for a sixth successive session, scaling above $US1320 per ounce.

Copper rose 2 per cent to scale two-year highs in both London and New York after China’s latest manufacturing data showed an important engine of global growth was humming again after sputtering in the second quarter.

Reuters

http://www.smh.com.au/business/markets/huge-selloff-in-agriculture-as-speculators-run-20101002-161g3.html

Indonesia’s Sinar Mas Censured by Palm Oil Watchdog

Jakarta Globe, September 23, 2010

Sinar Mas has come under attack by Greenpeace who are campaigning against further expansion of forest industry and palm oil plantations in prime forest and peatlands that stores massive amount of carbon deposits. Palm oil industry watchdog, The Roundtable on Sustainable Palm Oil, said on its Web site its grievance panel had written to SMART and Golden Agri censuring the firms for the breaches uncovered by an audit. (AFP Photo/Romeo Gacad)

Jakarta. An industry body for sustainable palm oil has made its first public censure of a member, saying Indonesia’s Sinar Mas Agro Resources & Technology breached its principles and may face sanctions.

Sinar Mas Agro Resources & Technology, also known as SMART, last month released an independent audit after Greenpeace alleged SMART bulldozed high conservation value forests and damaged carbon-rich peatlands.

The audit gave SMART a mixed score card, highlighting some instances in which Indonesia’s environmental laws were breached.

The Roundtable on Sustainable Palm Oil, also known as RSPO, — an industry body of planters, green groups and consumers — said on its Web site its grievance panel had written to SMART and Golden Agri censuring the firms for the breaches uncovered by the audit.

SMART is a member of the RSPO but Golden Agri-Resources is not.

“In its letter to SMART and GAR, the panel finds there has been serious non-compliance with the RSPO code of conduct, specifically a failure by SMART to work towards implementation and certification of the RSPO principles and criteria,” it said.

In particular, RSPO principles on social and environmental impact assessments and peatland management have been infringed, it said.

“Members who have been found to not be in compliance and who continue to be in non-compliance with the RSPO regulations could ultimately face sanctions, including the suspension and, eventually, the termination, of their membership of the RSPO.”

The comments may be a blow to SMART’s aims to win back big palm oil buyers including Burger King, Nestle and Unilever, who have said they will stop buying from SMART because of environmental concerns.

The RSPO also urged GAR to stop publicly suggesting it was in the process of obtaining RSPO certification.

“GAR is not a member of the RSPO, nor has the RSPO yet received a membership application from the company. The Panel encourages GAR to submit a full and complete application for membership,” the statement said.

SMART said in a statement it would work toward the requirements set by the RSPO, including environmental impact assessments and conservation of deep peatlands.

Enormous amounts of climate-warming gases are released when deep peatlands are disturbed, and the deforestation of Indonesia’s extensive tropical forests led the World Bank to name it the world’s number three emitter in a 2007 report.

“We take the feedback of our stakeholders very seriously and this applies to the concerns of the RSPO, whom we are in touch with,” said Daud Dharsono, President Director of SMART.

Golden Agri referred queries to the SMART statement. SMART and Singapore-listed Golden Agri are controlled by the Widjaja family that founded Sinar Mas, a group with interests from plantations to property and finance.

Greenpeace welcomed the RSPO’s statement, saying RSPO should follow up on its reprimand by expelling SMART within four weeks if the company does not take action.

“Greenpeace is calling on other companies, like Cargill, to follow Unilever, Nestle and Kraft’s lead and cancel its palm oil contracts with Sinar Mas until it stops destroying rainforest and carbon rich peatlands,” said Greenpeace activist Bustar Maitar.

Reuters

End of deal: A Burger King franchise is seen on Sept. 2, 2010, in Los Angeles. The US hamburger chain has said it will stop buying palm oil from an Indonesian company accused of destroying rainforests. – AP/Damian Dovarganes


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Indonesia’s Sinar Mas Censured by Palm Oil Watchdog

Jakarta Globe, September 23, 2010

Sinar Mas has come under attack by Greenpeace who are campaigning against further expansion of forest industry and palm oil plantations in prime forest and peatlands that stores massive amount of carbon deposits. Palm oil industry watchdog, The Roundtable on Sustainable Palm Oil, said on its Web site its grievance panel had written to SMART and Golden Agri censuring the firms for the breaches uncovered by an audit. (AFP Photo/Romeo Gacad)

Jakarta. An industry body for sustainable palm oil has made its first public censure of a member, saying Indonesia’s Sinar Mas Agro Resources & Technology breached its principles and may face sanctions.

Sinar Mas Agro Resources & Technology, also known as SMART, last month released an independent audit after Greenpeace alleged SMART bulldozed high conservation value forests and damaged carbon-rich peatlands.

The audit gave SMART a mixed score card, highlighting some instances in which Indonesia’s environmental laws were breached.

The Roundtable on Sustainable Palm Oil, also known as RSPO, — an industry body of planters, green groups and consumers — said on its Web site its grievance panel had written to SMART and Golden Agri censuring the firms for the breaches uncovered by the audit.

SMART is a member of the RSPO but Golden Agri-Resources is not.

“In its letter to SMART and GAR, the panel finds there has been serious non-compliance with the RSPO code of conduct, specifically a failure by SMART to work towards implementation and certification of the RSPO principles and criteria,” it said.

In particular, RSPO principles on social and environmental impact assessments and peatland management have been infringed, it said.

“Members who have been found to not be in compliance and who continue to be in non-compliance with the RSPO regulations could ultimately face sanctions, including the suspension and, eventually, the termination, of their membership of the RSPO.”

The comments may be a blow to SMART’s aims to win back big palm oil buyers including Burger King, Nestle and Unilever, who have said they will stop buying from SMART because of environmental concerns.

The RSPO also urged GAR to stop publicly suggesting it was in the process of obtaining RSPO certification.

“GAR is not a member of the RSPO, nor has the RSPO yet received a membership application from the company. The Panel encourages GAR to submit a full and complete application for membership,” the statement said.

SMART said in a statement it would work toward the requirements set by the RSPO, including environmental impact assessments and conservation of deep peatlands.

Enormous amounts of climate-warming gases are released when deep peatlands are disturbed, and the deforestation of Indonesia’s extensive tropical forests led the World Bank to name it the world’s number three emitter in a 2007 report.

“We take the feedback of our stakeholders very seriously and this applies to the concerns of the RSPO, whom we are in touch with,” said Daud Dharsono, President Director of SMART.

Golden Agri referred queries to the SMART statement. SMART and Singapore-listed Golden Agri are controlled by the Widjaja family that founded Sinar Mas, a group with interests from plantations to property and finance.

Greenpeace welcomed the RSPO’s statement, saying RSPO should follow up on its reprimand by expelling SMART within four weeks if the company does not take action.

“Greenpeace is calling on other companies, like Cargill, to follow Unilever, Nestle and Kraft’s lead and cancel its palm oil contracts with Sinar Mas until it stops destroying rainforest and carbon rich peatlands,” said Greenpeace activist Bustar Maitar.

Reuters



End of deal: A Burger King franchise is seen on Sept. 2, 2010, in Los Angeles. The US hamburger chain has said it will stop buying palm oil from an Indonesian company accused of destroying rainforests. – AP/Damian Dovarganes

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KPK: Corruption Jeopardizes Lucrative Climate-Change Deals

Jakarta Globe, Sunanda Creagh | September 17, 2010

Jakarta. The billions of dollars that Indonesia stands to earn every year in climate-change deals could be at risk if it fails to stamp out corruption in its forestry sector, antigraft authorities warn.

Norway is preparing to pay the first $30 million of the $1 billion it agreed to give Indonesia as part of a UN scheme in which rich nations will pay developing countries not to clear woodlands.

Agus Purnomo, the head of the National Council on Climate Change, has estimated national revenue from emissions cuts could reach $15 billion a year by 2030.

But considerable obstacles stand in the way. Indonesia’s lucrative palm oil plantations and mining sector say the moratorium on converting forests will hinder expansion and profits, while the forestry sector has long had a reputation for mismanagement and graft.

An Ernst & Young audit found that in just four years in the mid-1990s, the reforestation fund lost $5.25 billion through mismanagement and fraud.

Antigraft officials are concerned that the vast sums on offer under the UN scheme could lead to further trouble.

“The forestry sector is a source of unlimited corruption,” said Chandra M Hamzah, a deputy chairman of the Corruption Eradication Commission (KPK).

Wandojo Siswanto, a senior forestry official who helped negotiate the Norwegian deal and represented Indonesia at the Copenhagen climate talks last year, is a suspect in a corruption case, adding to concerns.

The KPK has spent two years probing allegations that forestry officials, legislators and businessmen at private contractor Masaro Radiokom conspired to ensure the firm won a lucrative radio project. The KPK estimated it cost the state Rp 70 billion ($7.75 million).

The KPK alleges Wandojo, who was in charge of the procurement project, received $10,000 in bribes from Anggoro Widjojo, a director of Masaro, to ensure the project was included in the Forestry Ministry budget.

It says Wandojo awarded the contract to Masaro rather than going through a tender process. A travel ban was imposed on him last year after Copenhagen.

Wandojo maintains his innocence, saying he found the $10,000 on his table, and called Anggoro to ask what the money was for.

“I wasn’t brave enough to make a report to the KPK at that time,” he said, adding that he held on to the money for four months before handing it to the authorities.

Wandojo has said his staff pushed to award the contract without holding a tender. “I was advised by my committee that it was conducted every year this way,” he said. “I was a victim of the situation.”

As part of the same investigation, the KPK last year raided the office of the ministry’s secretary general, Boen Purnama, where they found $20,000 in cash, allegedly also from Anggoro. Purnama would not comment and has so far not been named a suspect.

Anggoro has fled the country since being named a suspect.

The KPK said there was no evidence to suggest forestry officials would try to steal the Norwegian funding, but added Norwegian government officials had asked the KPK to play an oversight role to ensure the money was used properly.

The Norwegian International Climate and Forest Initiative, part of the Environment Ministry, said the $1 billion deal was designed in such as way as to reduce the risk of corruption.

“It is an unfortunate fact that there are significant governance challenges, including issues of fiduciary management, in most tropical forest countries,” a statement said. “Clearly, dealing with these challenges is a priority.”

Adnan Topan Husodo, a deputy coordinator of Indonesia Corruption Watch, said a graft suspect should not have been part of the team that negotiated the deal with Norway.

“The credibility of the team involved in the agreement is at stake,” he said. “This is huge money we’re talking about.”

Kuntoro Mangkusubroto, who oversees implementation of the deal, said the money would be kept separate from the government budget.

Reuters

Fast-Food Giant Cuts Ties With Sinar Mas

Jakarta Globe, September 02, 2010

In this file photo Greenpeace activists display a large banner with a message "APP stop destroying tiger forest" at the PT. Tebo Multi Agro concession. APP, Indonesia's largest pulp and paper producer is a division of Sinar Mas. Burger King, the international fast food company, has cut ties with Sinar Mas after Greenpeace’s successful campaign against the Indonesian group’s land-clearing practices. (AFP Photo/Romeo Gacad)


US fast food giant Burger King said on Thursday that it would no longer buy palm oil from Sinar Mas or its subsidiaries, after Greenpeace’s successful campaign against the Indonesian group’s land-clearing practices.

Burger King joins the likes of Unilever, Nestle and Kraft in shunning Sinar Mas in a move that will increase pressure on other corporate buyers of its palm oil products, such as Pizza Hut, KFC and Dunkin’ Donuts.

The news comes on the same day that Burger King, the second-largest US fast-food chain, announced that it had agreed to be bought by investment firm 3G Capital for $24 per share, or about $3.26 billion.

Indonesia is the biggest producer of palm oil, which is used in everything from biscuits to cosmetics, but environmentalists say plantations are behind deforestation blamed for habitat loss and greenhouse gas emissions.

Burger King said a recent independent audit of Sinar Mas palm oil unit Smart’s land-clearing practices — commissioned by Sinar Mas in response to the Greenpeace allegations — revealed activities “inconsistent with our corporate responsibility commitments.

“We believe the report has raised valid concerns about the sustainability practices of Sinar Mas’s palm oil production and its impact on the rainforest,” Burger King said on its Facebook page.

“As part of our … corporate responsibility program, Burger King Corp. is committed to sourcing our products from sustainable suppliers.”

It said it was looking for a new palm oil supplier for its 176 restaurants supplied by Sinar Mas.

“In addition, we are notifying our suppliers of our intent to discontinue the use of palm oil supplied by Sinar Mas in the manufacturing of our products.”

Sinar Mas Agro Resources and Technology has been struggling to repair its image after a Greenpeace campaign led several foreign buyers to cancel major contracts.

Greenpeace says the company is clearing high-value peat forest against Indonesian law and failing to wait for environmental studies before starting operations in sensitive areas of Borneo.

The company has acknowledged mistakes have been made in small areas, but denies it is a “forest destroyer.”

Rampant deforestation, much of it illegal, is a major reason Indonesia is the world’s third-biggest emitter of greenhouse gases and is driving species like Sumatran tigers to extinction.

Smart’s credibility took a blow last month when auditors Control Union Certification and BSI Group, authors of the independent verification report, complained that it had misrepresented elements of their findings.

The company had trumpeted their report as evidence that Greenpeace’s allegations were false, but the auditors said the probe’s “key findings” included that it had violated Indonesian law on forest management.

It also found that Smart had initiated operations on almost 38,000 hectares of land on Borneo before mandatory environmental studies had been completed.

Greenpeace welcomed Burger King’s announcement.

Greenpeace forest campaigner Rolf Skar wrote in a blog: “This is another blow for Sinar Mas, which had hoped its self-commissioned audit would convince corporate customers and the media that it was a sustainable company."

Smart president director Daud Dharsono has rejected any suggestion the company was trying to dodge the findings of its own audit or mislead shareholders.

Agence France-Presse


End of deal: A Burger King franchise is seen on Sept. 2, 2010, in Los Angeles. The US hamburger chain has said it will stop buying palm oil from an Indonesian company accused of destroying rainforests. – AP/Damian Dovarganes


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