CORRECTED-Indonesia says building criminal cases against 8 firms over fires

Fri Jun 28, 2013 4:26am EDT

(Corrects spelling of national police spokesman, paragraph 15)

By Aubrey Belford

JAKARTA, June 27 (Reuters) – Indonesian investigators are

building criminal cases against eight Southeast Asian companies

they suspect of being responsible for raging fires that have

blanketed neighbouring Singapore and Malaysia with hazardous

smog.

The Environment Ministry last week named the firms for their

alleged role in Southeast Asia’s worst air pollution crisis in

16 years, which has raised concerns over public health and hurt

business and tourism in Singapore, Malaysia and Indonesia.

Owners of five of the plantations have denied any

wrongdoing. Reuters has not been able to contact the others.

A 2009 law carries tough penalties for environmental crimes,

although such regulations have rarely been enforced due to

Indonesia’s endemic corruption and sprawling geography.

And investigators could find it hard to pin the blame on

specific firms because of the complex ownership of palm oil

concessions and pulp and paper holdings on Indonesia’s Sumatra

island where most of the fires are burning.

But outrage from Singapore as well as environmental groups

is putting pressure on Jakarta. Fires are used to clear land on

plantations and can burn for weeks because of peat deposits

below the surface.

“This is the first major haze since the new law. This is the

first big opportunity for the government to use it,” said Peter

Kanowski, deputy director general of the Center for

International Forestry Research (CIFOR), a conservation

organisation based in Indonesia.

Three of the firms under investigation are owned by

government-linked companies in Malaysia. Unlike Singapore,

Malaysia has not publicly admonished Indonesia over the smog.

An initial on-the-ground investigation by dozens of

officials in Sumatra’s Riau province found evidence of fires on

land licensed to PT Tunggal Mitra Plantations and PT Bhumireksa

Nusa Sejati, said Sudariyono, the Environment Ministry’s

enforcement chief.

The two firms are owned by the world’s largest palm oil

planter by landbank, Malaysia’s Sime Darby Bhd, via

its Indonesian subsidiary Minamas Plantation.

In a statement, Sime Darby said the latest satellite maps

from the U.S. government agency NASA, overlaid with the

company’s own map of its concessions, showed no fires at Tunggal

Mitra Plantations.

There were three fires in Bhumireksa Nusa Sejati’s

concession area. However, they were outside the company’s

operating area, said Sime Darby, which is backed by state funds

in Malaysia.

Sime Darby cited Indonesian regulations, imposed in the

1980s, under which local farmers can use concession land without

restrictions. The firm said it has not cleared land since April.

Some farmers illegally clear land using “slash and burn”

techniques during the June to September dry season.

Fourteen people had been arrested this week for lighting

fires, national police spokesman Boy Rafli Amar said. He

declined to say if any were employed by the named companies, but

added there was evidence of fires at concessions owned by all

eight firms.

Sudariyono said investigators had visited concessions of all

the firms and were using GPS data to establish the location of

fires. They were focusing initially on “going after the local

companies” and would pursue any links to parent firms later.

He declined to give more details, but said more companies

would be investigated.

TOUGH PENALTIES

The Environment Ministry and the police are leading the

investigation and say they will decide if there is enough

evidence to recommend the attorney general’s office pursue the

case further.

A team of 58 police officers and nine officials from the

Environment Ministry were on the ground in Riau, the epicentre

of the fires, police said.

Action has rarely been taken against plantation companies

since the first major Indonesian haze crisis in 1997, when smog

disrupted shipping and air travel across Southeast Asia.

Under the 2009 law, a person or company found guilty of

starting a forest fire can face up to 10 years in jail and 10

billion rupiah ($1 million) in fines.

A guilty company can also have their profits seized,

operations shut down and be sued for damages.

Palm oil is a key ingredient for products such as cooking

oil and biofuel. Global demand has nearly doubled in seven years

to more than 51 million tonnes, with much of it produced in

Indonesia and Malaysia.

Industry data show oil palms cover about 5 million hectares

in Malaysia and more than 8 million hectares in Indonesia.

Among the other firms Sudariyono listed was PT Multi Gambut

Industri, known officially in Malaysia as PT TH Indo

Plantations.

It is a unit of the Malaysian state-linked Pilgrimage Fund

Board. Kuala Lumpur-listed TH Plantations Berhad, also

a unit of the fund, manages TH Indo Plantations.

TH Plantations said it had “zero-burning” policies, adding

it had observed instances of open burning outside the boundaries

of the estates it managed.

($1=9,925 rupiah)

(Additional reporting by Janeman Latul, Michael Taylor and

Andjarsari Paramaditha in Jakarta, Niluksi Koswanage in Kuala

Lumpur, and Eveline Danubrata in Singapore; Writing by Randy

Fabi. Editing by Jason Szep and Dean Yates)

CORRECTED-Indonesia says building criminal cases against 8 firms over fires