Case study of IOI Pelita Plantations operations and practices, and its impact upon the community of Long Teran Kanan, Tinjar, Baram, Sarawak,

Transcription

1 Case study of IOI Pelita Plantations operations and practices, and its impact upon the community of Long Teran Kanan, Tinjar, Baram, Sarawak, Malaysia

2 Table of Contents About this report... ii Summary... iii 1. Introduction Background IOI Plantations Long Teran Kanan Miri High Court case: Long Teran Kanan vs. IOI Pelita, LCDA and Sarawak Government Chronology of events Field study trip Methodology Findings No access to community land; Continued occupation and encroachment by IOI Poor consultation and community relations Poor road maintenance Irresponsible water resource management Haphazard agrochemical handling Unsanitary solid waste disposal Disregard for foreign workers welfare Oil palm plantings on steep slopes No High Conservation Value and Social Environmental Impact Assessments conducted Government recognition of Native Customary Rights Significant developments after field trip Conclusion and recommendations Annex 1: BRIMAS statement Another victory for the natives of Sarawak Annex 2: Judgement; Kg. Long Teran Kanan vs. Rinwood Pelita, LCDA, Sarawak Government Annex 3: IOI Pelita Plantation Sdn Bhd s Response to the Land Dispute case in Sarawak Annex 4: BSI Management Systems report on Land Dispute Case in Middle Tinjar Annex 5: Memorandum to Dato Lee Yeow Chor, IOI Corporation Annex 6: Stakeholder assessment checklist against RSPO P&C Annex 7: Map showing boundaries of Native Customary Rights (NCR) area for the residents of Kampung Long Teran Kanan, Baram, Marudi District, Miri Division, Sarawak Annex 8: Holding IOI Accountable article in The Nut Graph Annex 9: IOI Corporation Bhd s Statement in response to The Nut Graph s article titled Holding IOI accountable i

3 About this report This report is produced as part of the Palm Oil Monitoring Initiative (POMI) that is a stakeholder / NGO driven programme aimed at supporting wider engagement between communities, grassroots groups, NGOs, community organisers and RSPO members. The aim is to provide a suitable platform for these groups to directly engage producers where their operations may be in conflict with local communities or forest conservation. The programme is two pronged with a Malaysian and Indonesian component and partners in each of the programme are experienced in tackling various issues, including social organisation, land rights, RSPO implementation, investigative reporting, legal counsel and advocacy. This report was produced by Grassroots for POMI with the collaborative efforts of the following organisations: Sarawak Dayak Iban Association (SADIA) Sarawak Indigenous Lawyers Alliance (SILA) Tenaganita This report has been made possible through the contribution of Doen Foundation (Stichting DOEN; see Doen s support for this project and report does not in any way reflect Doen s own positions and views. First public release: 2 November 2010 ii

4 Summary IOI is recognised as a leading palm oil company with a vertically integrated business that stretches from primary planting of oil palms to refinery and processing. IOI s business can also be considered global with considerable investments in Asia and notably owning one of the largest processors of palm oil, Loders Crooklaan in the Netherlands. IOI also claims to be a founding RSPO member and accordingly claims a strong Corporate Social Responsibility track record that is often cited in its marketing and promotional materials. IOI has also been under scrutiny of stakeholders over allegations of illegal land clearing, fires, clearing of high conservation value areas, workers welfare issues and conflict with community over disputed land. These allegations have originated from their operations in Indonesia and Malaysia. The village of Long Teran Kanan is situated along the Tinjar River in Baram, Miri Division, Sarawak. It was first established in the 1960 s after the presently living Kenyah and Kayan groups moved to this area. The siting of Long Teran Kanan was done through traditional customs (bulak) and later ratified in official government records. Therefore, the present Long Teran Kanan residents have a lawful and legitimate Native Customary Right over the territory they now claim and are in dispute with IOI Pelita Plantations. In this case, it is important to place the report in context. The community of Long Teran Kanan has been engaged in a court battle over this land for over 12 years and in March 2010 the community won the case in the High Court of Miri. The court decision basically recognises the NCR claims of the community and places the onus of responsibility upon IOI and the other defendants to compensate the community accordingly or leave the disputed land. In effect, any activities carried out by IOI with this present ruling amounts to unlawful entry. In addition, the original Environmental Impact Assessment for the estate carried with it a condition for approval, which is in the form of a written undertaking signed and agreed, to the Natural Resources and Environment Board, Sarawak for the due compensation of the community of Long Teran Kanan for extinguishing of their rights to the land. In November 2009, a series of meetings was held between IOI and the community (and stakeholders) over resolving the dispute. The key outcome was that IOI would not appeal the case (that it now disputes) as well as carry out important measures to improve relations, including acting on road maintenance and beginning work on compensating for losses to the community. The field trip was carried between August and set out to establish what progress had been made on this case after much discussion during the months of November 2009 where meetings were held between the company and the community. The findings as recorded in this report include the following: 1. The community continue to have limited or no access to community land due to the continued occupation and encroachment by IOI. 2. Community relations remain tense and poor. IOI clearly does not possess the capacity or have adequate resources available on site to address ongoing tensions between the community and company. 3. The conditions of roads remain very poor and in urgent need of repair as it is a critical element for the village to function. 4. The sole water catchment area for Long Teran Kanan is planted with oil palms by IOI, and evidence of application of weed killers or other agrochemicals observed, jeopardising the water resources for the village. 5. Water intake point is also compromised due to increased siltation at the point due to land clearing and other disturbance to plant oil palms. 6. Poor maintenance of riverine areas, including the lack of buffers between river and plants as well as poor maintenance of some culverts. Community members allege that these contribute towards flooding in the area. iii

5 7. The haphazard and unsafe manner by which the team encountered the management of agrochemicals that were found left unattended beside a river. 8. The neglectful state of housing for foreign workers that were observed, including unsanitary and unsafe conditions for the housing. 9. The discovery of a grave site that was being used by foreign workers to bury deceased on community land that was undisclosed. 10. The potential for accidents and fatalities on the estate after the discovery of the grave site leads to potential questions regarding the safety of the estate. 11. The observance of plantings on steep slopes including one measuring over 36 gradient. 12. Land cleared in the disputed area that was done without consultation with communities through neither a Social Impact Assessment nor the conduct of High Conservation Value assessments. 13. Government provided services for Kg. Long Teran Kanan include the provision of a health clinic and school in the village itself. In addition, government subsidies were provided to the community to rebuild their longhouse after a fire. The recent clearing a land in the NCR claimed area to make way for a gas pipeline connecting Sarawak with Sabah compensated affected individuals on the community who lost lands resulting from this. All these only serve to reinforce the legitimate claims of the community. IOI s response to the engagement process has been unsatisfactory from the stakeholders and community perspective. In addition to the findings of the field trip, the approach of IOI towards stakeholders has been less than constructive and it is difficult to ascertain how that would lead to amicable and equitable solutions on the ground to the many problems and challenges. In principal IOI has breached the following RSPO standards in so far as their dealings and conduct in the dispute with the community of Kg. Long Teran Kanan: 1. RSPO Code of Conduct art. 2.3: Members will commit to open and transparent engagement with interested parties, and actively seek resolution of conflict. Engagement has been stuttering at best, with IOI ceasing communicating with stakeholders and not responding to either community memorandums or stakeholder engagement. In addition, the length of time between what was agreed in November 2009 for resolving issues also demonstrates a lack of commitment while its often antagonistic approach in addressing concerns by interested parties also demonstrates no respect by IOI for RSPO s Code of Conduct. 2. RSPO Certification Systems requirement (c): there are no significant land conflicts, no replacement of primary forest or any area containing HCVs since November 2005, no labour disputes that are not being resolved through an agreed process and no evidence of noncompliance with law in any of the non certified holdings. IOI continues to maintain its RSPO certification status despite there being clear evidence that it is involved in significant land conflicts through this dispute in Long Teran Kanan. In addition, by continuing to ignore the undertaking to NREB that was a condition for the approval of the EIA, IOI operates without complying with the laws of this non certified holding. Finally its continued operations after the March ruling of the Miri High Court means IOI is trespassing on community land, an offense under Malaysian law. In order to resolve the issues at hand, the following recommendations are presented to provide a roadmap for heading towards a sustainable future: a. IOI should withdraw its pending appeal against the decision of the Miri High Court unilaterally. b. IOI should act upon fulfilling the conditions of the EIA for the estate as contained in the letter of undertaking to the NREB. c. IOI should suspend all operations in the disputed lands, especially any land clearings. iv

6 d. IOI should prioritise and begin in earnest, direct negotiations with the community of Kg. Long Teran Kanan for the compensation of lands or the return of lands to community members who have legitimate claims. Such a process should be done through a transparent and mutually agreed process that allows community members to negotiate through their own representatives and arbitrated through a suitably agreed process that is equitable to both communities and company. e. IOI should rehabilitate and protect Long Teran Kanan s water catchment area and water intake point, including rehabilitating the catchment area as well as ensuring strict control over access into the area and demarcation of the catchment through a joint exercise with community. f. IOI should improve its management of agrochemicals, riverine zones and solid waste. g. IOI should improve staff housing conditions to ensure safe, sanitary and liveable conditions for all workers. h. IOI should exhume the deceased and rebury them in a suitable burial ground for workers at a site that is decided in consultation with the community. i. IOI should complete road repairs. v

7 1. Introduction Palm oil has become associated with the clearing of tropical rainforests and creation of social conflict due to its aggressive expansion over the past decade, driven by global demand for palm oil as a food staple and more recently biofuels. The oil palm is a tropical palm originating from West Africa but has grown to dominate the landscape of Malaysia and Indonesia, covering large tracts of lowland, coastal and alluvial soil areas in the region. Optimally grown in the equatorial belt, both countries were ideally placed socio economically and politically for the rapid growth of oil palm plantations over the last 40 years. Due to the reputation palm oil has gained, the Roundtable on Sustainable Palm Oil (RSPO) was formed, with the expressing objective of promoting the production and use of sustainable palm oil. In that catch phrase the means to achieve this would be through the system of third party certification against a standard for sustainable palm oil that is created through a multi stakeholder platform, which is the role of the RSPO. Because the RSPO is multi stakeholder by nature, the Palm Oil Monitoring Initiative (POMI) was established in Leveraging on the access that the RSPO platform accords to stakeholders, POMI focussed on bringing grassroots groups and communities into direct dialogue and negotiations within the boardrooms of major palm oil producing companies. In that sense, POMI was a resounding success as its target, Wilmar International Ltd, an RSPO member, was successfully engaged by NGOs and the actions resulted in two major conflict cases of Wilmar s being tackled in Indonesia. The Palm Oil Monitoring Initiative II (POMI II) is the second phase and expanded to include a Malaysia and Indonesia component. Specifically the project focuses on land conflict and deforestation where oil palm expansion is ongoing, namely Borneo. That also influenced the composition of organisations involved in the current project. The case involving Kg. Long Teran Kanan and IOI Plantations is the first case to be studied and activated under the Malaysia POMI II project. The Long Teran Kanan case is an obvious one to begin POMI II in Malaysia. It is an existing case in the Court system and there is already an organised community on the ground. Because IOI is the owner of the estate, it becomes a priority to engage the company in addressing the social conflict on its estate. 1

8 2. Background 2.1 IOI Plantations IOI Plantations is a subsidiary branch of IOI Corporation Bhd. IOI (as the Group is commonly referred to) is one of the largest business conglomerates in Malaysia, with a diverse portfolio of businesses anchored around a few key industries. Incorporated in 1969 as Industrial Oxygen Incorporated Sdn Bhd, IOI is now identified for its concentration in the plantation, resource based manufacturing and property businesses. It is headed by Executive Chairman Tan Sri Lee Shin Cheng, also listed by Forbes as the 3 rd richest person in Malaysia for 2010 and worth a reported US$ 4.6 billion 1. His family maintains control of IOI through Progressive Holdings Sdn Bhd. His son, Dato Lee Yeow Chor is Executive Director of IOI Corporation and is seen as the key decision maker after his father. The following are the key statistics of IOI based on their most recent Annual Report of In 2009 IOI Corporation generated revenues of RM 14,600 million (US$ 4,124 million), operating profits of RM 2,432 million (US$ 687 million) and profits after tax of RM 1,063 million (US$ 300 million). At the end of 2009 the size of IOI s oil palm estate plantations amounted to 172,980 hectares, spread over 82 estates. As at 2009, approximately 68 per cent of IOI s plantation holdings are based in East Malaysia, 31 per cent in Peninsular Malaysia and the remaining 1 per cent in Indonesia. At the end of 2009, 139,597 hectares of IOI s planted oil palm acreage (92%) were mature. In 2009 the company produced 3.6 million tonnes of Fresh Fruit Bunches (FFB). The company processes the FFB in its 12 palm oil mills, which have a total annual capacity of 4 million tonnes. CPO production amounted to 778,000 tonnes in 2009, equivalent to 5.57 tonnes per mature hectare. In 2009, all oil palm activities (plantations and manufacturing) taken together of the company accounted for RM 1,970 million (US$) or 81% of its operating profits. IOI Group has been a member of the Roundtable on Sustainable Palm Oil (RSPO) since May 2004 under the Palm Oil Processor and/or Trader membership category. It often makes a claim that it is a founding member of the RSPO. IOI is also a member of the current RSPO Executive Board. The RSPO further lists IOI as having 4 certified mills producing 270,692 tons metric of palm oil and 62,768 tons metric of palm kernel, but it cannot be certain as a check on the RSPO website shows that there should be more than 6 certified units based on the approved (Pamol Sabah and Sakilan in Sabah as well as Pamol Kluang, Johor, all in Malaysia) and notifications posted on the RSPO website. 2.2 Long Teran Kanan The present site of Kg. Long Teran Kanan was established around The present residents of the village can trace their history to that time when their community moved to this present site, after getting the rightful permission of the Berawan communities in the area through customary laws and processes. The area was also recognised by the official government agency overseeing land matters and proper documentation of the establishment and right of the community of Long Teran Kanan over their NCR lands in the area undisputed. Kg. Long Teran Kanan itself is organised into two (2) main parts, Kg. Long Teran Kanan A (Kayan community) and Kg. Long Teran Kanan B (Kenyah community) as shown in photo 1 and 2. Both parts maintain some structural authority independent of each other, but in practical terms both communities often co operate at different levels for mutual benefit. 1 Source: rich 10_Lee Shin Cheng_HZCA.html 2 Source: IOI Corporation, Annual Report 2009, IOI Corporation, September Information collated by Profundo 2

9 Photo 1 (Point M, Map 1): Sunset over Long Teran Kanan A longhouse. Typical of rural villages in Sarawak, Kg. Long Teran Kanan is sited next to a major river called Sg Tinjar that until the arrival of dirt roads up from Miri was the primary (or only) means of transport. Other villages exist on the opposing bank of Sg. Tinjar, facing Long Teran Kanan. Some suggestions are that there are 4 villages clustered along the banks in the area; Kg. Long Teran Kanan, Kg. Long Teran Kiri, Kg. Long Teran Batu and Kg. Long Teran Kenyah. Photo 2 (Point M, Map 1): Long Teran Kanan B longhouse. 3

10 2.3 Miri High Court case: Long Teran Kanan vs. IOI Pelita, LCDA and Sarawak Government The community of Long Teran Kanan has been embroiled in a land rights and custody case against Rinwood (subsequently acquired by IOI), the Land Custody and Development Authority (LCDA) of Sarawak and the Sarawak State Government for over 12 years. On 31 March 2010, the High Court of Miri ruled in favour of the community of Long Teran Kanan that in essence provides recognition of their native customary rights to their native customary land. The decision was noted by Sarawak NGOs, including Borneo Resources Institute (BRIMAS) that posted a press statement highlighting the victory of the community in the case. The essential section of the Miri ruling as explained by BRIMAS is as follows: The court declared that the plaintiffs, Lah Anyie and 4 others who were representing their village of Long Teran Kanan in a class action suit, possess native customary rights (NCR) over their native customary land (NCL) area at Long Teran Kanan, Tinjar and that the Provisional Leases (PLs) of Lot 3 and Lot 8 Dulit Land District issued by the third defendant, the Sarawak Government through the Land and Survey Department to the first and second defendants, Land Custody Development Authority (LCDA) or also known as Pelita and IOI Pelita Plantation Sdn. Bhd. (formerly known as Rinwood Pelita Plantation Sdn. Bhd.) are declared null and void. 3 The BRIMAS press release is provided as Annex 1. The key points of the judgement (provided as Annex 2) are as follows: i. The community of Kg. Long Teran Kanan have Native Customary Rights (NCR) over the land covered by the two provisional leases issued to/held by IOI Pelita Plantation Sdn Bhd. over Lot 3 and Lot 8, Tinjar Land District. ii. Based on the actions of government the community of Kg. Long Teran Kanan have a legitimate expectation to live, reside or occupy the land in Lot 3 and Lot 8. iii. As required under Chapter 81 of the Sarawak Land Code, the government is required to firstly extinguish the rights of the occupants of the land prior to issuing new leases (however it must be done according to the provisions of the statute including payment of compensation to the person who acquired NCR over the land involved), which was not done prior to alienating the land under Lot 3 and Lot 8 and issuing provisional leases to IOI Pelita Plantations Sdn Bhd. iv. Therefore the provisional leases issued for Lot 3 and Lot 8 are declared null and void. v. This means that by virtue of that ruling, IOI is trespassing on the NCR lands of the community of Kg. Long Teran Kanan. vi. The community of Kg. Long Teran Kanan should have damages assessed (including any and all exemplary and aggravated damages) and paid for by the defendants, including costs. Subsequent to that decision, IOI Group released a press statement on 3 April 2010 through its website 4 stating that We have been advised by our solicitors that the defendants including the JV Company have strong grounds for appeal and hence advised us to appeal against the said decision (provided as Annex 3). 2.4 Chronology of events The legal proceedings have been ongoing since 1997 when the plantation was owned by Rinwood Pelita Plantations Sdn Bhd. After the plantation was sold to IOI, the court case was inherited by IOI Pelita Plantations Sdn Bhd. 3 Source: 4 Source: CD2CD9E31374F90 4

11 Stakeholder complaints and dissatisfaction against IOI were already lodged with RSPO in In 2009 itself, due to the audit and certification process for IOI s estates from auditors BSI and SGS, several grievances were raised by stakeholders with RSPO. These complaints are separate from the issues raised by Milieudefensie through their report Too Green to be True 5 regarding IOI s operations in Ketapang, West Kalimantan, Indonesia. While that report and subsequent discussion 6 generated sufficient concern for it to be of attention to the RSPO, the attempts of IOI to gain certification of its Sabah estates brought its own grievances from stakeholders over operations in Sabah, and the initial complaint on IOI Pelita s operations in Tinjar. The first complaint was raised by SADIA that led to the subsequent events in November At the 7 th Roundtable meeting on Sustainable Palm Oil (RT7) held in Kuala Lumpur from 2 4 November 2009, representatives from Kg. Long Teran Kanan together with their representatives were invited to meet with IOI s officials. The meeting was called in no small part due to the official grievance submitted to RSPO that was made by SADIA in July 2009 affecting impending audits against the RSPO standard as well as concerns raised by buyer Neste Oil (another RSPO member). This was followed by a few weeks on intense interaction between IOI and the representatives of Kg. Long Teran Kanan. The key controversy during the lead up to the field visit revolves around the obligations and agreed actions of IOI as understood by the representatives of Kg. Long Teran Kanan and stakeholders. These obligations and agreed actions were duly reflected in the report by IOI s own auditors from the Certification Body, BSI. The events are provided in Table 1 below. Date Event POMI presence 25 July 2009 Grievance submitted by SADIA on IOI Pelita in Sarawak and BSI (auditor) Grievance submitted by SADIA on IOI operating on land disputed by community of Long Teran Kanan. Upon recommendation that CB undertake stakeholder meeting with affected community to address matter during audit / certification process. 3 Nov 2009 RT7 meeting, Kuala Lumpur. Meeting between Joshua Mathews, IOI with Emang Jau, Kg. Long Teran Kanan representative and NGO representatives. IOI representative said intention of company is to engage community and amicably resolve issues. 3 Nov 2009 RT7 meeting, Kuala Lumpur Meeting between BSi social auditor and SADIA regarding social issues associated with Kg. Long Teran Kanan and IOI as part of partial certification requirements. Follow up to be held on site through stakeholder meeting 17 Nov 2009 RSPO certification stakeholder meeting, Pejabat Ladang Sejap for IOI audit Joshua Mathews reiterated company position to not appeal case even if it should win and to build up relations with community to resolve land dispute. Statement recorded and reflected in BSi report (see Annex 4) 31 Mar 2010 High Court Miri hands down ruling on case of Long Teran Kanan vs. IOI Pelita Bhd, LCDA & Sarawak Government Ruling in favour of plaintiffs (Long Teran Kanan) and declares Provisional Leases (PL) null and void. SADIA Grassroots SADIA Tenaganita Grassroots SADIA AidEnvironment SADIA SILA Tenaganita SILA 5 publicaties/report too green to be true english 6 For information on this see publicaties/summary ofmilieudefensies reaction to iois response towards the report too green to be true 5

12 Date Event POMI presence 3 Apr 2010 IOI press statement IOI releases statement that it will in fact appeal the case after conferring with lawyers, breaking promise made in November Apr 2010 Memorandum to IOI Corporation from Long Teran Kanan Following statement from IOI, community writes memo to IOI s Executive Director, Dato Lee Yeow Chor appealing for the company to live up to its own words (Annex 5). No reply was ever received by community or NGOs Table 1: Chronology of events N/A AidEnvironment Grassroots SADIA SILA Tenaganita In addition to the meetings held in November the community further sent a memorandum to IOI s Executive Director, Dato Leo Yeow Chor after learning that in fact, IOI was appealing the case after the Miri High Court ruled in favour of the plaintiffs, Kg. Long Teran Kanan. This was in stark opposition to the promise made by IOI at the stakeholder meetings held and recorded as the action it would take in the assessment for the RSPO. 2.5 Field study trip The field trip was conducted after an invitation from the community of Kg. Long Teran Kanan. The intention of the visit was to follow up upon the initiative of POMI to assess the situation at Kg. Long Teran Kanan following the decisions reached at the stakeholder meeting between IOI and the community of Long Teran Kanan on 17 November 2009, and subsequent decisions thereafter affecting the case between Kg. Long Teran Kanan and IOI (with LCDA and the Sarawak State Government). The field trip was carried out from Sunday, 22 August 2010 to Tuesday, 24 August Map 1 shows the general area visited as well as key sites that are further elaborated in this report. 6

13 Map 1: Location map showing key areas visited during the field study: A IOI workers housing B View of recent land clearing activities by IOI C IOI s agrochemical storage and mixing area D Sungai Tegai E IOI s waste dumping area F IOI Tegai Estate entrance / IOI cuts off community farmer s access to farm G Community water intake point / Community water catchment area / Community farmer Malang Jok s land H IOI workers illegal burial grounds I IOI promises assistance with road repairs J View of IOI s oil palms on community land K Gas pipeline project L IOI Tegai Estate office M Kampung Long Teran Kanan 7

14 3. Methodology This case study is made possible through the Palm Oil Monitoring Initiative II (POMI II) that is a multicountry NGO collaboration to monitor and enable NGO engagement with oil palm companies on issues of social conflict and environmental degradation as a result of these companies activities. The focus of POMI II in the field is in Sarawak (Malaysia) and Kalimantan (Indonesia). This case study is part of the Malaysian initiative. The study was done through the combination of field and desk research. The field trip for the study was conducted during August 2010 in collaboration with the following organisations: 1. Tenaganita 2. Sarawak Indigenous Lawyers Alliance (SILA) 3. Sarawak Dayak Iban Association (SADIA) 4. TAHABAS 5. Grassroots Organisation Personnel Role Tenaganita Shafinaz Suhaimi Project leader Audio/video Sarawak Dayak Iban Association Sarawak Indigenous Lawyers Alliance Nicholas Mujah Nicodemus Singgai Ujai Dami Gani Harrison Ngau Abun Sui Interview Mapping support Ground logistics Case history Translation Information provision TAHABAS Siew Choon Siak Capacity building Grassroots Andrew Ng Si Siew Lim Field documentation GPS Photography Together the 5 carried out field research in the disputed area between Kg. Long Teran Kanan and IOI Pelita Plantations, Tegai estate. The methods employed include the following: 1. Direct dialogue and discussion with community on the dispute between the village and IOI (Photo 3 below) 2. Documentation and recording of disputed areas and conflicts between the community and IOI 3. Interview with estate management (Photo 4 below) 4. Background research on case history, IOI Plantations, Kg. Long Teran Kanan and RSPO Principles & Criteria for Sustainable Palm Oil (RSPO P&C). 8

15 Photo 3 (Point M, Map 1): Meeting with the community of Long Teran Kanan. Photo 4 (Point L, Map 1): Meeting with Assistant Manager of IOI s Tegai Estate. The findings of the research are appraised against the RSPO P&C and reported with these references to enhance clarity of issues and violations of RSPO s standards. The research team employed the use of photographic and audio/video recording for interviews and meetings. A Global Positioning System (GPS) device was used to record location of sites and conflict points. The results and data collected during the field research were then organised using an RSPO centric approach; using the RSPO P&C as template 9

16 through a Stakeholder Assessment Checklist against RSPO P&C (see section 4 below; checklist provided as Annex 6). 4. Findings The findings of the research team have been organised based on issues as brought forward by the community of Long Teran Kanan. Where relevant, specific parts of the RSPO P&C are referred to in each sub section. The use of the Stakeholder Assessment Checklist against RSPO P&C is used to determine whether key social and environmental criteria are being adequately managed or addressed (see Annex 6). References to community land are based upon community mapping that produced a map (provided as Annex 7) of claimed areas and contested land lots under IOI s Provisional Lease (PL). For each of the findings under this chapter, the relevant RSPO P&C are also provided at the start to focus the relevance of the findings against RSPO s certification requirements. 4.1 No access to community land; Continued occupation and encroachment by IOI Relevant RSPO criteria: Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights. Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements. The community map produced by Kg. Long Teran Kanan shows the areas claimed as NCR land, and overlaps with the disputed Lot 3 and Lot 8 of the Provisional Lease (PL) for IOI. The areas occupied by IOI have been intensely developed through planting and cultivation of oil palms on the customary lands of the community. This was observed during the field trip, and IOI continues to operate on the disputed lands in defiance of the most recent Court ruling on 31 March Photos 5 9 on the following pages serve to show evidence of this. 10

17 Photo 5 (Point F, Map 1): Entrance to IOI s Tegai Estate, which continues to operate on NCR land despite the 2010 court decision. Photo 6 (Point J, Map 1): IOI s oil palms planted on NCR land without consent of or consultation with communities. Despite the 2010 court ruling in favour of the community, IOI continues to harvest fruits from these conflict areas. In light of the ruling by the court, and bearing in mind that IOI claims to be a company that is adhering to the spirit and standard of the RSPO, its continued presence and activities on the disputed land (Photo 7) only serves to exacerbate the tense situation on the ground between the company and villagers who are claiming parts of the area as customary lands. 11

18 Photo 7: IOI s workers and vehicles continue to operate on NCR land (March 2010 court ruling). In the case of one community farmer, he claims that 300 of his own oil palms were cleared by the company and subsequently replaced with their own (Photo 8). Photo 8 (Point G, Map 1) A villager holds the frond of an oil palm planted by IOI on his ancestral land. He claims that IOI cleared 300 of his oil palms and replaced them with their own oil palms. 12

19 For community member Malang Jok, parts of land traditionally cultivated and owned by his family were cleared by IOI and planted with oil palms (Photo 9). Mr. Jok expressed his opinion that if not for the active resistance and action of the community as a whole, his land would have been totally cleared by IOI with no regard for the property of his family or the crops cultivated therein. Photo 9 (Point G, Map 1) IOI s oil palms planted on villager Malang Jok s ancestral land. If not for resistance from the community, Malang Jok felt that all of his ancestral land would have been cleared by IOI. The individual cases documented serve to highlight the situation and the attitude of IOI s Tegai estate in allowing access by community members to their lands. The issue was raised directly through the lawyers representing Kg. Long Teran Kanan to IOI Pelita Plantations as an urgent matter (photo 10). 13

20 Photo 10: A copy of a lawyer s letter requesting IOI to cease cutting off villagers road access to their NCR land and also to clarify and explain 5 statements made by IOI regarding this matter. 4.2 Poor consultation and community relations Relevant RSPO criteria: Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. The community of Kg. Long Teran Kanan display some cohesion and willingness to work together communally in addressing the state of relations with IOI Pelita s Tegai estate. In the view of Lah Anyie, village head of Long Teran Kanan, becoming good neighbours is essential for mutual benefit and prosperity. As such, communications exist between both the community and management of Tegai. In ascertaining whether communications between the community and company existed, it is key to also seek out the actions and practices of the company in maintaining proper contact between the management and community. The manager on duty at IOI s estate, Ellevenson William Dueed, Assistant 14

21 Manager, IOI Tegai estate, showed the team the estate s Green Book which was the primary tool for the lodging of grievances, requests and complaints against the estate. According to Mr. Dueed, the Green Book was meant to be a clear record of complaints, actions and results. He also showed where in previous instances grievances, requests and other issues were lodged with the estate through the Green Book and action taken. The use of the Green Book as a tool for addressing grievances is an important step in building constructive relations with the community. Consultation and community relations however require more than just the provision of a record for grievances and actions taken. The system employed and shown to the team by IOI Tegai estate clearly does not provide for checks and balances, nor does it meet the rigours of RSPO s own standards under Criteria 6.2, 6.3 and 6.4. During the community meeting and follow up interviews with community members, the weaknesses of IOI in addressing issues with the community leading to tension between both sides were revealed. While it was revealed that IOI had in fact taken action on repairing the road as was recorded in the Green Book (but was unable to execute the plan due to inclement weather and the need to reassess the project due to increases in the price of gravel) such information was not passed on to the community or the village head. This led to suspicion that IOI had not lived up to its promise by community members. This clearly demonstrates the need for more communication and better community relations. The estate does not maintain adequate capacity to provide liaison work with the community of Long Teran Kanan. While it should be expected that as this estate is not RSPO certified, and therefore may be on the way to realising better community relations and consultation, there is a dire need for such resources now. The team enquired about what progress was made since the March 2010 court ruling on the agreed actions by the company. Mr. Dueed relayed the following: Water samples have been taken at various points Christmas contributions to the community have been made Road repairs/construction is in progress Meanwhile some community members have felt that at times, the company used intimidation and threat of force from the local police to discourage villagers from pursuing the protection of their lands from further encroachment. In addition the lack of adequate resources for community relations has led to complaints over the willingness of the estate management in meeting and discussing issues with community members. At the meeting with the Assistant Manager, the team were informed through him that Joshua Mathews had expressed anger and disappointment that stakeholders were entering the estate without getting the prior and explicit approval of the IOI Head Office Management. Such is the attitude of IOI and it is unfortunate the company failed to recognise that as much as IOI was operating on the land, the present decision of the court means the land belongs to Kg. Long Teran Kanan and the team did not need to get the permission of IOI to visit the land. In fact the team was never obligated to meet and allow IOI the time to share their views, perspectives and challenges but chose to do so in the spirit of transparency, constructive engagement and building dialogue. At the end of the meeting, the POMI team were asked to provide their contact details in order for IOI to invite all those present as stakeholders to attend a planned community and stakeholder meeting at a neutral venue to further discuss the issues surrounding IOI s Tegai estate and Kg. Long Teran Kanan. The projected date for the meeting was September To date none of the POMI team members had received invitations to such a meeting. It was recently confirmed that such a meeting had not yet taken place, as informed by the Tegai estate Assistant Manager. 15

22 Part of the tension between the community and the company can be traced to accusations from the company against village members of stealing oil palm fruit bunches from the company s trees in the disputed lands. In discussions with the community, it was revealed that IOI s Tegai estate Assistant Manager filed police reports on 3 occasions against villagers. However, upon the initiative of the village, the accused villagers visited the police station to co operate with them on the matter and gather more details or information regarding any charges or cases placed upon them. They were informed that there was no case against them and no action will be forthcoming. While it may be the case that in fact some village members had taken fruit from trees planted by IOI, there is much to be desired by the approach and attitude of the estate in tackling the matter. In light of the dispute and overlapping claims of land ownership between the company and Long Teran Kanan, the decision to involve the local police and threat of punitive action can only serve to increase tensions with the community. 4.3 Poor road maintenance Relevant RSPO criteria: Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate. As mentioned earlier, the primary transport route from Kg. Long Teran Kanan to Miri and other places is through the road that runs through IOI s Tegai estate. This unpaved road is used by the community to move out of the village as well as to individual farms, gardens and crop areas as well as to adjacent forestland that form part of the entire land under Native Customary Rights (NCR). The same roads are also used by IOI s estate to connect with the main road as well as for access to the individual planted areas to maintain and harvest crop. During the field visit, it was apparent that IOI continued to utilise the roads for their operations (Photo 7). In addition logging trucks were also using the same roads to enter and exit a logging concession adjacent to the area to extract timber. In view of the heavy usage of the unpaved roads by heavy machinery and trucks, deterioration of road quality is a constant concern. During the field visit, travel by road to the village would have been challenging for a normal sedan vehicle with 2 powered wheels. Deep ruts, potholes, uneven surfaces and slick mud typify the roads in the area (Photo 11). 16

23 Photo 11 (Point I, Map 1): A villager stands on a poorly maintained road leading to several community farms including his own. According to the villagers, IOI had promised to assist with road repairs during a meeting with community but to date; no work has been done at this site. The issue of road building and maintenance was raised during the meeting between the community and IOI on 17 November 2009 (see Annex 4). A major constraint to improving the road that is commonly used by the villagers of Long Teran Kanan, Tegai estate and logging trucks is funds or resources to upgrade the road, as is claimed by IOI. During face to face meetings between the team and IOI s management representatives it was revealed that IOI was still assessing the cost of upgrading the roads, especially that of gravel. However, it was also claimed that some work had already been done by IOI s contractors albeit in a piecemeal fashion as observed by villagers. Mr. Dueed blamed the rainy weather for the partial effort of road building. 17

24 4.4 Irresponsible water resource management Relevant RSPO criteria: Criterion 4.4 Practices maintain the quality and availability of surface and ground water. Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented. Kg. Long Teran Kanan does not have piped water supply from the State s water system. The community of Long Teran Kanan rely on water supply from nearby water sources. The main water source for the village is identified at Point G, Map 1. Being the primary source for potable water to the community, the catchment for the intake point becomes an environmentally sensitive area by default. Community members brought the team to note the condition of the catchment area. Most of the water catchment area has been cleared and planted with oil palms by IOI (Photo 12). Photo 12 (Point G, Map 1): The water catchment area (sole water supply for Long Teran Kanan) cleared and planted with oil palms (but subsequently abandoned) by IOI. At the water intake point, gravel deposits as a result of IOI s land clearing activities in surrounding areas have resulted in a shallower stream that feeds the community reservoir (Photo 13 below). Furthermore, community members claim that the area identified as the upper catchment was cleared and planted with oil palms by IOI. 18

25 Photo 13 (Point G, Map 1): A villager working to ensure the inlet that feeds the community s only reservoir remains free flowing. Gravel deposits from IOI s land clearing activities in the surrounding watershed have resulted in a shallower stream over time. The team also found that there is evidence to suggest use of agrochemicals in the water catchment area, as shown in photo 15. The use of such agrochemicals in the catchment area poses a major health risk to the community s sole water supply, especially during periods of rain where chemical run off is expected. (L R) Photos 14 and 15 (Point G, Map 1): Despite IOI s notice (L) in the community s watershed area stating that the use of pesticide and fertilizers are strictly prohibited in the area until there is a decision by the Department of Land and Survey, there is clear evidence of agrochemical use (R). 19

26 The landscape around the claimed area is dissected by various tributaries to the Tinjar River. The gently rising slopes from the banks contain small rivers that drain into the Tinjar. As mentioned above, the community of Long Teran Kanan is dependent upon tapping water through a gravity feed system from one of the tributaries directly to homes and other users in the village. One such river, Sg. Tegai, is considered by the community as an important flood mitigating area, indispensible for the efforts of the village on flood control. In this river, villagers claim that river quality has deteriorated since IOI s operations and until recently, Sg Tegai was a popular bathing spot for the community. The team investigated these claims by the community and found that there was no buffer between the plantings and the river (Photo 16 below) while the poor maintenance of culverts at crossings were observed (Photo 17 below). Villagers suspect that such poor practices have contributed to deteriorating water quality and flood management for the area. Photo 16 (Point D, Map 1): No riverine buffer along a section of Sg Tegai. 20

27 Photo 17 (Point D, Map 1): Poor maintenance of the culvert across Sg Tegai by IOI has resulted in blockages and subsequently, flooding of adjacent community farms. At the same time, the team discovered agrochemical containers arranged next to the river, probably for cleaning of containers or mixing of agrochemicals using the river water, based on the presence of rubber hoses leading to the river from the assembly point of the containers. This point is discussed further below. 4.5 Haphazard agrochemical handling Relevant RSPO criteria: Criterion 4.4 Practices maintain the quality and availability of surface and ground water. Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented. Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Criterion 4.8 All staff, workers, smallholders and contractors are appropriately trained. 21

28 The jerry can containers discovered when visiting Sg. Tegai (Photo 18 below) showed an alarming lack of care and management of agrochemicals, failing to meet the standards required by the RSPO s Principles & Criteria 7. As shown by Photo 18, there were a significant number of green jerry cans that were unlabeled, but upon closer inspection the team were able to establish that the likely active ingredient on the labels could have been glyphosate (upon inspection one of the containers had a worn out label stating its contents as containing glyphosate). The chemical containers were also placed openly by the side of the road and not stored in an enclosed space or with proper signage and warnings. Mr. Dueed, Assistant Manager for Tegai estate, who was passing by the site at the time, claimed that the jerry cans contained only water. Upon closer examination by opening some of the containers, the jerry cans emitted strong chemical smells that were noxious. Liquid samples were taken as evidence to ascertain if the containers only held water. But it appears apparent that the contents of the containers were indeed chemicals. The way filled and re used chemical containers were as shown in photo 18 cannot in any way be seen as complying with the legal standards, let alone that of the RSPO. During a subsequent visit to the Tegai estate office where Mr. Dueed was asked by the team if active chemical mixing was done on the banks of Sg. Tegai, he denied that such practices occurred. This is in contrast to the villagers witnessing active mixing of liquids on the site and corroborated by the admission of workers interviewed during the visit that in fact mixing was done on that site. Photo 18 (Point C, Map 1): Jerry cans containing agrochemicals stored in the open and next to Sg Tegai, a river used by local community. 7 The RSPO Principles & Criteria have specific criteria dealing with agrochemical use and safety. In particular criterion 4.6 on agrochemicals and criterion 4.7 on occupational health and safety are relevant to this particular instance. Basic standards of operation (as is commonly benchmarked for FAO, RSPO) require that containers are labelled correctly and stored properly in an area that can be locked; the containers are constantly under supervised care of a trained worker and suitable notices or signage; and, the mixing area has cement flooring, proper drainage and spillage sumps for containment, emergency eye wash and locked storage area. 22

29 4.6 Unsanitary solid waste disposal Relevant RSPO criteria: Criterion 5.3 Waste is reduced, recycled, re used and disposed of in an environmentally and socially responsible manner. The team was brought to a site by villagers to show the site of an abandoned housing area, where the dilapidated old structures stood and directly in front of what appeared to be a large dumpsite for solid waste that was also abandoned. Photo 19 shows the unsanitary conditions of the site. Photo 19 (Point E, Map 1): Large open dumpsite previously maintained by IOI. In addition to the obvious environmental pollution, the POMI team is concerned about the potential impact on human health as such irresponsible waste dumping would create perfect breeding grounds for mosquitoes and potentially cause diseases like dengue or malaria. 23

30 4.7 Disregard for foreign workers welfare Relevant RSPO criteria: Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Criterion 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited. Oil palm estates are heavily dependent upon manual labour for day to day operations. The high labour intensity of activities means that oil palm companies often face the challenge of maintaining adequate, trained and available workers. The reliance on labour also means that labour costs become an important factor in any operations. Due to Malaysia s apparent lack of unskilled labour or a workforce that is unwilling to work in estates, many plantations are very reliant upon foreign workers to make up their workforce. The vast majority of foreign workers in estates come from various parts of Indonesia, with a sizeable minority of workers originating from South Asia and a smaller group coming from other South East Asian countries. During the field visit, the team observed two distinct housing areas for workers/staff on Tegai estate. The main quarters, located in a complex together with the management offices, medical centre and water tanks were typical of most major palm oil estates, with the houses in relatively good, habitable conditions. In a second encampment closer to Kg. Long Teran Kanan, the team found a housing area with a longhouse that was conspicuously dilapidated and less habitable compared to those at the Tegai estate office area (Photo 20). The close proximity of a fruit loading chute to the housing further raised concern over the safety of these particular workers and their families. There were no signs of proper sanitation and sewage was flowing openly through the front of the longhouse. The workers housed there appeared to be from Indonesia and the team was told the majority of those living at this longhouse were from Makkasar, of Bugis ethnicity. The workers encountered there were uneasy about meeting with the team. It was likely that those living there were involved in labour intensive activities on the estate. Due to the lack of time and resources, the team was unable to carry out any thorough investigation on the workers welfare and legal status. Workers interviewed said the company had been holding their travel documents for administrative reasons, supposedly to acquire work permits for them. In addition it was revealed that each worker earned RM28/tonne of Fresh Fruit Bunch (FFB) collected. 24

31 Photo 20 (Point A, Map 1): IOI s workers housing in poor condition (right of photo) and situated in close proximity to a FFB loading area (left of photo). The team were also brought to a burial site for workers, which villagers uncovered by chance. The gravesite (Photos 21, 22 and 23) is located along a quiet area off the main road, making it inconspicuous. At the site, villagers uncovered 4 existing graves, of which 2 are adults all belonging to IOI s Indonesian workers. 25

32 Photos 21, 22 and 23 (Point H, Map 1): Photo 21 (Top): Partially hidden gravesite belonging to IOI s workers on community land. Photo 22 (Left): A close up of the gravesite Photo 23 (Right): A grave believed to contain a child s remains lies nearby The discovery of the gravesite itself was coincidental for the villagers as it occurred by chance as a villager travelling out of the village converged with an entourage of workers from the housing longhouse at night carrying a bundle in the middle of the night, under cover of darkness. As the villager approached them, the entourage sought assistance in carrying (what turned out to be) the deceased to the site where upon the other graves were discovered. Those from the community interviewed on the matter expressed shock and sadness at the discovery of the graves. From the community s perspective, the welfare of workers should be far better managed by the estate, from the health and safety to burial and internment. In particular, community members felt that there was a lack of compassion or humanity in how the deceased workers were buried far away 26

33 from their homeland in anonymous shallow graves without due rituals, grieving or internment. Emang Jau, a village elder for Long Teran Kanan expressed the view that following customary laws, areas specific for the establishment of burial sites were already demarcated while the village was willing to assist in burying those in the unmarked graves at these sites, with proper burial rites and observance of respect for the dead. In that sense, the community of Long Teran Kanan are now faced with the unauthorised establishment of a burial plot against customary traditions and practices of land use communally held. 4.8 Oil palm plantings on steep slopes Relevant RSPO criteria: Criterion 4.3 Practices minimise and control erosion and degradation of soils. The terrain of the area can be generally described as a valley, with Sg. Tinjar as the point the valley terminates. Small rivers and tributaries (like Sg. Tegai, the water source for Kg. Long Teran Kanan) cut the landscape from the hills to the north of Kg. Long Teran Kanan into Sg. Tinjar. Based on Map 1, travelling from point G to point A, the right/north side of the road would show that the hills and cliff faces are rugged. The rest of the terrain from then on gradually slants towards Sg. Tinjar, but still remains undulating with minor hills and slopes dominating the landscape (see photo 25 and 26). However, this has not prevented IOI from continuing operations in the area. While it is apparent that some areas are unsuitable, in this instance being too steep (as shown in photo 24), others are clearly well within RSPO limits and legal ones too. But the observation of plantings on steep slopes was common as shown on photo 24, calculated at Specific guidance under Criteria 4.3 of the Roundtable on Sustainable Palm Oil (RSPO) Malaysia National Interpretation (MY NI) document states: For Sarawak, steep slopes are considered high risk erosion areas and cannot undergo replanting unless specified in the EIA report and approved by the Natural Resources and Environment Board (NREB). For Sabah, slopes 25 degree and steeper are considered high risk erosion areas and cannot undergo replanting unless specified in the EIA report [Environment Protection (Prescribed Activities)(Environment Impact Assessment) Order 2005] and approved by the Environmental Protection Department (EPD). 27

34 Photo 24 (Point A, Map 1): Basic calculations using 2 GPS points (one point at the foot of the hill and another at the top see person in red shirt in the photo above) reveal that IOI has planted these oil palms on this steep slope. 28

35 4.9 No High Conservation Value and Social-Environmental Impact Assessments conducted Relevant RSPO criteria: Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Criterion 5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Criterion 5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations. Criterion 6.1 Aspects of plantation and mill management, including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations. Criterion 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values. Criterion 7.5 No new plantings are established on local peoples land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements. Much emphasis is given to ensuring proper consultation with stakeholders and implementation of actions or practices that support environmental protection and social interests in the RSPO. This is clearly articulated through the requirements for conducting Socio Environmental Impact Assessments (SEIAs), High Conservation Value (HCV) assessments as well as concepts like Free, Prior and Informed Consent (FPIC). These key areas define RSPO s standards clearly as being a standard that contributes towards sustainable and outlines what each RSPO producer needs to have in place in order to merit certification against the RSPO standard. 29

36 While many RSPO members continue to move towards certification, the integration of these key tools and concepts becomes highly important. During an interview with IOI s Tegai estate Assistance Manager, it was revealed that neither SEIA nor HCV assessments were carried out prior to land clearing. This statement is ambiguous as prior to IOI s take over of Tegai estate, land had already been cleared and planted by the former owners, Rinwood Oil Palm Plantations Sdn. Bhd. In fact some may argue that since the establishment of the estate dates back to at least 1996/7, the application of such concepts cannot be made. However, during community interviews and discussions, community members said that from 2009 to date, IOI were seen opening new areas, often forest areas outside of the NCR land cultivated by the community. However, no data was available to corroborate such information. Nevertheless, new clearings were observed during the field trip (photos 25 and 26), which is consistent with the claims of the community. Photo 25 (Point B, Map 1): A panoramic view of forest area (on NCR land) cleared by IOI for new plantings during No EIA or HCVF assessments were carried out prior to land clearing activities. Photo 26 (Point B, Map 1): Steep hills cleared by IOI for new plantings. The IOI Assistant Manager interviewed during the field investigation was also unable to positively answer queries by the team regarding the conduct of HCV assessments in areas opened up more recently (i.e. after the property was owned by IOI). However, IOI claims it has been undergoing a HCV assessment for its Pelita plantations (see section 6 below). 30

37 5. Government recognition of Native Customary Rights The acknowledgement that the NCR of Kg. Long Teran Kanan still remains is already included in the judgement of the case in the Miri High Court. While such a decision would suffice as the definitive interpretation of the facts by any law abiding and respecting individual and company, IOI refuses to accept it through its continued presence on the land. During the field trip, the team was shown the area where a clear felled, demarcated line was created through the community land for the construction of a pipeline (see photos 27 and 28). Villagers informed the team that the State government had paid compensation for community land lost as a result of this construction through the Land and Survey Department. Though not explicitly stated, this clearly demonstrates that the Sarawak State government recognises the NCR land belonging to the community of Long Teran Kanan and have compensated accordingly as required by law. Furthermore, one of the major conditions placed upon Rinwood Plantations by the NREB, as part of its EIA in 1996 was a Letter of Undertaking signed by Rinwood. Under the terms and conditions of the approval by the NREB of the initial EIA study, Rinwood accepted responsibility for the compensation of those present on the land disputed (i.e. Lot 3 and Lot 8, which is also claimed by Kg. Long Teran Kanan), and alienation of reasonable plots to the community for their subsistence needs. The condition also further extends to ensuring that the natives of the land (i.e. Kg. Long Teran Kanan) can remain in their area. IOI as the present owner of the estate is still bound by the legal obligations. (L R) Photos 27 and 28 (Point K, Map 1): North (L) and South (R) views of clearing for the construction of a gas pipeline. Villagers received compensation from the government for the loss of this NCR land. However, the case is not true for oil palm development on NCR land. Kg. Long Teran Kanan also has a health clinic and school (photo 29) that are all government provided in the disputed area. In addition, government subsidies were provided for the construction of the longhouse of Kg. Long Teran Kanan A after it was partially destroyed by fire in the past. The evidence of government assistance in supporting the village of Long Teran Kanan through subsidies, facilities and 31

38 services demonstrates that the government by de facto recognises the rightful claim of residence of the community. Photo 29: Kg. Long Teran Kanan school is situated in the village itself (photo credit: Seira Sacha). 32

39 6. Significant developments after field trip The team continues to monitor the situation of the community and other outstanding matters from this case. In particular the following matters remain outstanding: i. Response from Dato Lee Yeow Chor of IOI Corporation on the memorandum sent to him by the community representatives of Kg. Long Teran Kanan in April ii. Conformance from IOI Pelita Plantations to letter from HNL Co. to cease all operations in Lot 3 and Lot 8 as well as stopping antagonistic actions like the breaking of access to community orchards and farms. iii. Date and notification for the supposed meeting between IOI and the community of Kg. Long Teran Kanan and their representatives. On the matter of continued encroachment into Long Teran Kanan s NCR land, the community has lodged a police report on the grounds of trespass into community land on Lot 3 and Lot 8. On 27 September 2010, accompanying journalist with the team, Gan Pei Ling published an article in online news media website The Nut Graph that chronicled the plight of Kg. Long Teran Kanan titled Holding IOI Accountable (provided as Annex 8) 9. Following that, on 28 September 2010, IOI released a statement on its website 10 refuting the article as being baseless and unsubstantiated (provided as Annex 9). However, it is ironic that IOI itself makes claims of its own in their response that are factually inaccurate or flimsy in their argument. The following details the reasons for the analysis of the IOI statement: IOI: claims the Kayan and Kenyah natives who initiated the court case have made claims which overlap with the claims by another group of natives, the Berawan group, who assert that they are the earlier occupants of the lands and should be the group receiving the compensation. Fact: The judgement handed down by the High Court of Miri painstakingly details out how the NCR over the land in question was rightfully and properly given to the present residents of Kg. Long Teran Kanan by way of bulak as a fact. IOI: claims It is not true that IOI had promised the villagers in a November 2009 meeting that IOI would not appeal to the next higher court if IOI lost the case in the High Court. Fact: The promise was made by Joshua Mathews of IOI and recorded by the BSi auditors on 17 November 2009 at Pejabat Ladang Sejap and provided in Annex 4. IOI: states opines that as these three groups are neither auditors certified by RSPO nor even members of RSPO. Fact: The RSPO s Code of Conduct, Art. 2.3 states Members will commit to open and transparent engagement with interested parties, and actively seek resolution of conflict. Therefore it is irrelevant whether the groups are RSPO members or not. They are interested parties with legitimate stakes in the issue. IOI: claims they do not have the standing or expertise to make judgments on whether the technical and elaborate standards of RSPO have been violated or not. Fact: The team comprised of key RSPO expertise to complement the social experts to provide holistic and balanced perspective. The team included former staff of the RSPO Secretariat with a combined 7 years experience in RSPO matters. Specific expertise includes the overseeing of the development of the RSPO P&C, RSPO Code of Conduct, RSPO Grievance Procedure and RSPO Statutes & By Laws. In addition, the team included individuals who were involved as social experts on official RSPO pilot audits as well as a 9 Source: ioi accountable/ 10 Source: C73B3F B3 33

40 former plantation executive that was directly involved in RSPO implementation for one of the largest palm oil companies globally. Regarding the conduct of HCV assessments, in October 2010 (exact date unknown) IOI release a short statement claiming IOI Pelita has started its High Conservation Value (HCV) Assessment on 7th July The process will go on until October Conclusion and recommendations The strategy of IOI in pursuing an appeal for the legal case calls into question the motives of IOI and whether such an approach towards stakeholder relations and land conflict best reflects the spirit of RSPO as well as IOI s own supposed sustainability policies and practices. While IOI has a right to ensure that it receives fair or just treatment, it is also IOI s own position in the entire situation that leaves it with both the resources and opportunity to take a constructive and positive path. After all, it is already what IOI claims to follow, both from their own stated claims on sustainability as well as their commitment towards the RSPO. That is not the case. It also should be noted that based on the RSPO Certification Systems 12 IOI has breached the requirements of the Certification Systems (c) regarding partial certification requirements, which are: (c) there are no significant land conflicts, no replacement of primary forest or any area containing HCVs since November 2005, no labour disputes that are not being resolved through an agreed process and no evidence of non compliance with law in any of the non certified holdings. In the case of Long Teran Kanan, the approach IOI has taken towards addressing and resolving the conflict has been criticised by the community. The sometime antagonistic approach in tackling the conflict and the severance of contact between IOI and stakeholders after the submission of the Memorandum from the community in April also breaches the RSPO Code of Conduct, part 2 on transparency, reporting and claims, specifically article 2.3 that states: 2.3 Members will commit to open and transparent engagement with interested parties, and actively seek resolution of conflict. The community of Long Teran Kanan demonstrated resilience in facing such a drawn out legal affair. They also showed good organisation and awareness of issues that it is fair to claim the community is of the maturity to be able to deal constructively with IOI on a common standing through direct negotiations if necessary. The field trip highlighted glaring concerns with regard to the situation between Kg. Long Teran Kanan and IOI Pelita Plantations. There continues to be a confrontational situation between the community and company due to issues revolving around access to community land, jeopardising the water sources of the community, and lack of consultation or community outreach that can lead to a constructive resolution. The Tegai estate management itself seems to not meet the standards of the RSPO P&C. From the lack of due assessments for biodiversity and social needs (HCV), poor agrochemical management practice to the existence of unofficial burial sites on the estate, the level of performance cannot in any way come close to meeting partial certification requirements. In specific terms, the following stand out as the main conflicts caused by IOI Pelita (the respective RSPO P&C criterion are provided in brackets for each bullet point): 11 Source: under heading Latest News 12 RSPO Certification Systems. 34

41 1. Respect for the laws (P&C 2.1) The written undertaking with the NREB to respect the claims of the community was not fulfilled by IOI. The undisputed recognition of the High Court of Miri of the ownership of land by the present community of Long Teran Kanan and its transfer mechanism (bulak) undermined and misleadingly disputed by IOI. 2. Respect the land rights of the community (P&C 2.2) The transfer of land rights to the area now covered under Lot 3 and Lot 8 by the Berawan to Kenyah and Kayan community by way of bulak in 1963 has already been recognised as legitimate and therefore having the force of law, even being registered officially by the government of the day, IOI fails to respect this right of the community. 3. Respect the legal and customary rights of community and ensure Free, Prior and Informed Consent (P&C 2.3) Lands occupied by IOI that belong to community members who have not consented to relinquishing them to IOI was not returned or compensated despite court rulings and IOI s own promises made in November The establishment of a compensation mechanism that is mutually agreed between both parties has not been initiated by IOI to resolve land disputes with community and compensated as promised in November The siting of workers burial ground on land within the disputed area was done without the consent of community. 4. Planting on slopes (P&C 4.3) Plantings on steep slopes were observed, well over the normal thresholds. 5. Responsible management and maintenance of water resources (P&C 4.4) The sole potable water supply for the community was jeopardised by planting of oil palms by IOI in the catchment area. Use of weed killer or other agrochemicals in the water catchment area threatens water safety and health of the community. The poor maintenance of riverine zones in the estate leads to flooding that is avoidable through better maintenance practices. 6. Responsible and competent management of agrochemicals (P&C 4.6, 4.7) The haphazard practices observed show an appalling lack of regard for ensuring safety and responsible management of agrochemicals. The risks of river water contamination, accidents and other potential problems from the blasé approach to storage and handling are very likely with such an approach towards agrochemical management. The practice observed cannot be seen as meeting minimum legal and RSPO standards for agrochemical management. 7. Conduct of EIA assessment and identification of HCVs (P&C 5.1, 5.2) The development of new land or replanting should be suspended until HCV assessments are completed and socialised with community. The written undertaking with the NREB to compensate the community should be carried out as agreed under the conditions for approval of the EIA for the estate. 8. Waste management (P&C 5.3) The evidence of open pits of solid waste potentially provides places for unsanitary developments that can harm the health and wellbeing of both workers and the community. The need for a sanitary and proper waste disposal management system needs to be demonstrated. 9. The conducting of a social (and environmental) impact assessment, ensuring Free, Prior and Informed Consent as well as instituting a fair, representative compensation system or mechanism (P&C 6.1, 7.5, 7.6) Community members desiring to have their lands returned or compensated rightfully due to IOI s occupation of their lands should be addressed in an equitable manner that is agreeable to all parties. The continued occupation by IOI, including continuing its operations and blocking of access to community farms elevates the conflict between both parties. 35

42 10. Community communications and relationship management (P&C 6.2) The resources that IOI appears to have in situ to manage community relations leave much to be desired. The non transparent and at times antagonistic approach applied by IOI in dealing with stakeholder engagement also clearly goes against RSPO s modus operandi and contradicts IOI s own declaration of their corporate social responsibility approach in their operations. The need for better liaison, outreach, communications and relations with community from IOI is clearly needed if the conflict between the estate and community is to be resolved. 11. Having an agreeable and documented compensation method (P&C 6.4) During direct interaction between IOI s main representative with community members in November 2009, it was stated that IOI wished to address issues directly and decisively, including the agreement on the part of IOI to not appeal the ruling of the Miri High Court that IOI now contests and refutes. IOI needs to respect the wishes of the community and immediately negotiate with them on the issue of compensation. 12. Treatment of workers, minimum standards for pay and working conditions as well as discrimination (P&C 6.5, 6.8) The housing quarters for workers that were visited leaves much to be desired as suitable, sanitary and safe conditions for housing. The burial of foreign workers (rather than repatriation of the deceased to their homeland) raises questions over the treatment and welfare of IOI s workers. The deaths of workers due to accidents (or potentially disease) raise questions over the level of attention paid to worker safety and welfare. 13. Contributing to local sustainable development (P&C 6.11) The conditions of the roads shared by IOI and Long Teran Kanan require more attention and prioritisation from the company in line with their agreement to the community made in November The continued restriction of access for community to their crops undermines community rights to their lands as well as sustenance. The recommendations for next steps are aimed at providing a long term solution that is equitable to both the community and IOI Pelita. It is recognised that IOI has already invested heavily in the acquisition of the estate, its management as well as legal proceedings. However, it is also inevitable that much of the responsibility for initiating further solutions or steps lies plainly with IOI. They possess both the resources and initiative to initiate actions that will lead to the eventual resolution of the conflict and dispute over the land in Lot 3 and Lot 8. The recommendations proposed are: j. IOI should withdraw its pending appeal against the decision of the Miri High Court unilaterally. k. IOI should act upon fulfilling the conditions of the EIA for the estate as contained in the letter of undertaking to the NREB. l. IOI should suspend all operations in the disputed lands, especially any land clearings. m. IOI should prioritise and begin in earnest, direct negotiations with the community of Kg. Long Teran Kanan for the compensation of lands or the return of lands to community members who have legitimate claims. Such a process should be done through a transparent and mutually agreed process that allows community members to negotiate through their own representatives and arbitrated through a suitably agreed process that is equitable to both communities and company. n. IOI should rehabilitate and protect Long Teran Kanan s water catchment area and water intake point, including rehabilitating the catchment area as well as ensuring strict control over access into the area and demarcation of the catchment through a joint exercise with community. o. IOI should improve its management of agrochemicals, riverine zones and solid waste. p. IOI should improve staff housing conditions to ensure safe, sanitary and liveable conditions for all workers. 36

43 q. IOI should exhume the deceased and rebury them in a suitable burial ground for workers at a site that is decided in consultation with the community. r. IOI should complete road repairs. Those involved in the preparation of this report (i.e. those organisations listed in Section 3 as part of the team) remain prepared to re engage IOI in a meaningful, time bound and target driven programme to address the issues and resolve the dispute. 37

44 Annex 1 Annex 1: BRIMAS statement Another victory for the natives of Sarawak BRIMAS BORNEO RESOURCES INSTITUTE MALAYSIA Lot 1046, 2 nd Flr. Shang Garden Com. Centre Jalan Bulan Sabit Miri, Sarawak MALAYSIA Postal Address: P.O. Box Miri Sarawak. Tel: Fax: markbujang@gmail.com 31 March 2010 FOR IMMEDIATE RELEASE Another victory for the natives of Sarawak MIRI The Kayan community of Long Teran Kanan, Tinjar, Miri Division finally got the justice they deserve after fighting the legal battle at the High Court for more than 12 years to get recognition of their native customary rights to their native customary land. The judgment was delivered by the Senior Assistant Registrar of the Miri High Court, Abdul Raafidin bin Majidi on behalf of Justice Datuk Abdul Aziz bin Adul Rahim at 10 am this morning to the joy of the villagers numbering about 50 people who were in court to hear the decision. The court declared that the plaintiffs, Lah Anyie and 4 others who were representing their village of Long Teran Kanan in a class action suit, possess native customary rights (NCR) over their native customary land (NCL) area at Long Teran Kanan, Tinjar and that the Provisional Leases (PLs) of Lot 3 and Lot 8 Dulit Land District issued by the third defendant, the Sarawak Government through the Land and Survey Department to the first and second defendants, Land Custody Development Authority (LCDA) or also known as Pelita and IOI Pelita Plantation Sdn. Bhd. (formerly known as Rinwood Pelita Plantation Sdn. Bhd.) are declared null and void. The court further declared that the plaintiffs also possess NCR outside the two PLs areas according to the plaintiffs communal boundary and that the third defendant cannot impair and disturbed those rights or be inconsistent with the plaintiffs rights. The court went on to say that the two PLs issued by the third defendant to the first and second defendants were bad and in breach of the law, as the third defendant never extinguished the plaintiffs NCR and compensated them as in accordance to Section 15 of the Sarawak Land Code. The court also found out that the issuance of the PLs constitutes a violation of the rights of the plaintiffs guaranteed under Article 5 and Article 13 of the Federal Constitution, where Article 5 guarantees the right of the plaintiffs to live which includes deprivations of their source of livelihood and Article 13 guarantees the rights of the plaintiffs to their property. With this decision, the court declared that the first and second defendants or its agents or servants are trespassing over the NCR land of the plaintiffs and that any damages and loss suffered by the plaintiffs be assessed by the Deputy Registrar of the High Court at a date to be fixed. 38

45 Annex 1 The court awarded both exemplary and aggravated damages against the defendants and cost of the action be taxed unless agreed by the parties. Met outside the court house, Emang Jau, one of the plaintiffs in the suit, said he was very happy with the judgment. He urged the state government to not appeal the High Court decision if they are really sincere with the welfare of the people as in accordance with the 1Malaysia slogan, Peoples First, Performance Now. Emang Jau said, Previous and current Ministers, elected representatives and government officers have encourage us to develop our land and not leave it idle. We have received a lot of assistance from the government when our previous longhouse was burnt twice and also from subsidies to plant rubber, cocoa and paddy. So it is unfair for the government now to accuse us of not having any rights at all. Lah Anyie, the first plaintiff and also the headman for Long Teran Kanan said, The government has officially appointed me as the headman for the village, as was my predecessor. So, why does the company and the government accusing us of being squatters when our village is officially recognise by the government as a legitimate village?, asked Lah Anyie. The government should help and protect the rights and interest of the poor. They should not take away our lands than give it to the rich and powerful, lamented Lah Anyie. BRIMAS are also in view the Sarawak State Government should not appeal this decision. Even though, the government has a right to appeal, they have to take into account their priorities to the people as espoused by the 1Malaysia slogan. The natives are poor people and the disputed areas are their only means of livelihood from where they derived their source of food and income. The government itself have consistently encouraged the plaintiffs to settle on the land and develop it by building a school, health clinic, gravity pipe water system and providing agricultural subsidies to them. Even the local council continue to collect the annual assessment rate/fees from each household within the longhouse. When the national oil company, Petronas wanted to build a pipeline across the plaintiffs disputed land, the Land and Survey Department compensated the landowners affected. So why the double standards? The Sarawak Natural Resources and Environment Board (NREB), whose members are the Chief Minister of Sarawak, Director of Forest, Director of the Land and Survey Department and the State Attorney General has approved the Environmental Impact Assessment (EIA) report/studies carried out by the second defendant over the land in Lot 3 and Lot 8 Dulit Land District whereby, the report recommended that areas already occupied and cleared by the native plaintiffs should not be disturbed by the first and second defendants. Lah Anyie and 4 others filed the class action suit in 1997 when the villagers found out that their NCR land is being encroached upon by Rinwood Pelita Plantation Sdn. Bhd. Rinwood Pelita Plantation Sdn. Bhd. is a joint venture (JV) company between Rinwood Oil Palm Plantation Sdn. Bhd. and Pelita. The PL of Lot 3 Dulit Land District was issued by the Land and Survey Department in 1996 to Rinwood Pelita and while the land dispute between the company and the natives were going on 1997, the Land and Survey Department issued another PL, Lot 8 Dulit Land District to Rinwood Pelita. In 2006, IOI acquired Rinwood and the JV company was renamed IOI Pelita Plantations Sdn. Bhd. 39

46 Annex 1 Lah Anyie and his villagers were represented by counsel Harrison Ngau Laing while Pelita was represented by counsel David Lim, IOI Pelita was represented by KY Lin and the Sarawak State Government by the State Legal Officer, Joseph Chioh. Press Statement released by: Mark Bujang Executive Director 40

47 Annex 2 41

48 Annex 2 42

49 Annex 2 43

50 Annex 2 44

51 Annex 2 45

52 Annex 2 46

53 Annex 2 47

54 Annex 2 48

55 Annex 2 49

56 Annex 2 50

57 Annex 2 51

58 Annex 2 52

59 Annex 2 53

60 Annex 2 54

61 Annex 2 55

62 Annex 2 56

63 Annex 2 57

64 Annex 2 58

65 Annex 2 59

66 Annex 2 60

67 Annex 2 61

68 Annex 2 62

69 Annex 2 63

70 Annex 2 64

71 Annex 2 65

72 Annex 2 66

73 Annex 2 67

74 Annex 2 68

75 Annex 2 69

76 Annex 2 70

77 Annex 3 Annex 3: IOI Pelita Plantation Sdn Bhd s Response to the Land Dispute case in Sarawak IOI Corporation Berhad On 31 March 2010, the Miri High Court in Sarawak declared that 4 natives had won a class action suit against the State Government of Sarawak, Land Custody and Development Authority ( Pelita ) and IOI Pelita Plantation Sdn Bhd on a long standing land dispute. The lands in dispute were granted by the State Government of Sarawak directly to Pelita, a state owned agency, through the issuance of provisional leases. The lands were subsequently transferred to a joint venture company between Pelita and Rinwood Oil Palm Plantation Sdn Bhd ( Rinwood ), then known as Rinwood Pelita Plantations Sdn Bhd ( JV Company ). In 2006, IOI was invited by Pelita to acquire Rinwood s shareholding in the JV Company to rescue the JV Company which was in financial difficulties. Being a shareholder to the JV Company, IOI henceforth became involved with the long standing land conflict case between the natives and the JV Company which started much earlier in At the time of the acquisition, IOI was advised by solicitors and Pelita that the JV Company has a strong defence to the natives claim of Native Customary Rights on the lands. The court in the above decision had inter alia awarded damages to be assessed to the natives who are occupying a small part of the lands. We have been advised by our solicitors that the defendants including the JV Company have strong grounds for appeal and hence advised us to appeal against the said decision. It is to be noted that the court did not allow the natives claims for a declaratory order to cancel the leases issued for the lands and for the vacant possession of the lands to be delivered to the natives on the ground that the native customary rights on the lands can be extinguished by paying compensation to the natives. The court also did not grant any injunctions sought by the natives restraining the JV Company from remaining and continuing its operations on the lands as it would result in greater injustice to the defendants who had undertaken development on the lands. IOI remains committed to its sustainability goal and its compliance with legal regulations and RSPO Principles and Criteria and will abide by the decision of the final appellate court in this matter. 71

78 Annex 4 Annex 4: BSI Management Systems report on Land Dispute Case in Middle Tinjar BSi Management Systems Singapore Pte Ltd Land Dispute in Middle Tinjar: IOI Pelita Plantation Sdn Bhd and Native Customary Right Court Cases in Sarawak, Malaysia Report on Physical Meeting held 17 November 2009 Prepared by Iman K. Nawireja, BSi Social Assessor RSPO 72

79 Annex 4 Introduction The IOI Plantation Sdn Bhd acquired Rinwood Pelita Plantation Sdn Bhd, a joint venture of Rinwood and Pelita (Malaysia Acronym for Land Custody and Development Authority) to form IOI Pelita Plantation Sdn Bhd (a joint venture between IOI and Pelita). Before the IOI take over, a land dispute arose between Rinwood Pelita and four Kayans of Long Teran Kanan representing 92 families (including the Kenyahs). The people filed suit in the High Court of Miri as according to local people Rinwood Pelita had encroached their Native Customary Right (NCR) land without any compensation. When IOI took over the property in September 2006, inevitably IOI inherited the dispute from the previous company. Later in June 2007, three Berawan representing four settlements (Long Jegan, Long Teran, Long Tabing, and Long Takong) filed suit against IOI Pelita Plantation, the Superintendant of Land and Surveys and the State of Sarawak on the same piece of land previously claimed by the Kayans. Currently both of the cases are with the court for final decision. Other complaints raised are in relation to environmental degradation and hardship. Although the local government agency said that people will benefit from the development, however, according to local people the communities became worse off instead. The communities claim that heavy usages of pesticide/herbicide as well as fertilizer have polluted the river that people use for living. Rinwood Pelita has also been claimed to have cleared land within a water catchment area where Long Jeran and Long Teran Kanan have a pipeline to carry water to their villages. On the basis of the above disputes and claims the physical meeting was held to find solutions. Physical Meeting The meeting was held in Sejap Estate, IOI Pelita Plantation, Miri, Sarawak, on 17 November 2009 and was attended by NGOs (Tenaganita, Aid Environment, and Sarawak Dayak Iban Association), the Land Custody and Development Authority, IOI Pelita Plantation, lawyers of both local people and IOI, two certification bodies (BSi and SGS ), and local people representatives totaling 45 persons to seek solution on the disputes. In this meeting the certification body representative s role was as observers. In general, the meeting ran well, was fruitful and all parties seem to be happy with the results. The main points discussed were as follows, (complete minutes of meeting available in attachment): (1) Berawan and Kayan communities and IOI Pelita Plantation, agreed to settle the dispute through a mechanism outside the court system, where every party will be represented by their lawyer. None of community s members are permitted to settle the dispute outside this mechanism. In line with this agreement, local people will hold a meeting next week to settle the dispute among themselves before later coming to IOI with a resolution proposal. It is possible for IOI to ask the court to delay the decision since both parties will settle the dispute outside the court system. IOI promised it will not make an appeal if it loses the case. In addition, IOI gave assurance that even if it won the case, it will not simply grab the land forcefully, but will follow negotiation and ex-gratia compensation procedure. The company will pay ex-gratia compensation to the respective persons based on the size of land and type of planted crops, and according to the compensation procedure that has been set by PELITA. (2) Local people claimed heavy usages of pesticide/herbicide as well as fertilizer have polluted the river that people use for living. IOI assigned an independent laboratory (Envisar Sdn Bhd) for water quality testing once every three months. The report showed water quality from Mentegai River is safe for consumption. 73

80 Annex 4 (3) Rinwood Pelita also was claimed to have cleared land within a water catchment area where Long Jeran and Long Teran Kanan have a pipeline to carry water to their villages. According IOI, the palms planted were approximately 150 meters away from the catchment area. Initial survey made by the company showed that both sides of the waterfall area had been felled by villagers for rice cultivation and gardening. A Joint survey with village representatives and the estate will be carried out immediately to delineate the estate boundary and solve the problem accordingly. IOI promised that a 20 meters buffer zone from the river bank along the length of the river will be reserved to allow natural soft-vegetation to grow. IOI also promised that during replanting, oil palm will not be planted along the buffer zone. (4) All of the Kampung Chiefs of Long Tuyut, Long Tabing, Long Teran, Long Jegan and Long Takong requested IOI Pelita to maintain the main road leading to their kampungs. The road is badly damaged during the monsoon season, which makes it difficult to travel. IOI stated it will need assessment before the request can be approved, since the cost for transporting gravel is high. The company themselves cannot complete gravelling in their own land of cultivation due to the exorbitant cost. The cost for a lorry to load the gravel is about RM1000 and then needs to be transported 155 km from the source to the estate. (5) The timber and estate trucks often travel at a high speed on the road between Sejap and Tegai estates. It is a safety risk for the villagers, livestock and other road users. IOI will meet up with the logging companies and consult on this matter. Another option is to set a speed limit and install road safety signboards along the road. (6) During the meeting, issue of unsatisfactory wages was raised by one worker. The management explained that the work given is on a piece rate basis on productivity. The management will explain in detail on these issues to the complainant and how the contract system (piece rates) works for better earnings. (7) Minutes of the meeting will be made available to all participants, to make sure that all parties understand the agreement and to avoid empty promises of the company. (8) A regular meeting between IOI Pelita and local communities is suggested by local people, to improve relationship between both parties. People also requested the travel cost for attending should be borne by IOI. IOI agreed on the suggestion and are willing to provide transport on future occasions. The villagers are required to provide a list of names one week in advance of any such meeting to facilitate transport arrangements. Conclusions Several conclusions can be drawn from the physical meeting as follows: (1) There are three parties to the land dispute: IOI Pelita Plantation; the Kayans; and the Berawan, where both the Kayans and Berawan have overlapping claims on the same piece of land. In this regard IOI inherited the land dispute from the previous company, Rinwood Pelita Plantation Sdn Bhd. Following a formal legal process, the case is awaiting the final court decision. (2) At the physical meeting on 17 November 2009, the three parties agreed to settle the dispute outside of the court system, where every party will be represented by its lawyer. Nobody is allowed to settle the dispute through another mechanism. The Kayans and Berawan will solve the dispute between themselves before coming to IOI with a resolution proposal. (3) Regarding the land clearing claim inside the water catchment area, IOI and local communities agree to conduct an immediate joint survey to delineate the issue and solve accordingly. (4) Regarding the request for road maintenance, IOI will study the work required and determine the cost and if possible then IOI will provide it. 74

81 Annex 4 (5) Although the meeting did not resolve all of the disputes, however, both parties came to a better understanding of each other. Another promising result is that both parties agreed to hold regular meetings every six months. This is a very good opportunity to strengthen relationships and increase mutual understanding between IOI and local communities. It is very important that all parties keep nurturing the momentum, in order to avoid set back of the mutual agreement reached during the meeting. (6) The Meeting confirmed IOI commitment to dispute resolution through a process that is understood and accepted by all parties. ATTACHMENT A Notes of Iman Nawireja s Meetings with Stakeholders Interview of Nicholas Mujah - Sarawak Dayak Iban Association (SADIA) 3 November The dispute is located in Baran, Miri, Sarawak, Malaysia. IOI inherited the problem since September In Sarawak, land utilization is under the authority of the Land Custody Development Authority (LCDA) who usually forms joint ventures with companies to develop the land. If the land is encumbered by native right, then the proportion of the share will be 10% (LCDA), 60% (company), and 30% (native community). - Although there are native Dayak living at the location, however, when the development started in 2004, both Rinwood and LCDA did not respect the native right and developed the land without any share or compensation to the local people. - Local people had already planted rubber, pepper, rice, and fruit before the development to oil palm began - The community is located inside the estate - Water sources inside the estate are about to be buried by IOI - Total number of houses is around 74 doors or approximately 400 persons, and the majority of them are Iban Kahayan, Berawan - There is still another land development plan in place by IOI - The dispute is already in court, but it will be take a very long time to settle - Another option is through negotiation, where company surrenders 30% of share to local people Interview of Tan Kim Ha and Shobian Fadzal - IOI Pelita Plantation Sdn Bhd 16 November Rinwood Pelita and LCDA share the joint venture in the proportion, 70 : 30 - The joint venture between Rinwood Pelita and LCDA started in 1994, and the area was planted between 1996 and IOI took over the plantation in September 2006, although the due diligence process found out about this dispute. However, the LCDA assured IOI that they will handle the dispute. - The land belonged to the government, since they occupied the land since 1960s, while the Sarawak regulation stated that NCR can only be developed before 1 January The plantation consists of two estates (Sejap and Tegai), with a total planted area of 3,024 hectares of the total property area of 9,000 hectares. 75

82 Annex 4 - Since IOI took over, it has only been able to plant many pockets of land totaling approximately 200 hectares, e.g. Lot 8 (Sejap) approximately 100 hectares and Lot 3 (Tegai) approximately 100 hectares. The majority of the plantings were infillings to the areas left vacant in the original plantings by the previous management. - In contrast to the land acquisition by Rinwood Pelita that was done without any documentation, the estate development during IOI management is guided by a Land Acquisition SOP and is well documented. - Under the SOP process, every piece of land is acquired through direct negotiation with the land owner. Interview of Philip Abeng LCDA Pelita, Miri 18 November The joint venture was between Land Custody and Development Authority (Sarawak) and Rinwood Pelita Plantation, which was later sold to IOI in September As from the 1st January 1958, native customary right (NCR) might be created in accordance with the native customary law of communities for communities. Review of Sarawak Land Code: the methods by which native customary right might be acquired are: o The felling of virgin jungle and occupation of the land thereby cleared o The planting of land with fruit trees o The occupation or cultivation of land o The use of land for burial ground or shrine o The use of land of any class for right of way or o Any other lawful method - Government allocation of land to a company usually was based on maps prepared by Land and Survey Department, determined from the NCR map identified since When the plantation was under Rinwood Pelita, there were no land disputes in this area, the dispute just arose before take over by IOI - Usually people were interested after the land was developed, triggering the claim over land there are many cases related to land claims in Sarawak - He encouraged the dispute resolution outside of the court system since court resolution will take a long time and will involve a lot of cost as well. In this regards, local people are likely to lose more considering that companies usually prepare a budget to engage lawyers. Minutes of RSPO Meeting Location: Sejap Estate IOI Pelita Plantation Sdn Bhd 17 th November :00 a.m. 12:45 p.m. 1:30 p.m. 3:00 p.m. List of attendance: 1. Mr Joshua Mathews IOI Research Centre. 2. Mr Reynolds PELITA, Kuching. 3. Mr Abun Sui HNL & Co., Miri. 4. Mr K.Y. Lin Kadir Wong & Lin. 5. Mr Steven Ng Tenaganita, KL. 6. Mr Sebastian Baya PELITA, Kuching. 76

83 Annex 4 7. Mr Nicholas Mujah SADIA, Kuching. 8. Mr Adriani Zakaria AIDEnvironment, Miri. 9. Mr Tan Kim Ha IOI Pelita Plantation Sdn Bhd. 10. Mr Shobian Fadzal IOI Pelita Plantation Sdn Bhd. 11. Dr. Lim RSPO 12. Mr Tunku Nazim RSPO 13. Mr Iman K Nawireja RSPO others local stakeholders. Coordinator (Mr. Peter Ugus Maga from IOI Pelita Plantation Sdn Bhd) welcomes the arrival of all those present and grateful because all who are present able to spend their valuable time and attend for the meeting. He also explained that purpose of the meeting is to enable independent observers to determine whether IOI GROUP is qualified for RSPO certification. Coordinator also explained that the people who are attending the meeting are free to voice out whether they are satisfied with the company s daily management program and social aspect in their estate. Chairman invited the panellist to start the meeting and all those present to participate in that meaningful meeting. Arising Matters 1. The meeting was initiated by Mr. Petrus Sigeh, Berawan indigenous people representative. Mr Petrus explained that Berawan indigenous people have stayed in Long Tuyut, Long Tabing, Long Teran, Long Jegan and Long Takung since hundred years ago. Kayan and Kenyah people were only moving in around year According to him, no other races in that area that has rights other than Berawan indigenous people. They are clearly know those areas which are now developed by government Agency is belongs to government. Thus, they have no any objection on any development on the government land. 2. Mr. Lah Anyie Ngau who is representing Long Teran's villagers says that the company has trespass their NRC land. However, they have filed-in the land reclaiming document and are still waiting for court decision on the case. a. Mr. K. Y. Lin mentioned that the case had overlapped between Kayan people s with Berawan people 's who are claiming for the same area. This is why the court is still pending on this case. 3. Mr Lah Anyie Ngau says that the trees in their water catchment area have been felled and planted with oil palm trees. Therefore they are worry the sources of water would be contaminated by chemical substance, fertilizer and other source of pollutants when the estate is starting their operation. a. Company representative told that the both side of the water catchment areas were native land and palms planted were about 150 meters away from catchment. b. Company representative said that the matter would be resolved by using GIS to survey the gazetted areas to confirm the area is located inside the estate s boundary. But initial survey made by company showed that the both sides of waterfall area have been felled by villager for rice cultivation and gardening. A Joint survey with villagers and estate will be carried out immediately. The Sr. Manager will give GIS coordination to IOI GIS Department for verification. If the water catchment area is located in the estate s boundary, the company will treat as a buffer zone to conserve the area. 77

84 Annex 4 4. Mr. Lah Anyie also said that the water in Mentegai river had been polluted by farming activities. He also requested the company not to plant anything close to the river. a. Answer given by company representative was 20 meters buffer zone from the river bank along the river will be reserved as buffer zone to allow natural soft-vegetation to grow. Company representative also promised that during replanting, oil palm will not be planted in the 20 meters buffer zone. b. Company representative explained that Mentegai river water quality is being analysed by independent laboratory (Envisar Sdn Bhd) once every three months. The report showed that water quality from Mentegai river is safe for consumption. 5. Mr. Lah Anyie also requested that the company not to simply invade villagers land even though after negotiation with few representatives. They should go through a proper process by consulting their lawyer to avoid any confusion in the future. a. Company representatives agree that they will consult their lawyers regarding to that matter. b. Even if the company won the land ownership case, Mr. Joshua promised that the company will not simply grab land forcefully. These will be proper negotiation and compensation procedure to follow upon as per company policy and will let their respective lawyer s to take any appropriate action. If the villagers wish to surrender their land to the company, the company will pay compensation to the respective person according to the size of land and type of planted crops, according to the compensation procedure that has been set by PELITA. 6. All of the Kampung Chief from Long Tuyut, Long Tabing, Long Teran, Long Jegan and Long Takong request the company to help them in repairing the main roads which are leading to their respective kampong, especially during rainy season. Furthermore, they request that IOI PELITA PLANTATION SDN BHD should send stones to the necessary places for road repairing. - Mr. Joshua said that they need to prepare working paper on this matter because the cost for stones is too high and it is not in his position to agree on it. The cost for a lorry to load the stones is about RM1000 and need to be transported 155 km away from the estate. However, the estate management will study the situation within their vicinity. 7. Mr Lah Anyi from Long Teran Kanan requests that the minutes of meeting to be distributed to those who are present to avoid the matters discussed in the meeting became empty promises from the company. - Company s representative said that any party who are intended to file-in any report / complaint should write it into the Green Book prepared by the company. The purpose of the book is for easier follow up on the issues by the management. Road matters can be recorded into the book as requested follow by investigation and cost study and follow-up by action plan through discussion with long house heads. Mr. Joshua once again asks for that cooperation from all quarters to prevent things that are undesirable from happening especially threatening the Sr. Manager. The panel once again states that the land disputes between the villagers should be settled between themselves through legal avenues and not in today s event. 8. The villagers also understand that the case must be settled through their lawyers in order to obtain a fair and just outcome. The villagers also requested that such a meeting should be done more often at 6 monthly basis. As this is a good opportunity for both the estate 78

85 Annex 4 management and staffs and the villagers to improve relations. They also requested that the transport fares to be borne by the company. The management is willing to provide transportation for such occasion in future. The villagers are required to provide a list of names one week in prior of any such meeting to facilitate transport arrangements. 9. Mr. George Ruth of Long Jegan states that they are confused about the laws regarding the road between Sejap Estate and Tegai Estate. The timber/ estate lorries which used the road travel at a high speed and this will pose a safety risk on the villagers, livestock and other road user of the road. The management will meet up with the logging companies and consult on this matter. Proposal for the set up of speed limit and road safety signboards along the road was raised. 10. Other issues raised an employee called Marylene voiced out about the unsatisfactory wages. The management explained that the work given is on a contract basis. To earn more than the daily wages the worker have to work harder. The fixed salary for a smaller hectarage is lesser compared to the salary received by those who work on a bigger hectarage. The management will explained in detailed on these issues and the complainant how the contract system (price rates) works for better earnings. 11. Mr. Sebastian Baya from PELITA: States that any land developed prior to 1 st January 1958 are only recognized as NCR land. Any forest area after that time is considered as Tanah Kerjaan. Any party who wished to develop any area after that period must seek approval of Kerjaan from the department of Land and Survey. Failure to do so will be considered as illegal land used. He also explained that PELITA is a Kerjaan Agency assigned by the government to manage Kerjaan land. Before any land is handed over to PELITA, the Department of Land and Survey will first confirm the status of the area as suitable for development or not. In summary, PELITA will only know which areas will be placed under their jurisdiction after the Department of Land and Survey has confirmed and issued a PL to PELITA. After that, then only PELITA is allowed to seek partners which have the capital and technical capacity to develop the area that has been approved. Once again, he states that only the Department of Land and Survey has the authority to designate the status of an area as NCR or Kerjaan Land. Because no further matters were raised, the meeting was concluded by the panel member, Mr. Steven Ng from NGOs at 3.00 pm. Minutes was taken by, Mr. Daniel Ak Aut. Confirmed by, Mr. Tan Kim Ha 79

86 Annex 4 CC: Dato Foong, HQ SPC Sabah/Sarawak Jabatan Tanah dan Survey, Miri Mr. Philip Abeng DO, Marudi. SAO, Beluru. Ketua Polis Beluru. KK John Long Tuyut. KK Balang Long Tuyut. KK Lawai Long Tabing. KK Wlliam Dueed Long Teran Kiri KK Lejau Ngerong Long Teran B KK Lah Anyie Long Teran Kanan A KK Francis Ubi Long Jegan KK Tingang Long Takong 80

87 Annex 5 Annex 5: Memorandum to Dato Lee Yeow Chor, IOI Corporation TO: Dato Lee Yeow Chor Executive Director IOI Corporation Bhd. 22 April 2010 MEMORANDUM TO IOI CORPORATION BHD ON RESPECTING THE DECISION OF THE HIGH COURT OF SABAH & SARAWAK AT MIRI ON 31 MARCH 2010 (SUIT NO ). With reference to the statement released by IOI on its website dated 3 April 2010 ( we view IOI s plan to appeal the land dispute case that was decided in the High Court of Sabah and Sarawak at Miri on 31 March 2010 with a very heavy heart. We call on IOI Pelita Plantation Sdn Bhd to uphold and deliver its own promise to not appeal the case (Suit no ) should it not win this case as stated by Mr Joshua Mathew, Research Controller of IOI to our representatives during our meeting at RT7 in Kuala Lumpur last November. This was repeated to us during the meeting on 17 November 2009 at Pejabat Ladang Sejap. In addition, we also want IOI to stop any further actions that violate the court ruling and potentially worsen the situation on the ground. As a founding member of RSPO and since IOI states that it strives to be a trusted and responsible corporate citizen, we believe that IOI should show restraint in their actions and contribute towards the livelihoods of local communities where they operate. The absence or resolution of significant land conflicts is also a major requirement for RSPO partial certification that needs to be met, and the situation remains unresolved with Kampung Long Teran Kanan so long as IOI pursues the matter in court. Appealing the case will show that the company has not entered into dialogue with us in good faith and negatively impact any future relationship between the community of Kampung Long Teran Kanan and the company. We see the opportunity for strong working relationships between IOI and the community of Long Teran Kanan with mutual benefit and trust if IOI demonstrates they are committed to its sustainable development principles and keeps its promise to not appeal (uphold and respect the court decision). There already exists a framework in place to move forward, including proposals for resolving existing conflicts and out-of-court settlement that the community supports. Our involvement in engaged dialogue with IOI was based on the promise that IOI wishes to resolve the conflict irrespective of the court decision. As such we call upon IOI to respect the court s decision and honour its commitment. We urgently request for a meeting to put the points laid out in the meeting and court findings into action on the ground. 81

88 Annex 5 82

89 Annex 6 Annex 6: Stakeholder assessment checklist against RSPO P&C Date of assessment exercise: August 2010 Name of estate: Location: Company: Tegai Middle Tinjar, Baram, Sarawak, Malaysia IOI RSPO P&C compliance checklist: P&C ref Question/criteria Y/ N Notes Community related issues 2.1 Company meets all applicable local, national and ratified international laws and regulations N Company did not follow NREB requirements i.e. undertake EIAs Company did not report deaths of their workers Company did not document their foreign workers (probable) 2.2a Company demonstrates evidence of legal ownership of land N/A Refer to court case 2.2b Legal ownership of land is not contested by the community N/A Refer to court case 2.3a Customary rights to land not threatened or diminished N Company continues to encroach and occupy community land Company blocks community members road access 2.3b Acquisition of land by company done through a free, prior & informed process N Consultation with community inadequate Company underwent court battle with community over land Company has ongoing dispute with community over land 83

90 Annex 6 P&C Question/criteria Y/ N Notes ref 2.3c Disputed areas mapped out by company through participatory manner N No mapping done by company with community participation 2.3d Company does not prevent community from seeking compensation 2.3e There is no intimidation by company, authorities or other parties 4.4 Water quality for community not jeopardised, including groundwater and maintenance of riverine buffers 4.6 Use of agrochemicals does not jeopardise community health, water sources and workers 5.2 Forests significant for community or wildlife identified and protected 5.3 Company s waste management and disposal does not negatively impact communities N/A N N N N N Team was unable to discuss this issue in depth Company made false accusations and filed police reports against community members for stealing oil palm fruits Company cleared and planted oil palms on community water catchment area Company cleared all riverine buffers along Sg. Tegai Possible contamination of Sg. Tegai by company s agrochemicals Company mixes and stores agrochemicals in close proximity to Sg. Tegai posing a major health risk to community members Company cleared community land Company dumps waste in the open within a community housing area 6.1a Social impact assessment completed N Company did not carry out any social impact assessments 6.1b Community representative selected by village/community without external influence or interference 6.1c Consultation with community done, issues raised taken into consideration and acted upon Y N Community representative is current village head Company may have carried out consultation meetings with community but issues like road repairs, clearing of water catchment areas and continued encroachment of community land, remains unresolved 84

91 Annex 6 P&C Question/criteria Y/ N Notes ref 6.2 Consultation and communication between company and community documented and available N Company has a system of documenting grievances and complaints i.e. IOI s green book However, there is no consistent contact between the company and community over key issues Community complains of short notices given by company with regards to meetings 6.3a Company has a documented system for dealing with complaints/grievances in place 6.3b Company uses grievance system to deal with complaints/grievances to the satisfaction of the community 6.4 Company has system for compensation in place that enables the community to express their views Y N N/A Company has a system of documenting grievances and complaints i.e. IOI s green book Grievance system is in place but the community remains dissatisfied with the company s actions and attempts at resolving problems Team was unable to discuss this issue in depth 6.10 Company deals transparently with community outgrowers and offers fair prices for their FFB 7.1a A comprehensive and participatory independent social environmental impact assessment (SEIA) has been done for new plantings N/A N Team was unable to discuss this issue in depth SEIA not done 7.1b Community adequately consulted during SEIA process N SEIA not done 7.1c SEIA correspondingly tackles issues of the following P&C: 7.2, 7.3, 7.4, 7.5, a New plantings have not destroyed community forests, community farm or areas rich in wildlife or plants N N SEIA not done Company cleared community forests and farms 85

92 Annex 6 P&C Question/criteria Y/ N Notes ref 7.3b New plantings have a HCV map that is available N HCV assessments not done 7.5a Company has directly obtained the free, prior & informed consent of community to establish a new plantation in the area 7.5b All meetings between company and community are documented properly 7.5c No external parties or company representatives attempt to manipulate community decisions 7.6 Company has collaborated with community to map out legal and NCR claims N Y N/A N/A No FPIC obtained from community Meetings between company and community documented Team was unable to discuss this issue in depth Team was unable to discuss this issue in depth 4.4, 4.5, 4.6, 4.8, 5.5/ 7.7a Applicable to communities who are also outgrowers: Company provides adequate training to community outgrowers for maintaining water quality, integrated pest management, agrochemical use and zero burning techniques Environment, biodiversity & conservation related issues: 5.1 EIAs done, including for replanting N EIAs not done N/A Team was unable to discuss this issue in depth 7.2 Soil surveys and maps available N/A Team was unable to discuss this issue in depth 7.3c Floodplains, seasonally flooded and environmentally sensitive areas not cleared N/A Team was unable to discuss this issue in depth 7.4a Plantings do not occur above 300m above sea level Y Area is low lying 86

93 Annex 6 P&C Question/criteria Y/ N Notes ref 7.4b Plantings do not occur on slopes more than 25 N Company has planted on a slope (calculations done on a sample site) Plantings on steep slopes seem to be a common occurrence in the area 7.4c Plantings do not occur in deep peat N/A Team was unable to discuss this issue in depth 5.5/ 7.7b Fire is not used for land clearing or waste disposal Y No traces of fire found Summary of community capacity needs: (for each subject below, list needs) Community organisation Case documentation Engagement training NGO support needs Others: Community is adequately organized Ongoing Required Ongoing P&C compliance assessment observations & notes: (use the section below to elaborate on P&C assessment observations relevant for determining case) Summary of key issues / narrative of case contents: 87

94 Annex 7 Annex 7: Map showing boundaries of Native Customary Rights (NCR) area for the residents of Kampung Long Teran Kanan, Baram, Marudi District, Miri Division, Sarawak 88