Shell companies in tax havens not only serve to enable large companies and millionaires to avoid paying taxes. Or for official criminals to hide the money from their illegal activities. They are also the perfect formula to pass off products that are not sustainable as sustainable.
This is precisely what a journalistic investigation accuses the First Resources business group of. According to the group of non-profit journalists The Gecko Project, Despite committing to a zero deforestation policy, this company was allegedly responsible for clearing 95,000 hectares of forest in Indonesia (almost 15 times the size of the New York island of Manhattan, or twice the area of Spain’s Doñana National Park). since 2018. The objective: to produce palm oil through intermediary companies and shell companies.
The journalistic work found evidence that points to a control relationship between First Resources and three supposedly independent companies after reviewing ownership documents and interviewing 14 people who between 2011 and 2022 worked for them. Known for being among the richest in Indonesia, the owners of First Resources, the Fangiono family, are accused of being the palm oil producers with the largest deforested area in Southeast Asia in the last five years, when they had already signed a commitment to zero deforestation. First Resources denied having any type of relationship with the three companies by email to one of the media partners of the journalistic investigation, Süddeutsche Zeitung.
First Resources’ deforestation commitment was aimed, according to researchers, continue selling its oil to giants like PepsiCo and Procter & Gamble. The investigation maintains that, while claiming to comply with the criteria of the RSPO (a body created in 2004 by the industry to advance the sustainability of crops), First Resources expanded its plantations, destroying forests and violating the rights of indigenous communities through three companies under control of the same family: Ciliandry Andy Abadi (CAA); FAP Agri (formerly known as Fangiono Agri Plantation); and New Borneo Agri.
Although illegal deforestation to plant palms in Indonesia has plummeted under consumer pressure and government policy, there is growing evidence of timber and palm oil producers trying to circumvent the sustainability restrictions they claim to abide by. with the creation of shell companies. In the simplest cases, different members of the same family take charge of supposedly independent companies that in reality respond to a single control. In others, the name of the beneficial owner is hidden by creating companies in jurisdictions off shore (tax havens), the classic method of corruption and tax evasion.
The response of companies
This newspaper was able to review the evidence with which The Gecko Project justified his conclusions and accessed the report published in 2018 by the environmental NGO Greenpeace, where evidence was also provided that pointed to First Resources as responsible for the deforestation companies CAA and Fap Agri. The exhaustive investigation of The Gecko Project confirmed the findings reported by Greenpeace and expanded, with documentation and testimonies it obtained, the list of companies controlled by the First Resources family with New Borneo Agri (former Sulaidy Group).
The different reactions that that 2018 Greenpeace report unleashed in food and cosmetics companies, the main consumers of palm oil, are striking. While multinationals such as the giant Unilever announced that they would stop buying from First Resources and its subsidiaries, other groups such as Danone, Bimbo, Colgate-Palmolive, Procter & Gamble, PepsiCo, or Cargill still had the Indonesian group’s products in their inventories years later, according to the records they themselves published.
Although illegal deforestation to plant palms in Indonesia has plummeted under consumer pressure and government policy, there is growing evidence of companies trying to circumvent the sustainability restrictions they claim to abide by.
In the statement sent by Danone to EL PAÍS it is said that First Resources is not a supplier to the group. What is not directly explained is why the Indonesian company’s palm oil did appear in Danone records intermittently in recent years, but includes a final sentence that could serve as an answer: “We have never had a direct relationship with any of the entities mentioned, but we believe that in the past some of our suppliers have sourced from them.” The company adds that they take the allegations in the investigation “very seriously and will closely examine the information “to determine if further action is necessary.”
Procter & Gamble and PepsiCo, also First Resources clients, did not respond to a request for comment sent by The Gecko Project. At Colgate, as at Danone, they said they had no direct relationship with First Resources and admitted to sourcing from suppliers that did buy from the Indonesian company. . The name of First Resources appears in the records that Danone, Colgate and Procter & Gamble themselves make public.
He Bimbo group He did not respond to any of the requests for comments that EL PAÍS sent him by email. The American giant Cargill is one of those large intermediaries that both Danone and Colgate work with, and First Resources has continued to appear all these years in their public records. consulted by The Gecko Project, A Cargill spokeswoman responded in a tone similar to that of the other companies: they took the allegations very seriously and would begin an investigation that could lead, if the accusations were confirmed, to ending all business relationships with First Resources.
An open investigation
Almost all companies use in their defense the adherence to the RSPO, the body created by the industry to ensure the sustainability of palm oil crops and arbitrate in case of complaints. According to the research of The Gecko Project, The RSPO received the complaint in 2021 accusing First Resources of controlling CAA and FAP Agri, but went two years without making a decision on the matter. The RSPO has finally opened an investigation. Although he did not want to give details about the punishment that could be imposed on First Resources if it were found guilty, the agency’s general rules require the payment of a considerable sum for deforestation, in addition to possible liabilities for threats and arrests to members of indigenous communities. whose lands were taken without their consent.
The authors of the research The Gecko Project They believe that the First Resources case could be a first step towards recognizing nefarious practices that must be prosecuted. Many of the family businesses that dominate the timber and palm oil sectors in Indonesia have been accused of running extensive shadow networks, while still taking part in sustainability programmes. According to Angus MacInnes, researcher at the NGO for forest conservation Forest Peoples Program, it is the companies that buy from these producers that have to play a “more proactive role” by investigating their networks of shell companies. “They might be worried about what they might find,” he says.
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