Forest Peoples Programme Supporting forest peoples’ rights

The CAO story: Contesting procedural irregularities and standards violations by Wilmar and the IFC through the Compliance/Advisor Ombudsman

In 2007, a consortium of concerned NGOs filed a complaint with the International Finance Corporation’s (IFC) Compliance Advisory Ombudsman (CAO) about serious breaches of IFC Performance Standards by its client, the palm oil trading house Wilmar, a prominent member of the Roundtable on Sustainable Palm Oil (RSPO). Today, Wilmar trades about 45% of globally traded palm oil. Based on detailed field studies, the complainants pointed out that Wilmar’s operations were in violation of legally required environmental protection measures, taking over indigenous peoples’ customary lands without due process or negotiated agreements, and clearing lands and using fire without legally required permits. Detailed correspondence, a field visit and meetings followed which led to the CAO Ombudsman agreeing to mediate a few of the many land disputes mentioned by the complainants.

After the failure of CAO-mediated dialogues between the complainants and IFC staff, the Compliance Unit also decided to audit IFC staff for their adherence to the Performance Standards.

The consortium filed a second complaint in 2009 after the IFC persisted in providing further financial support to Wilmar despite unresolved land disputes and the CAO audit being underway. The CAO’s damning audit findings in 2009 led the World Bank President to suspend all World Bank Group funding of the palm oil sector pending the adoption of a new framework for funding future World Bank Group investment in the sector. After extensive consultations a new framework and strategy were adopted in 2011.

Meanwhile, the Ombudsman was able to resolve the land disputes in three concession areas, and following a third complaint engaged in another Wilmar concession (PT Asiatic Persada in Jambi Province, Indonesia) where serious human rights abuses occurred in 2011, when company personnel working with a company-paid mobile police brigade violently evicted 83 families from their homes and bulldozed their dwellings into nearby creeks. However, in April 2013, this concession was sold by Wilmar to non-RSPO and non-IFC funded companies, without prior consultation with the indigenous Batin Sembilan communities who are engaged in the IFC CAO land conflict mediation process.

The documents below provide further information on this issue.

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IFC Ombudsman strongly criticises palm oil giant Wilmar for selling off PT Asiatic Persada in mid-mediation

2 January, 2014

The Compliance Advisor Ombudsman (CAO) of the International Finance Corporation, the World Bank's private sector arm, has just issued a strongly worded report which formally closes its efforts to mediate the resolution of land disputes between affected communities and the oil palm company PT Asiatic Persada (PT AP) in Jambi Province in Indonesia.

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Mongabay: Indonesian palm oil company demolishes homes and evicts villagers in week-long raid

16 December, 2013

Indonesian palm oil company demolishes homes and evicts villagers in week-long raid

Source: Mongabay

Nearly 150 homes were reportedly destroyed in the latest incident in a long-standing conflict between indigenous Batin Sembilan residents and former Wilmar unit PT Asiatic Persada.

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Indonesia: IFC CAO withdraws from mediation process in PT Asiatic Persada oil palm concession

26 November, 2013

The International Finance Corporation Compliance Advisor/Ombudsman (IFC CAO) has formally announced its withdrawal from the case of PT Asiatic Persada, following the sale of the concession by Wilmar in April 2013, and the new management’s decision to continue mediation through a government team instead. This is despite the fact that the affected Batin Sembilan communities and complaint signatory NGOs have repeatedly called on the IFC CAO to continue its role as mediator and to encourage the company to pursue this avenue towards conflict resolution.

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Mediation: Strategy or Objective? Reflections on the conflict mediation process between PT Asiatic Persada and the Suku Anak Dalam (Batin Sembilan) communities of Jambi, Indonesia

Rukaiyah Rofiq and Rian Hidayat

26 November, 2013

This report summarises the various phases of the mediation process between PT Asiatic Persada and the Batin Sembilan communities in Jambi, Sumatra, including the initial phase of mediation by SETARA and the second phase of mediation facilitated by the Joint Mediation Team of the International Finance Corporation Compliance Advisor/Ombudsman (IFC CAO) and the Jambi province government.

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Press Release - Indonesia: The Governor of Jambi Province must take action to tackle unscrupulous conduct of palm oil plantation PT Asiatic Persada

4 October, 2013

PRESS INFORMATION: FOR IMMEDIATE RELEASE - 7 October 2013

Nurman Nuri, Leader of the Suku Anak Dalam group 113 of Pinang Tinggi in the Indonesian province of Jambi, stated in a press conference held on 3 October 2013 at the office of Indonesian NGO CAPPA:

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Indonesia: Oil palm giant Wilmar lets down local communities yet again and jeopardises their futures

5 July, 2013

‘We have invested so much energy & time into the mediation process, now we do not know what will become of all we have invested'

Oil palm giant and Roundtable on Sustainable Palm Oil (RSPO) member, Wilmar, has agreed the sale of its oil palm concession PT Asiatic Persada, without prior consultation or respect for the Free, Prior and Informed Consent of indigenous Batin Sembilan communities already engaged in a land conflict mediation process. The sale agreement with non-RSPO and non-International Finance Corporation funded companies jeopardises the current International Finance Corporation’s Compliance/Advisor Ombudsman (IFC CAO) mediation process over numerous land conflicts in the concession since early 2012.

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The World Bank’s Palm Oil Policy

29 April, 2013

In 2011, the World Bank Group (WBG) adopted a Framework and Strategy for investment in the palm oil sector. The new approach was adopted on the instructions of former World Bank President Robert Zoellick, after a damning audit by International Finance Corporation’s (IFC) semi-independent Compliance Advisory Ombudsman (CAO) had shown that IFC staff were financing the palm oil giant, Wilmar, without due diligence and contrary to the IFC’s Performance Standards. Wilmar is the world’s largest palm oil trader, supplying no less than 45% of globally traded palm oil. The audit, carried out in response to a series of detailed complaints[1] from Forest Peoples Programme and partners, vindicated many of our concerns that Wilmar was expanding its operations in Indonesia in violation of legal requirements, Roundtable on Sustainable Palm Oil (RSPO) standards and IFC norms and procedures. Almost immediately after the audit was triggered, IFC divested itself of its numerous other palm oil investments in Southeast Asia.

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