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

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. PT AP was a subsidiary of IFC client Wilmar International, the world's largest palm oil trader and a prominent member of the Roundtable on Sustainable Palm Oil. The report summarises the progress the CAO was making to resolve these land conflicts, after a complaint was raised about the case by Forest Peoples Programme and 17 other groups in 2011, and describes how these efforts were brought to an untimely end when Wilmar sold PT AP to other owners in April 2013.

Questioning Wilmar's ethical integrity, the CAO's report notes:

Unfortunately in Jambi, Wilmar's sale of PT AP has had direct and indirect adverse consequences for the affected communities. Interim agreements that were reached through mediation are not being honored, and communities with previously acknowledged land claims are being evicted from their land. This raises questions for CAO about the ethical responsibility of the company in discharging assets to a new owner in the midst of a sensitive mediation process, with no contingency plan provided for affected communities.

The report also notes that: 

In December 2013 community groups with land claims competing with PT AP's concession area were forcefully evicted from their homes. CAO received information that homes have been dismantled and the area has been cleared, reportedly by a combination of police, military and the company's security forces.

 

The report also notes that, in response to CSO pressure, the CAO had begun to engage with Wilmar to address wider systemic problems in Wilmar's operations and in its supply chain but that these remained un-addressed as a result of the unilateral closure of the case. As the report concludes:

 

The concerns about systemic issues - land disputes in different Wilmar operations and in its supply chain in Indonesia and beyond - have not been addressed through this process.

Click here to read full report from CAO