Case Study 2: Boven Digoel, Digoel Agri Group

Issues of potential concern:

• Deforestation • Abandoned concessions • Links to political figures • Overlapping permits • Lack of transparency • No FPIC • Permit speculation

© Ulet Ifansasti / Greenpeace

The Rainbow Warrior III sails on the Boven Digoel river in Papua Province. 30 Mar, 2018

On 26 November 2015 the Bupati of Boven Digoel, Yesaya Merasi, issued three new companies with location permits over land previously covered by concessions held by three of the original Menara Group companies, two of which (PT MSM and PT TKU) had been sold to Tadmax Resources Bhd while the other (PT UNT) remained in the hands of the Menara Group. Neither Tadmax nor the Menara Group had developed plantations on the land, despite holding IUPs for over four years. For the new companies taking over the same land, the permit process has proved much easier because some of the key bureaucratic obstacles had already been surmounted by their predecessors: the land had already been released from the forest estate, and was included in the provincial spatial plan as land earmarked for plantations.

These new companies are part of a group which refers to itself as the Digoel Agri Group. At the time their location permits were issued, the three companies – PT PBDS,353 PT Perkebunan Bovendigoel Abadi (PT PBDA)354 and PT Bovendigoel Budidaya Sentosa (PT BDBS)355 – were owned by a politically connected individual and his family: Vence Rumangkang (who died in 2020), one of the founders of the Democratic Party.356 Merasi issued the location permits less than three weeks before the 2015 election in which he was seeking a second term as bupati.357 Under the 2015 law on elections for heads of regional and local government, Merasi was required to have been on ‘campaign leave’ and therefore should not have issued permits during this campaign period.358 The timing suggests the possibility that corruption may have been involved, since local politicians are reported to regularly finance their election campaigns by selling permits to resource industry companies.359

The new location permits covered the same land360 as the still-valid IUPs for PT MSM, PT TKU and PT UNT. Less than two months previously, on 1 October 2015, Merasi had issued a decree revoking these IUPs,361 but this decree would have been considered invalid because the 2011 permits had been issued by the provincial administration and a bupati, as the head of a different authority (the local administration), had no authority to revoke them.362 Since the question of whether there were any existing rights over the land that might preclude the issuing of the location permits should have been addressed in the technical considerations presented prior to the issuing of the permits, the existence of still-valid IUPs should have been flagged as a problem and the location permits should not have been issued.363 Moreover, a new regulation signed in April 2015 governing the process of issuing location permits prevented new location permits being issued unless the permission of any holders of existing business permits has been obtained.364

353 Location permit for PT PBDS 354 Location permit for PT PBDA 355 Location permit for PT BDBS 356 Partai Demokrat website ‘Sejarah Partai Demokrat’ 357 Digoel Agri Group denies any connection between these permits and the election campaign. 358 Article 70 of Law 1/2015 on the Election of Governors, Regents [Bupatis] and Mayors / Undang-Undang no.1 tahun 2015 tentang Penetapan Peraturan Pemerintah pengganti Undang-Undang no. 1 tahun 2014 tentang Pemilihan Gubernur, Bupati, dan Walikota Menjadi UndangUndang (full text available at https://peraturan.bpk.go.id/Home/Details/37341/uu-no-1-tahun-2015). 359 Wijaya T (2018) 360 Concession maps for the three companies were included in their EIA studies, showing that they did indeed cover the same area as the earlier permits. 361 Decree by the Bupati of Boven Digoel no. 522/539.a/BUP/2015 purporting to revoke IUPs for PT MSM, PT TKU and PT UNT. 362 This is based on the principle of contrarius actus, described in Hasanah S (2017). 363 The three location permits state that this technical evaluation was carried out by the Regency Forestry Agency and sent on 3 November 2015. At the time, the relevant regulation (Head of the National Land Agency (2011)) stated in Article 7 that among the factors to be considered is that of ‘land availability’. 364 See Article 11 of Minister for Agrarian Affairs and Spatial Planning (2015).

However, by falsely asserting that the IUPs had been revoked through his decree, Yesaya Merasi could claim that he had the authority to issue new location permits without the consent of holders of existing IUPs. While this was bad governance, issuing the new permits may not have been strictly illegal because the regulations concerning location permits (issued by the Ministry of Agrarian Affairs and Spatial Planning) and those concerning IUPs (issued by the Ministry of Agriculture) are not synchronised, and therefore do not stipulate what is to be done in such cases. This makes it possible for pseudo-legal situations to arise in which two unrelated companies have overlapping permits on the same land.

Eventually, on 2 November 2017, the Papua Province Investment Agency revoked the three old IUPs and on the same day issued in-principle approval for the new companies to apply for IUPs. This action can be seen as an implicit acknowledgement that Yesaya Merasi's earlier decree revoking the IUPs had been invalid, while retrospectively validating that revocation and setting the new companies on a path to obtain legitimate IUPs after going through the EIA process.

© Yayasan Pusaka Bentala Rakyat

Deforestation in the Digoel Agri Group concessions in January 2020. No oil palm was planted at that time. Satellite images show that clearance work recommenced in late 2020.

One implication of these overlapping permits, however, is that the new companies have successfully avoided the moratorium on new permits covering primary forest and peatland. The concessions were not included in the Forest Moratorium because the Menara Group held current IUPs at the time the moratorium came into force in 2011. Since the concessions were largely composed of primary forest, with areas of peatland along the main river valleys,365 the land they covered should have gone back into the moratorium if they were ever revoked. However, because new concessions over the same land were issued before the old ones were revoked this did not occur.

Greenpeace Indonesia has written to several agencies in Boven Digoel Regency and Papua Province requesting information about the current permit status of the new companies. The Provincial Forestry and Environment Agency replied to say that the EIAs for all three companies had been evaluated, and that it had communicated the results to the bupati, who is responsible for issuing environmental permits.

The Papua Province Investment Agency, which issues IUPs, refused to supply data. However, its counterpart in Boven Digoel did provide a copy of some licensing documents, issued at the provincial level. An IUP for PT PBDS was signed on 13 September 2018, one week before the Oil Palm Moratorium came into force. PT BDBS is believed to also possess an IUP.366 Conversely, a letter dated 19 December 2018 revoked the inprinciple permission for PT PBDA, citing the new moratorium, apparently signalling that the permitting process was to go no further. These developments appear not to have been effectively communicated to Indigenous communities in the area, who are reportedly unsure of what permits the Digoel Agri Group’s three companies currently hold.367 At some point between February 2017 and August 2018, a majority share in all three companies was transferred to a New Zealand citizen, Neville Christopher Mahon. Neville Mahon has a history of property development projects in New Zealand368 and Fiji,369 but Greenpeace has been unable to find any evidence of his prior involvement in the plantation sector. Members of Vence Rumangkang’s family hold most of the remaining shares in the three companies.

Between July and September 2019 a new road into PT PBDS’s and PT BDBS’s concessions was built and an area of around 100 ha of forest was cleared, divided between the two concessions. According to a 2020 report citing local community members, there is confusion and little understanding of the company’s activities; the area cleared in 2019 had not subsequently been planted with oil palm and the Digoel Agri Group appeared to have abandoned it from November 2019.370 However, satellite images show that deforestation recommenced towards the end of 2020 and accelerated in early 2021. Digoel Agri Group wrote to Greenpeace prior to publication of this report ‘we are now preparing to launch the Sustainability Policy shortly based on the NDPE vision’ and ‘[t]he Companies sustainability policy provides for free, prior and informed consent of the indigenous communities affected’.371

In a reply to Greenpeace Indonesia in July 2020, the provincial office of the National Land Agency confirmed that the Digoel Agri Group companies had not obtained HGU.

365 Digoel Agri Group states that they are launching a policy not to develop on peatland. However Greenpeace believes that peat protection should not rest on company policy alone. 366 Greenpeace has not obtained a copy of this document, but it is referred to in a timber legality audit carried out in February 2020 (Mutu Certification International (2020)). 367 Yayasan Pusaka Bentala Rakyat (2020c) 368 Mountain Scene (2017) 369 Slade M (2010) 370 Yayasan Pusaka Bentala Rakyat (2020c) 371 Letters to Greenpeace International from PT. Digoel Agri Group dated 23 March 2021 and 27 March 2021; The letters can be viewed in full at this location.

Satellite images of recent clearance in Digoel Agri Group concessions