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Burn now, pay later: Fines trickle in from Indonesia's crackdown on forest fires

Mongabay - November 7, 2023

Hans Nicholas Jong, Jakarta – A palm oil company in Indonesia has finally started paying off a $23 million fine for burning an important Sumatran orangutan habitat more than a decade ago, highlighting the difficulty of holding environmental violators to account in the country.

PT Kallista Alam (KA) was in 2013 found liable by a court in Aceh province, at the northern tip of the island of Sumatra, for burning 1,000 hectares (nearly 2,500 acres) of peat forest in the Tripa swamp between 2009 and 2012. Tripa is an integral part of the Leuser Ecosystem, one of Indonesia's last best rainforests, and in 1990 it held some 3,000 Sumatran orangutans. Today, there are no more than 200 of the great apes left in Tripa, as their habitat continues to be cleared to make way for oil palm plantations.

The ruling against KA, with the fine set at a then-record 366 billion rupiah ($30 million at the time, but $23 million at the current exchange rate), was upheld by the Supreme Court in 2015. The case also marked the first in a series of aggressive lawsuits brought by the government against companies that had allowed burning inside their concessions.

Even so, it was only in September this year – 10 years since the original verdict and 14 since the burning began – that KA started paying off the fine, comprised of 114 billion rupiah ($7.2 million) in damages and 252 billion rupiah ($15.9 million) for restoration of the burnt area.

In a press release dated Sept. 29, the Ministry of Environment and Forestry said KA had already paid half the damages, or 57 billion rupiah ($3.6 million), and would pay the other half by Nov. 18. The company has also agreed to pay the restoration fine in installments, according to Jasmin Ragil Utomo, the environment ministry's director of environmental dispute settlement.

However, activists say that KA's decade-long refusal to pay up, mounted through a series of legal challenges that were all eventually thrown out, means it shouldn't be afforded the leniency of being allowed to pay in installments.

"The payment in installments done by KA is very strange, because the court ruling doesn't open any room for that," said Roni Saputra, director of law enforcement at environmental NGO Auriga Nusantara. "What's even stranger is that the environment ministry is agreeing to the request by KA."

He said he suspected the company had sought out this arrangement to prevent having its assets seized, which a court had ruled in 2019 that the state could do in light of the company's persistent failure to pay the fines. Roni called on the government to act on the ruling and seize and auction off KA's assets.

"The environment ministry needs to propose the revocation of KA's business licenses because [the company] had intentionally not carried out the court ruling that is legally binding," he said.

Trouble collecting

The long road to holding Kallista Alam accountable for its environmental violations highlights the main difficulty the Indonesian government faces in enforcing a policy of strong legal action over forest fires.

Since 2013, the environment ministry has sued 22 companies for fires on their concessions. Fourteen have been found liable and have exhausted all avenues of appeal, including KA. In total, these 14 companies have been ordered to pay 5.6 trillion rupiah ($353 million) in fines.

Yet only one of these has paid in full: PT Bumi Mekar Hijau (BMH), a supplier of pulpwood to paper giant Asia Pulp & Paper (APP). None of the 14 have restored their burnt concessions.

In the case of BMH, the company was only hit with a fine for damages, at 78.5 billion rupiah ($5 million), but not ordered to pay for restoration, like KA was.

There are a number of reasons why law enforcers are struggling to collect the fines from these companies, Turyawan Ardi, an enforcement official with the environment ministry, told Mongabay.

One is resistance from companies, like in the case of KA, which filed a series of legal challenges to avoid having to pay any fines.

"[If we want to seize] thousands of hectares of lands and factories, you could imagine the resistance from companies," Turyawan said.

And when ministry officials want to execute court rulings, they often lack institutional support from law enforcement, he added. He said this was the case with KA, noting that it's the job of the country's courts to execute rulings such as collecting fines.

The same problem of lack of support also hinders efforts to assess corporate assets to determine a company's solvency before collecting a fine or seizing the assets. In the case of PT Jatim Jaya Perkasa, a palm oil company ordered by a court to pay 491 billion rupiah ($31 million) in fines for fires, the environment ministry was able to obtain some financial data but couldn't proceed further.

To verify the data, ministry officials sought confirmation from the company's bank, Turyawan said.

"The bank then asked for a letter from the OJK," the financial services regulator, he said. "It turns out the only party who can ask for such data is the OJK. While [we understand] the need for banking secrecy laws, this was a case where there was already a court ruling."

Another palm oil company fined for fires, PT Waimusi Agroindah (WA), initially started paying its fine in installments, like Kallista Alam, according to Turyawan.

The fine of 29.6 billion rupiah ($2.2 million at the time) was imposed by a court in 2016. The company was also ordered to pay for restoration of the burnt area, whose cost has not yet been determined, Turyawan said.

In 2019, WA began paying the fine in instalments, with 9 billion rupiah ($570,000) already paid. However, in 2021 the government issued a regulation barring payments in installments by companies whose fines are binding and cannot be appealed.

In light of that, the environment ministry asked WA to pay the rest of its fine, which it agreed to do in March this year, Turyawan said.

It's not clear why the same 2021 regulation hasn't been applied to Kallista Alam.

Source: https://news.mongabay.com/2023/11/burn-now-pay-later-fines-trickle-in-from-indonesias-crackdown-on-forest-fires