Native customary rights (NCR) issues at IOI Pelita escalate

The RSPO steps up pressure on IOI Group to address native customary right complaints at IOI Pelita.

In accordance with the RSPO grievance procedure:
1. The current and ongoing certification process of all IOI group’s activities will be suspended with immediate effect.
2. IOI group will be given a period of 28 days from the date of this letter to revert with an acceptable solution to these matters, which preferably should be mutually agreed by parties involved.
3. IOI group is expected to with immediate effect and agreed in advance with RSPO, to publish a statement on their corporate website indicating the two measures stated above.

Failure to deliver the required proposal by the due date of May 2, 2011 will result in the RSPO considering further sanctions against your company, which may include the suspension of your license for new transactions involving Certified Sustainable Palm Oil materials including GreenPalm certificates.

Background summary: After a 12-year legal battle, the Miri High Court nullified the lease of some plantation estates owned by IOI Corp in Sarawak. The Miri High Court declared four natives the winner in a class action suit against the Sarawak government, Land Custody and Development Authority (Pelita / LCDA) and IOI Pelita Plantation Sdn Bhd, end March 2010. The land leases used by IOI were “null and void” as they had been issued by the Sarawak state government in an illegal and unconstitutional way. Read more here, http://hornbillunleashed.wordpress.com/2010/04/04/6268/, where “...the Bruno Manser Fund welcomes the Miri High Court decision and expects IOI to stop its jungle clearance activities and move out of the disputed lands in the Tinjar region with immediate effect....”


Background info:
i) News report: http://biz.thestar.com.my/news/story.asp?file=/2011/4/7/business/8431450&sec=business.
ii) RSPO's announcement on grievance against IOI Group: http://www.rspo.org/?q=content/announcement-ioi-rspo-grievance-panel-breach-rspo-code-conduct-23-certification-systems-424-.
iii) IOI Group's past comment on the IOI Pelita - NCR issue: http://www.ioigroup.com/home_more.cfm?id=62D76BA9-1438-5066-5C1C4FCD256FE2D3; and links to "IOI Pelita" search on the company's website: http://www.ioigroup.com/search.cfm?searchid=44820&searchtxt=ioi%20pelita&CFID=4319922&CFTOKEN=39987901.
iv) NGO report on IOI Pelita issues: http://understory.ran.org/wp-content/uploads/2011/03/Industry_Oppresses_IPs2.pdf


Khor Reports comments:

a) Social HCVs is an emerging issue and is likely a longer term matter of concern to plantation companies. This would impact development in both forest and non-forest lands.

b) Plantation companies should prepare for better inclusion of native landholders with: i) free and/or pre-funded equity ownership with low / fair interest cost, ii) a larger proportion of smallholder schemes and iii) larger set-aside of land for HCV areas in their future developments.

c) Those who make secondary purchases of land of native customary right (NCR) areas should be concerned about the legitimacy of the land concessions. Khor Reports has viewed land deal documents that raise strong ethical questions about the lack of free prior and informed choice (FPIC) of the natives in these transactions. It appears that they were verbally promised a stake, but later they found they were unable to subscribe (pay for) their interest in the plantation developments. In the meantime, they had already assigned their interest in the land. In the strict sense, the natives had given up their right to subscribe. However, the natives would likely have been lacking in financial understanding and resources to participate in the transaction.

d) Such land dispute cases number in the 100s and many have dragged on into a decade.

World Bank Group - new palm oil sector approach

Khor Reports comment: On 2nd April 2011, The World Bank Group (WBG) announced its "new Framework and IFC Strategy to guide its future engagement in the palm oil sector." This follows-on a freeze on new investments in the sector, followed by months of consultations. WBG says it will focus investments as follows: i) institutional and market initiatives to benefit smallholder development, ii) on projects to improve productivity on existing plantations and iii) it sounds as though funding of new area development would have to be on degraded lands.


Excerpts:

WBG says its areas of focus include support for:
• regulatory and governance reforms;
• responsible private investments;
• improved benefit sharing with smallholders and communities; and
• development and widespread adoption of environmentally and socially sustainable standards and codes of practice.


Priorities:
a) "Institutional and market initiatives that support smallholders and foster benefit sharing with rural communities. This will take place by helping to strengthen smallholder producer organizations, promoting their access to finance and markets, improving their agronomy practices and productivity, and fostering fair contractual arrangements with larger companies."
b) "To help protect forests and biodiversity and to move palm oil expansion from forested areas and peat lands, the Bank Group will give priority to initiatives that encourage production on degraded lands and seek to improve productivity of existing plantations."

WBG will scrutinize investments, using "new analytical “tools”, such as a joint World Bank-IFC Country Situation Analysis and IFC’s Risk Screening and Assessment procedure."

Read more about it here: www.ifc.org/palmoilstrategy.