Pulp firms accused of withholding reforestation funds

Haidir Anwar Tanjung, The Jakarta Post, Pekanbaru, Riau

A timber association executive accused pulp and paper firms PT Indah Kiat Pulp & Paper and PT Riau Andalan Pulp & Paper of withholding billions of rupiah in reforestation funds by manipulating production reports to Riau's forestry authorities.

Chairman of the expert board at the Indonesian Timber Business Association (APKOI), Viator BB, said Riau received Rp 48 billion (about US$5.39 million) in reforestation funds from both firms in 2001.

That amount, however, should had been nearly 10 times higher or at least Rp 460 billion that year, he said on Wednesday.

Viator based his estimates on Indah Kiat and Riau Andalan's production capacities. He said their production rates should have required them to pay more in reforestation funds.

Spokespersons for Indah Kiat and Riau Andalan dismissed the charges as rubbish.

But environmental activist Bakhti Sianturi said both firms might withhold between Rp 600 billion and Rp 800 billion in reforestation funds every year.

He charged Indah Kiat and Riau Andalan with manipulating their reports on the type, size and volume of their forestry products.

Falsifying a report to make it appear that a timber company was producing raw scrap material instead of logs could save the company over 90 percent on its mandatory monthly reforestation payments, Bakhti said.

A company is required to pay between $10 and $12 in reforestation funds per cubic meter if they produce logs. But they must pay only Rp 2,000 per cubic meter if they produce scrap raw material, Bakhti said.

"This is where the biggest manipulation occurs," said Bakhti, a director at non-governmental organization Youth Care. "If we look at a plant's production capacity, the manipulated funds could amount to between Rp 3 billion and Rp 4 billion a month."

He claimed to have "authentic data" regarding manipulation by Indah Kiat and Riau Andalan.

Bakhti and APKOI executive Viator said they planned to report their findings to the local prosecutor's office.

Indah Kiat spokesman Afrizon called the charges groundless and absurd.

He said the company obtained its raw timber after first securing clearance from the forestry ministry. According to him, this makes it impossible to manipulate the amount of reforestation funds the company is required to pay.

"The reforestation funds are handled by the forestry office," Afrizon said. "It's impossible for us to obtain timber without the forestry office knowing about it."

Riau Andalan spokesperson Fachrumnas MA Jabbar said his company always referred to the forestry office in obtaining its raw materials.

"We have evidence of our payment of reforestation funds," Fachrumnas said.