Swedish companies accused of helping destroy RI rainforests

Swedish companies accused of helping destroy RI rainforests forest

Elna Nykaenen, Agence France-Presse, Stockholm

Swedish companies pride themselves on their high business ethics standards, but now corporate heavyweights have come in for stinging criticism for their alleged role in the destruction of Indonesian rainforests.

According to a report published this week by the Swedish Society of Nature Conservation (SSNC), several blue-chip corporations have either equipped, bankrolled or traded with the Indonesian logging industry, which is accused of large-scale destruction of the country's tropical forests.

SSNC and the World Wildlife Fund accuse Indonesian companies Indah Kiat, owned by Asian Pulp and Paper, and PT Riau Andalan Pulp and Paper, owned by Asia Pacific Resources International Holdings, of turning huge areas of the irreplaceable Indonesian rainforest into acacia and eucalyptus plantations, with disastrous consequences for local inhabitants and wildlife.

And all with the help of Swedish companies, SSNC claims in the report, which reads like a Who's Who of the country's business elite.

"Many Swedish companies show a happy face at home, but abroad, they don't have control over the companies they work with and are involved in operations that destroy the environment and violate human rights," said SSNC chairman Mikal Karlsson.

Swedish financial services giant Nordea figures prominently in the report for allegedly helping to fund construction of an Indah Kiat paper plant, while ABB, the Swiss-Swedish engineering company, delivered machinery to both Indah Kiat's and RAPP's factories.

Others include the Swedish Export Credits Guarantee Board, a government-backed organization, which issued Indonesian forestry companies with loan guarantees.

Swedish firms Korimpeks and CellMark promoted the Indonesian companies' interests in Sweden, and paper manufacturers Duni, Klippan Paper and Munkedals all imported Indonesian pulp, it said.

"There is a link from Swedish bathrooms to the Indonesian rain forests," said Karlsson.

ABB confirmed it had made the deliveries to Indonesia, and admitted it did not see any problems in doing business with the companies at the time -- partly because the Swedish Export Credits Guarantee Board approved.

"We have heard about this and take it seriously. We will investigate this issue, possibly at location (in Indonesia), and also talk to our clients," said Erik Kristov, ABB spokesman in Sweden, responding to the report.

Lena Hoeglund-Rosen, spokeswoman for Nordea, said an unspecified credit was granted to Indah Kiat in the mid-1990s, but added that the bank's policy today was to deny loans to companies which "violate international practice".

"We use something called the environmental risk assessment tool to have a better picture of the companies we do business with. This tool is for finding out if companies act in a correct way when it comes to environmental issues," she said.

But last September and this January, when SSNC contacted companies about the organization's report, it said Nordea did not reply to their questions at all, while ABB maintained it had operated according to Indonesian law.

The other companies accused of unethical business practices either declined to comment or pledged that any past mistakes would not be repeated.

"What's done is done. In the future, we will have a whole different control on these type of things," said Duni spokeswoman Anette Laurell.

But some appear unlikely to give up so easily. Currently, a new paper mill in the Indonesian part of Borneo is planned, with funding from United Fiber Systems Ltd and China National Machinery, SSNC said.

CellMark has committed to marketing 90 percent of the plant's acacia pulp production over a 10-year period, but according to company Vice President Tomas Hedberg, financing of the project is not yet clear.

"I can promise you that if this project becomes reality, it will have gone through several environmental controls. Otherwise, it would be completely impossible to get financing for it," he said.

Environmental organizations both in Europe and Indonesia have heavily criticized the plans, saying that the transformation of rain forests into plantations destroys local villages and threatens endangered species such as orang-utans.

"Another gigantic paper mill in Borneo would be devastating for the rain forest and all its inhabitants," said Karlsson.