Sinar Mas faces fresh strife after spinning palm oil report

The long-running battle between Greenpeace and Indonesian firm Sinar Mas over the company's alleged illegal clearing of forest land to make way for palm oil plantations took a fresh twist this week, after the organisation was accused of misrepresenting the findings of an independent audit of its palm oil activities.

Greenpeace has now written to the Singapore Stock Exchange, where Sinar Mas's parent company Golden Agri-Resources Ltd is listed, accusing the firm of making "factually incorrect claims" on the Singapore Stock Exchange's web site in relation to the independently commissioned verification report.

The letter urges the exchange to launch an inquiry into Golden Agri-Resources' claims in order to ascertain whether or not the company has breached reporting regulations.

The verification report from British firm BSI was commissioned by SMART, the Indonesian palm oil arm of Sinar Mas, to look into claims from Greenpeace that the company was guilty of illegal logging and peat clearance – accusations that prompted several of Sinar Mas's largest clients, including Unilever, Mars, Kraft and Nestle, to stop purchasing palm oil from the firm.

The report was released last week and was immediately hailed by Sinar Mas as evidence that the company "operates responsibly and within the laws and regulations set out by the Indonesian government".

That response brought hollers of outrage from Greenpeace, which accused SMART of spinning the report "180 degrees" and deliberately ignoring parts of the audit report that found the company guilty of violating Indonesian forestry laws.

BSI waded into the row yesterday, releasing a strongly worded statement clarifying the audit's findings and claiming that its work had been misreported.

"It has come to the attention of BSI Group (BSI) that following the publication of the report BSI-CUC Verifying Greenpeace Claims Case: PT SMART Tbk on 10 August 2010, there have been elements of the report that have been misreported as it has been published and presented," the company said.

In particular, BSI said that while SMART had not been guilty of clearing deep peat to make way for plantations to the extent claimed by Greenpeace, it had set up plantations on deep peat in two estates in breach of Indonesian law. BSI also said that at eight out of the 11 concessions it visited, clearance had taken place without the necessary environmental permits.

A spokesman for BSI told BusinessGreen.com that the company had felt moved to issue the clarification after seeing the initial study "misreported in the public domain", although he declined to comment on whether Sinar Mas was responsible for that misreporting. "We realised that the findings were not being reported in the manner that you would expect," he said. "It was not a balanced way of reporting on the study."

However, in a blog posting Greenpeace accused Sinar Mas of willfully misrepresenting the findings of the independent report.

"Despite what company bigwigs have been saying, the audit doesn't clear Sinar Mas of operating irresponsibly or outside Indonesian law," the group said. " Worse, Sinar Mas has been telling these fibs not just to journalists, but to its shareholders, the Indonesian government and the stock exchange."

SMART today attempted to defend itself against the latest allegations, insisting the full verification report had been published on the company's web site and denying that it had attempted to mislead shareholders.

According to AFP reports, SMART president director Daud Dharsono said the company had been completely open about the report's findings.

"We've always emphasised that the independent verification exercise report be shared in an open and transparent manner and that is exactly what we have done, " he said. "Palm oil is a strategic economic product for the alleviation of poverty in Indonesia. We care for our people, the environment and all biodiversity including the important orangutan."