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Company ordered to pay record $76m over fires in Sumatra

PT National Sago Prima, a subsidiary of major palm oil producer Sampoerna Agro, lost its case against the Indonesian government in a Jakarta court on Thursday.

Indonesian President Joko Widodo scored a victory in his campaign to prosecute haze-causing companies on Thursday with the ruling by a Jakarta district court against PT National Sago Prima (NSP), which was ordered to pay a record 1 trillion rupiah ($76 million) for letting fires ravage land it controls in 2014.

The panel of judges agreed with government prosecutors that the plantation firm was guilty of negligence in failing to prevent the fires which helped blanket the region in a toxic haze. The fires are an annual occurrence caused by cheap, slash-and-burn land clearing practices which are generally illegal but nevertheless employed by farmers and companies alike. The widespread draining of Indonesia’s vast peat swamp zones to make way for exportable cash crops dries the land and creates the conditions for the fires to spread.

With the 2015 dry season extended due to the El Nino weather phenomenon, last year’s fires were especially destructive, burning an area larger than Vermont, sickening half a million people and, during September and October, emitting more tonnes of greenhouse gases than the entire EU. They also cost Indonesia $16 billion, according to the World Bank.

Thursday’s decision gives advocates for a crackdown on fire-linked firms cause to celebrate for the first time since September last year, when Indonesia’s Supreme Court ordered oil palm grower PT Kallista Alam to pay $26 million for cut-and-burning forest in the Tripa peat swamp region — the first major ruling against a company accused of causing fires.

Industry won the following round, with the Palembang District Court in South Sumatra acquitting timber supplier PT Bumi Mekar Hijau in a similar case. The judges’ acceptance of the defense’s argument that the fires in PT BMH’s concession did not damage the environment prompted widespread derision on social media, with a proliferation of mocking memes and a cyber attack on the court’s website. The Environment and Forestry Ministry has appealed the ruling to a higher court in the province.

If the investigations are simply repeated in the same way, they will likely end up with the same result.

Spokesperson from Greenpeace-Indonesia

On Thursday, the South Jakarta District Court took the opposite view as had the Palembang judges, ruling that the fires in PT NSP’s concession had caused significant damage in a variety of spheres. The court also cited a provision in the 1999 Forestry Law that obligates companies to prevent and control fires occurring on land they manage.

That provision is argued by many environmental groups to mean that firms are “strictly liable” for fires in their concessions whether or not they can be shown to have actually started the fires, a burden of proof that can be impossible to meet. Judges’ interpretations of the provision have varied.

The prosecution won its argument that PT NSP had been negligent in failing to prevent the fires. The company was shown to have failed to stock its concession with the firefighting equipment and infrastructure the law requires it to keep on hand. The rule is widely flouted by growers looking to cut costs — and who often benefit from “uncontrollable” fires that can wipe out unproductive crops whose insurance payouts sometimes eclipse the trees’ actual value.

A study conducted several years ago by the now-defunct presidential working unit known as the UKP4 found that an absence of the required firefighting capacity was the norm among plantation operators. Thursday’s ruling also follows the acquittal in June by a Pelalawan district court of Frans Katihokang, the operations manager of oil palm grower PT Langgam Inti Hibrindo who had been criminally charged over burning in the company’s land. Tempo, Indonesia’s leading independent newsweekly, decried the decision as “a farce.”

More recently, in late July, the police in Riau province said they were closing cases related to 15 companies that the Environment and Forestry Ministry had listed in connection with last year’s fires. Following an outcry from civil society, President Jokowi, as he is known, reportedly asked the ministry to help the police reopen the cases.

“It certainly requires a new approach, rather than simply ‘reopening the investigations’ — if the investigations are simply repeated in the same way, they will likely end up with the same result,” a Greenpeace-Indonesia spokesperson told Mongabay.

PT NSP’s concession is located in the Meranti Islands off the coast of Indonesia’s main western island of Sumatra, just 140 kilometers from Singapore, which is regularly smothered in haze from across the Strait of Malacca. The smoke from last year’s fires drifted at least as far as the Philippines.

The company said on Friday it would appeal the ruling. The three-judge panel in Jakarta was not unanimous in its decision, with one member offering a dissenting opinion on the grounds that the fires were a “natural disaster” rather than a manmade one, an argument commonly advanced by plantation firms.

PT NSP is a unit of publicly listed Sampoerna Agro, one of Indonesia’s leading palm oil producers. The archipelagic country is the world’s top exporter of the commodity, which has driven deforestation and social conflict even as it fuels economic growth in the region.

This story was published with permission from

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