More of Sinar Mas's handiwork, this time in an area known to support endangered Sumatran tigers
There's been a not insignificant amount of fallout from the implosion of Sinar Mas's audit last week. You'll remember that the independent auditors demanded public clarification on some statements made by Sinar Mas about the results of said audit which were not, in fact, supported by the audit itself.
First of all (and this might be a complete coincidence), shares for Golden Agri Resources (Gar) - one of the Sinar Mas group's palm oil producers - fell by over 6 per cent between 19 and 23 August. PT Smart, another palm oil arm, dropped by nearly 3 per cent.
As the Sinar Mas group had misreported its audit to investors, we wrote to the Singapore and Indonesian stock exchanges pointing out the clarification it had been forced to make. Gar has since been downgraded in status by analysts at investment bank OSK, from 'trading buy' to 'neutral', demonstrating a lack of confidence in Gar's performance. The only other status OSK has is 'trading sell' so as OSK says, "the uncertainty created by the possibility of being investigated by the authorities could weaken the stock price considerably".
Meanwhile, the Ecologist has revealed that the Norwegian government is a significant investor in Gar as part of its state pension fund. The Norwegians announced that they have sold their shares in Malaysian logging company Samling because of concerns about illegal logging. Whilst this is a good first step, Samling is not the only skeleton in Norway's pension fund cupboard, and also has over $16m invested in Gar.
This was revealed just as Norway's first $30m payment was made to Indonesia, part of its $1bn package to help protect the country's rainforests. This is a really positive move, but there's the danger that unless other unethical investments are weeded out, Norway puts this important work at risk.
We'll be directing the pension fund managers' attention towards the Sinar Mas audit and the clarification statement, as they show that Sinar Mas been behaving in a manner that's likely to contradict the bank's ethical code.
And Unilever - who stopped buying palm oil from Sinar Mas companies in December - has said it won't be placing another order for palm oil* until "additional measures to be taken to ensure sustainable palm oil production" as well as a target date for Gar to have Roundtable on Sustainable Palm Oil certification for all its plantations.
Unilever has also asked for more transparency from Sinar Mas about the group's operations, including details of the palm oil concessions the group holds. This is something our researchers have also been after for a long time: without this information, it takes a great deal of time and effort to establish whether Sinar Mas is sticking by its various claims to sustainability (or even just abiding by Indonesian law).
* Update: this should read "won't be placing another order for palm oil from Sinar Mas", instead of implying Unilever won't be buying any palm oil. That would just be silly.
