Tokyo 2020 using tainted Indonesian rainforest wood to build venues, say groups; Korean supplier accused of illegal logging

  • Four NGOs release reports claiming illegal wood is used for Olympic venues
  • They want banks to suspend credit to Jakarta-based firm Korindo
PUBLISHED : Monday, 12 November, 2018, 9:33am
UPDATED : Monday, 12 November, 2018, 10:31pm

Environmental groups on Monday called on Olympic organisers, governments and banks to take action against a South Korea-Indonesia company they say is illegally destroying rainforests in Southeast Asia for wood used in the construction of venues for the 2020 Tokyo Games.

Protesters were expected to gather on Monday at the Jakarta headquarters of Korindo Group and outside the main office of its principal financier, Bank Negara Indonesia (BNI), to demand a halt to the destruction of forests in Indonesia, particularly East Kalimantan, where orangutan habitats have been devastated, North Maluku and Papua.

Two reports released on Monday by four NGOs, entitled “Broken Promises” and “Korindo Investigation” detail what the groups say is clear evidence that Korindo has been sourcing illegal and unsustainable timber for its mills, and supplying plywood from those mills for the construction of Tokyo 2020 Olympics venues.

“The Tokyo 2020 Olympic organisers promised to deliver a sustainable Olympics,” said Hana Heineken from Rainforest Action Network (RAN). “Instead, it has used over 110,000 sheets of tropical plywood from Indonesia that is linked to rainforest destruction, land-grabbing and clearance of endangered orangutan habitat, much of it to make way for oil palm plantations.

“The Olympics is supposed to celebrate human achievement and global solidarity, not be built on top of human rights violations and environmental destruction from remote corners of the world.”

It says photographic evidence, company supply chain data and trade export records show that Korindo plywood used for Olympics venue construction has likely included illegal timber from North Maluku as well as timber cleared from orangutan habitat in East Kalimantan, supplied via the Japanese trading company Sumitomo Forestry.

Korindo has also been accused of using fire to clear land.

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Other groups involved in compiling the report are Walhi, TuK Indonesia and Netherlands-based Profundo.

The groups say their findings were put to Korindo and the company insisted that it operated in full accordance with all laws and regulations and that it was a leader in sustainability.

Olympic organisers justified their use of Korindo wood by saying its supplier, Sumitomo Forestry, gave assurances of compliance with the Tokyo 2020 Timber Sourcing Code, including checking the Indonesian government’s legality certificate.

However, the report says that an Indonesian independent monitoring group raised concerns about the sustainability system in use by Indonesia and that Tokyo 2020 organisers generally employ inadequate sourcing standards.

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“Korindo is abusing and exploiting North Maluku and the Indonesian people,” said Ismet Soelaiman, director of Walhi North Maluku, an offshoot of the largest and oldest environmental advocacy group in Indonesia, Walhi.

“From stealing community lands, harassing small scale farmers, to destroying local biodiversity with the monoculture plantation system, ordinary people are paying the price. Right now, Korindo is trying to grab more community forests in North Maluku to sell the timber and plant oil palm.

“The communities are resisting but they need the help of government and police to stop aiding illegal operations, and instead protect the people, their farms and forests.”

The report also delved into Korindo’s finances, corporate structure and offshore shell companies and uncovered what it says are instances of unethical and illegal practices, including misreporting loan arrangements and financial statements through its Singapore shell companies.

The report said banks and investors that finance and profit from Korindo’s operations – including BNI, SMBC Group, Hyosung Corporation, Sumitomo Forestry and Oji Holdings – have all played a critical role in the company’s expansion.

“BNI has committed to be a pioneer in sustainable finance,” said Edi Sutrisno from TuK-Indonesia. “To truly implement this commitment, it must first stop bankrolling companies like Korindo, operating without adequate permits and stealing community land and forests.

“Financing Korindo is in clear contradiction with BNI’s own standards, and is counter to new financial sector regulations from Indonesia’s Financial Services Authority. BNI should tighten its policies, drop companies like Korindo, and be a sustainable bank for the needs of ordinary Indonesians instead of tycoons.”

RAN said BNI failed to respond to inquiries concerning financing for Korindo.

The report urged Tokyo 2020 organisers to:

  • Investigate and disclose the extent to which Korindo wood was used for Olympic venue construction and provide a detailed account of how the legality and sustainability of the wood was assessed.
  • Halt further use of Korindo wood until the legality and sustainability issues in its operations and supply chain have been investigated and addressed.
  • Strengthen the Timber Sourcing Code to prevent further use of illegal or unsustainable wood.
  • Strengthen sourcing requirements for all other forest-risk commodities.

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They also asked the Japanese government to look into existing laws that vet the import of wood and enhance due diligence, while ensuring timber companies show greater transparency.

Financiers should also retreat from providing loans to companies that may disregard laws on procuring timber legally.

The Korindo Report says that the company is not an isolated case but symptomatic of the type of business model still being financed and still expanding into remote tropical forest regions in Indonesia.

It says such operations routinely ignore the constitutional rights and livelihoods of customary landowners, to the peril of local communities, their forests and society as a whole.