Indonesia: Bank Mandiri Denies Link to Companies Blamed for Forest Fires

Dion Bisara & Ratri M. Siniwi Jakarta Globe 10 Sep 16;

Jakarta. Bank Mandiri, Indonesia’s largest lender by assets, has reiterated its support for good corporate governance and environment conservation, in response to a report that claimed it is one of the largest financiers for companies linked to forest degradation in Southeast Asia.

According to the "Forest & Finance" report from Rainforest Action Network, Bank Mandiri disbursed more than $1 billion in loan or underwriting for clients which have been accused of destroying forests in Indonesia, including the Rajawali Group, Salim Group and Sampoerna Agro, between 2010 and 2015.

Bank Mandiri corporate secretary Rohan Hafas, however, said that Bank Mandiri had always set stringent requirements for their clients, scrutinizing administrative legality and good corporate governance of each prospective client.

"We would only finance corporations that have met our requirements and licensing regulations," Rohan said in a text message to The Jakarta Globe on Friday (09/09).

"We only give loans to plantation firms that have met all the requirements and permits as demanded by the relevant authorities, such as environmental impact assessment (Amdal) and other related permits," Rohan said.

According to Rohan, the bank is fully aware of sensitive environmental issues — one of the major risks in their financial portfolio. "Legality is always a major concern before we decide to disburse a loan," he said.

Adelaide Glover, report program coordinator and researcher at Rainforest Action Network (RAN), said while Mandiri may have enviromentally-friendly policies, the lender had failed to be more transparent regarding the issue.

One of Bank Mandiri clients, Sampoerna Agro, was found guilty of neglect last month in relation to forest fires on a 3,000-hectare concession land in Riau in 2014. The company was ordered to pay more than Rp 1 trillion in fines, the largest ever handed down for causing a forest fire in Indonesia. A report showed Bank Mandiri disbursed a total of $22 million in loans to Sampoerna Agro in 2010 and 2012.

"We looked at Mandiri's publicly available information on [environmental, social and governance] risks and found no information that answers satisfactorily our set of 15 questions [on policy assessment]," Glover said.

The assessments include finding out whether the bank has a publicly available forestry sector-specific safeguard policy, whether it requires clients to undergo regular independent assessment and whether such safeguard policy is applied to all clients within the same business group.

RAN said it will correct its report should the lender identifies errors in the assessment.