DIRTY BANKERS

28 March 2013, PT Bio Inti Agrindo:
Charred wood and smouldering fires in
recently cleared forest in the POSCO
Daewoo concession in Merauke, Papua.
©greenpeace
PLANTATION
The company’s sole palm oil plantation, located in Merauke
District, Papua, is held by subsidiary PT Bio Inti Agrindo (PT BIA), of
which POSCO Daewoo Corporation holds an 85% stake. POSCO
Daewoo bought PT BIA from its former owner in 2011, 318 after the
company had acquired the main permits needed to operate. 319 The
36,401ha 320 concession is expected to have started producing palm
oil in 2015 or 2016 as trees in the plantation reached maturity. 321
BANK LINKS
In 2015, POSCO Daewoo Corporation had loans from banks
including Woori Bank and AKA Bank. 322 Credit facilities were
maintained with Woori Bank and Korea Exim Bank and the company
held currency forward contracts with the following banks: Woori
Bank, Busan Bank, Kookmin Bank, Citibank Korea, SC Bank Korea,
HSBC, UOB, Bank of Communications, China Construction Bank,
JP Morgan, Deutsche Bank, Credit Agricole, KEB Hana Bank, Korea
Exchange Bank, ANZ Bank, Societe Generale, SMBC and the
Industrial and Commercial Bank of China. 323 POSCO Daewoo is
acting as guarantor for US$59.5m of loans to PT Bio Inti Agrindo
from the Korea Exim Bank. 324 Lead banks in POSCO’s syndicated
loans include Bank of America, HSBC, the Export-Import Bank of
Korea and the Korea Development Bank. 325
ENVIRONMENTAL AND
HUMAN RIGHTS POSITION
Neither PT Bio Inti Agrindo nor any of its parent companies are
members of the RSPO, and social and environmental impact
assessments have not been placed in the public domain.
POSCO Daewoo’s ‘Rules of Conduct’ 326 contains its group
environmental policy statement. The environmental section
(chapter 7, article 28) is devoid of specific commitments, instead
using noncommittal terms such as ‘will endeavor to’ and ‘will
minimize’, and makes no mention of avoiding deforestation or
cultivation on peat or areas of high conservation value.
PT Bio Inti Agrindo’s concession was entirely forested before
plantation development began. Although some HCV areas have
been set aside, the company has indicated that this was to meet
the conditions required to obtain permits from the Indonesian
government, 327 although this is generally regarded as insufficient
to ensure important habitats are protected. In the sustainability
section of its 2015 report, POSCO responds to criticism of its
palm oil project but continues to defend itself, claiming its 2009
environmental impact assessment and the HCV areas contained
within as an acceptable level of environmental protection. 328
Some clauses in the articles on human rights (article 25) and
sustainable business (article 26) in POSCO Daewoo’s ‘Rules of
Conduct’ 329 are relevant to its oil palm business: eg ‘The Company …
will maintain work environment that respects political, economical,
social and cultural diversity’, ‘The Company will support and
respect internationally recognized standards such as Universal
Declaration of Human Rights, and establish clear policy and system
for protection of human rights and endeavor not to violate human
rights in its management activities’ and ‘The Company shall not
engage in any act that may … cause disharmony among the public’.
TIMELINES
POSCO Daewoo stated to the Council on Ethics for the Norwegian
Government Pension Fund Global in 2015 that it planned to obtain
Indonesian Sustainable Palm Oil (ISPO) certification by 2016 and
RSPO certification thereafter. 330 However, as of December 2016
it was still not a member of the RSPO. This is a breach of HSBC’s
policy deadline of RSPO membership by June 2014. 331
MARKET LINKS
According to company data, Cargill ‘had a one-time purchase
from Daewoo earlier in 2016 and will review future commercial
relationships on the basis of the supplier’s compliance with our
sustainable palm oil policy’. 332
AAK refused to confirm or deny any trade relations with
Daewoo. 333 Astra Agro Lestari failed to confirm or deny any
trade relations with Daewoo.
38 DIRTY BANKERS