Indonesia says building criminal cases against 8 firms over fires

Indonesian investigators are building criminal cases against eight Southeast Asian companies they suspect of being responsible for raging fires that have blanketed neighbouring Singapore and Malaysia with hazardous smog.

The Environment Ministry last week named the firms for their alleged role in Southeast Asia's worst air pollution crisis in 16 years, which has raised concerns over public health and hurt business and tourism in Singapore, Malaysia and Indonesia.

Owners of five of the plantations have denied any wrongdoing. Reuters has not been able to contact the others.

A 2009 law carries tough penalties for environmental crimes, although such regulations have rarely been enforced due to Indonesia's endemic corruption and sprawling geography.

And investigators could find it hard to pin the blame on specific firms because of the complex ownership of palm oil concessions and pulp and paper holdings on Indonesia's Sumatra island where most of the fires are burning.

But outrage from Singapore as well as environmental groups is putting pressure on Jakarta. Fires are used to clear land on plantations and can burn for weeks because of peat deposits below the surface.

"This is the first major haze since the new law. This is the first big opportunity for the government to use it," said Peter Kanowski, deputy director general of the Center for International Forestry Research (CIFOR), a conservation organisation based in Indonesia.

Three of the firms under investigation are owned by government-linked companies in Malaysia. Unlike Singapore, Malaysia has not publicly admonished Indonesia over the smog.

An initial on-the-ground investigation by dozens of officials in Sumatra's Riau province found evidence of fires on land licensed to PT Tunggal Mitra Plantations and PT Bhumireksa Nusa Sejati, said Sudariyono, the Environment Ministry's enforcement chief.

The two firms are owned by the world's largest palm oil planter by landbank, Malaysia's Sime Darby Bhd (SIME.KL), via its Indonesian subsidiary Minamas Plantation.

In a statement, Sime Darby said the latest satellite maps from the U.S. government agency NASA, overlaid with the company's own map of its concessions, showed no fires at Tunggal Mitra Plantations.

There were three fires in Bhumireksa Nusa Sejati's concession area. However, they were outside the company's operating area, said Sime Darby, which is backed by state funds in Malaysia.

Sime Darby cited Indonesian regulations, imposed in the 1980s, under which local farmers can use concession land without restrictions. The firm said it has not cleared land since April.

Some farmers illegally clear land using "slash and burn" techniques during the June to September dry season.

Fourteen people had been arrested this week for lighting fires, national police spokesman Boy Rafli Amar said. He declined to say if any were employed by the named companies, but added there was evidence of fires at concessions owned by all eight firms.

Sudariyono said investigators had visited concessions of all the firms and were using GPS data to establish the location of fires. They were focusing initially on "going after the local companies" and would pursue any links to parent firms later.

He declined to give more details, but said more companies would be investigated.

TOUGH PENALTIES

The Environment Ministry and the police are leading the investigation and say they will decide if there is enough evidence to recommend the attorney general's office pursue the case further.

A team of 58 police officers and nine officials from the Environment Ministry were on the ground in Riau, the epicentre of the fires, police said.

Action has rarely been taken against plantation companies since the first major Indonesian haze crisis in 1997, when smog disrupted shipping and air travel across Southeast Asia.

Under the 2009 law, a person or company found guilty of starting a forest fire can face up to 10 years in jail and 10 billion rupiah in fines.

A guilty company can also have their profits seized, operations shut down and be sued for damages.

Palm oil is a key ingredient for products such as cooking oil and biofuel. Global demand has nearly doubled in seven years to more than 51 million tonnes, with much of it produced in Indonesia and Malaysia.

Industry data show oil palms cover about 5 million hectares in Malaysia and more than 8 million hectares in Indonesia.

Among the other firms Sudariyono listed was PT Multi Gambut Industri, known officially in Malaysia as PT TH Indo Plantations.

It is a unit of the Malaysian state-linked Pilgrimage Fund Board. Kuala Lumpur-listed TH Plantations Berhad (THPB.KL), also a unit of the fund, manages TH Indo Plantations.