Big Banks Imperiling Rain Forests in Asia
away from trans fats by Americans and Europeans.
Rajawali’s plantations have been accused by environmental and labor groups of deforestation and illegal burning. Indonesia is one of the world’s biggest palm oil producers, and forestry loss there and elsewhere ranks as one of the biggest single contributors to global warming.
Sebastian Sharp, a spokesman for Rajawali’s plantation arm, acknowledged that the burning and clearing on its West Kalimantan forest sites might be illegal, but said local communities encroaching on its properties and starting the fires were to blame. He said the company did not engage in illegal burning or clearing.
Credit Suisse declined to comment on its Rajawali deal. A Bank of America spokesman, Bill Halldin, said that the most serious accusations against Rajawali came after the 2014 loan, in which the bank played “a very small role.”
“Today, we would certainly consider more information before making any decision on any client,” he said.
Climate concerns have been brought into sharp relief by the impending presidency of Donald J. Trump, who has called climate change a hoax. Mr. Trump has said he will pull the United States out of the Paris accord, a commitment by 195 countries to take concrete measures to reduce planet-warming carbon emissions.
Daily emissions from Indonesia’s forest fires last year at times exceeded emissions produced by all economic activity i n America. A recent study found the fires caused 100,000 premature deaths in Southeast Asia. The World Bank estimates the fires cost Indonesia’s economy $16 billion.
Although deforestation has slowed in many parts of the world, forest clearing is on the rise in Southeast Asia. Indonesia suffers the world’s highest rates of forest loss, an average of almost 850,000 hectares a year, a study published in 2014 found.
Rajawali originally operated its palm plantation business, Green Eagle Holdings, as a joint venture with the French conglomerate Louis Dreyfus. But in 2014, Rajawali took the first step to consolidate the oil business under its control and invest in new infrastructure.
Its loans from Western banks were crucial. In January 2014, Green Eagle attracted a $120 million loan from a group of lenders led by ABN Amro (a spokeswoman declined to comment). In July of that year, it scored $235 million from a syndicate led by Credit Suisse. Bank of America also took part in that loan.
The financing allowed Green Eagle to buy out Louis Dreyfus. In November 2014, Green Eagle merged with another plantation operator, BW Plantation; Rajawali is majority shareholder of the resulting company, Eagle High Plantations.
The banks issued those loans as Rajawali was being accused of extensive forest and peatland destruction, illegal burning and use of child labor. Human rights organizations have reported that children as young as 6 work to support their parents in another Rajawali- controlled plantation in the Papua province.
Mr. Sharp, the Eagle High spokesman, blamed local villagers for the forest clearing and burning on its sites. He said that there were instances in which workers brought their children to plantations but that the company was “trying to brainstorm ways” to stop that.
The orangutan rescues continue. The world has lost 60 percent of its population of Bornean orangutans since 1950, according to the Interna- tional Union for Conservation of Nature. In July, the Bornean orangutan was listed as critically endangered.
In September, Rajawali’s plantation arm secured a $192 million loan from Bank Negara Indonesia, a state bank, to double the capacity of palm oil refineries in Papua and West Kalimantan.
Bank Negara Indonesia’s sustainability policies say that its clients must adopt “minimum environmental, social and governance standards.” The bank did not respond to requests for comment.