Toba/Indonesia (5/3). Protests by activists’ groups against the Singapore based but Indonesian owned PT Toba Lestari Pulp continues. The company previously known as PT Inti Indorayon and owned by the Indonesian tycoon family of Sukanto Tanoto has a long history of conflicts with the Indonesian government and local communities.
Owned by the RGE Group which includes PT Toba, Asian Agri and the controversial APRIL the protests are a continuation of grievances against the paper and pulp giant. The group made headlines of being convicted of the largest tax fraud in the history of Indonesia and new allegations by WALHI suggest tax issues remain an issue for the company. Informed industry insiders consider the company as a high-risk investment as management has lax attitude towards staff, contractors and communities. Activists concur and regularly warn to the public and the market about the risks doing business with the APRIL and APP.
The company was sued by its former CEO in Singapore for breaching his contract and suggestion a new tax investigation against some managers is underway.
“The company has not the best of reputation”, said a former contractor. “A yes, minister culture, fear and intimidation of staff is prevalent in the ranks. Many of the brains who built the success of APRIL, Toba and Asian Agri left because they do not have the confidence of the current the leadership.”, she added. “Many, even with high paying salaries, leave or left.”
The group underwent through a restructuring of management since Anderson Tanoto the scion son of the elderly tycoon has taken over. “He portrays himself a bit of a rich-crazy Asian type of guy, car racing, motorcycles in Bali, and helicopters are overshadowing the inexperience as a senior executive.”
New managers include two former Army officers from Singapore, a former accountant promoted to head APRIL, and an academic, now President Director in Indonesia. Counting on the military prowess Indonesian businesses are stacked with senior army officers having little actual industry experience but bring a Yes-commander attitude to the Chinese owned companies. But APRIL is not an exception.
“Having military experience is not a guarantee for success in a highly complex business”, says a paper industry insider. “Look at APP, the appointment of the former Intelligence chief of the SAF has not increased the sales for APP.” The APP products were pulled from the shelves in Singapore after the company was found violating environmental standards. APRIL escaped the wrath in Singapore.
A bitter dispute between APP and the Brazilian joint venture partners is making the rounds in the industry is seen as a test for the new generation of leaders in APP and APRIL.
The new management of APRIL, a former accountant Praveen Singhavi, now president of the APRIL Group, the paper giant and PT Toba has been plagued with allegations by communities. Many former and current employees view Singhavi poorly. Under his leadership a steady exodus of brain trust occurred.
“I have to please Singapore and Jakarta”, Singhavi was quoted to have said. Many decisions are based pleasing the owners, another source told the reporter. “He was promoted two ranks above his capability and three ranks above his skill.”, the source added.
The claims by WALHI, the Indonesian version of Friends of the Earth, is reflective of PT Tobas troubled past and uncertain future. The activists and local protesters calling on the government of President Jokowi to review the government position towards tax violations by the company.
Employment issues and a call on the government to form a union to fulfil the workers rights are another grievance.
Activists urge the indigenous rights are not recognized or protected. PT Toba has been accused to violate the indigenous rights in the concessions.
The two Indonesian paper giants control an estimated 80 percent of the global paper and pulp demand. European officials for long question the accumulation of too much power in the hands of two families calling in question if the Indonesian business is violation antitrust and anti-competitive laws of the EU.
Activists argue the latest protest in PT Toba are continuing to question the viability of the APRIL business model.