CBI Group was founded in 1982 by a wealthy businessman, Haji Abdul Rasyid Akhmad Saleh (AR). At that time, the group went by a different name, Tanjung Lingga Group. During its several decades in the natural resource sector in Central Kalimantan, CBI Group has been involved in cases of deforestation, human rights violations, and land conflicts with local communities, as detailed in what follows. With at least 7 members of Abdul Rasyid’s family having served as governors, regents, and members of the legislature, the group’s majority owners also have significant political influence.

The CBI Group is listed on the Indonesia Stock Exchange (IDX) through one of its subsidiaries, namely PT Sawit Sumbermas Sarana (SSMS). However, AR’s family is the group’s largest shareholder.

In 2017, CBI Group’s landbank comprised 135,471 hectares, all in Central Kalimantan. Kalimantan Island is home to nearly 40 million hectares of rainforest, making it one of the world’s largest carbon sinks. Although deforestation in Indonesia as a whole has declined in recent years, deforestation in Kalimantan remains higher than in almost any other part of Indonesia, and it is currently increasing in East Kalimantan. The palm oil industry is among the leading causes of deforestation in Indonesia.

Drone footage reviewed by Lucida and interviews with Laman Kinipan Indigenous people indicate that CBI Group is connected to deforestation of land that has been inhabited by the Kinipan people since 1870 through its former subsidiary, PT Sawit Mandiri Lestari (SML). The Kinipan people continue the cultural traditions and customs that have been handed down through generations, such as farming and hunting. For them, the forest is a source of ironwood for personal building materials, forest honey in tapan trees, and traditional medicines.

The residents of Kinipan Village have resisted SML’s efforts to develop their land since they began in 2005, when villagers sent a letter to the Regent of Lamandau expressing their opposition to oil palm plantations. In spite of villagers’ protests, the Regent has since issued several required permits and approvals to PT SML. After land clearing activities began in January 2018, villagers invited PT SML’s management to meet to try to resolve their land tenure dispute; however, villagers stated in interviews that PT SML did not attend the meeting. More recently, in mid-2020, the villagers created a guard post and installed a blockade on the road that PT SML has used to clear the Laman Kinipan customary forest. This action resulted in the arrest of five residents of Kinipan and Batu Tambun Villages on charges of damaging heavy equipment and chainsaws used by PT SML.

The Kinipan people’s clash with SML came to a head this past August, when their customary leader, Effendi Buhing, was arrested by officers from the Central Kalimantan Regional Police on charges of ordering the equipment theft and violence. After his arrest, community members created a change.org petition and organized a “justice coalition” press conference, demanding the release of Buhing and five other Kinipan residents. In addition, Panglima Jilah, the leader of an Indigenous community defense force known as the “Red Forces” (Pasukan Merah), gave an ultimatum via a short video by threatening to deploy troops throughout Central Kalimantan if Effendi Buhing were not released. Effendi Buhing was released after about 24 hours.

Villagers have also alleged that PT SML is polluting the river that provides drinking water to the community and flows from the area currently controlled by PT SML. As evidence, the Kinipan People cite the fact that marine life is dying in unusually high numbers. Further testing is needed to confirm environmental and social impacts.

Strikingly, PT SML’s land use right (HGU) appears not to have met the legal requirements for issuance. Per Law of the Republic of Indonesia Number 39 of 2014 concerning Plantations, to do so, disputes regarding the status of SML’s concession should have been resolved before issuance, yet disputes concerning both the customary forests of the Kinipan people and the administrative boundaries between villages are ongoing. Similarly, the relevant regulation (Regulation of the Minister of Agriculture Number 98/Permentan/OT.140/9/2013 concerning Guidelines for Plantation Business Licenses) states that if there are Indigenous Peoples on the land to be certified, companies must involve the community in the measurement and mapping process. However, the measurement and mapping of lands included in PT SML’s HGU has never involved the Kinipan Indigenous People.

In addition to possibly violating Indonesian law, SML’s failure to refrain from development until relevant disputes were resolved and to involve the Kinipan people in the measurement and mapping process violates the policies of the many companies and financiers that require Free, Prior, and Informed Consent (FPIC) of affected communities prior to development.

SML’s palm oil plantation may threaten endangered species and crucial ecosystem services. According to its own assessment, SML’s plantation contains a 4,832.83 hectare High Conservation Value (HCV) area, which amounts to almost 18 percent of the plantation’s total area (26,995.46 hectares). The area contains populations of critically endangered species, ecosystems important for the provision of water and prevention of floods for downstream communities, as well as areas used by local communities for food and building supplies.

In 2014, PT Sonokeling Akreditas Nusantara conducted an HCV assessment on behalf of SML, a prerequisite for new planting by RSPO members. However, field investigations by the Environmental Investigation Agency and the Independent Forestry Monitoring Network (JPIK) found several indications that the company conducted the assessment improperly. One indication is that SML’s figure for the HCV area appears to encompass only those areas, such as mountains and riverbanks, where Indonesian law forbids cultivation of oil palm rather than areas selected because of their ecological importance. Another is that the assessment report notes the presence of the Sunda pangolin (manis javanica) in the concession but fails to identify it correctly as a critically endangered species. In addition, the HCV areas identified in SML’s assessment appear not to be sufficiently well connected to one another and to the nearby Belantikan Conservation Programme area and Lamandau Wildlife Reserve to sustain the populations of bornean orangutans, clouded leopards, critically endangered flora, and dozens of other endangered species these areas support.

The irregularities in SML’s HCV assessment and its failure to respect Free, Prior, and Informed Consent requirements in its dealings with the Kinipan People prompted EIA and JPIK to file a complaint with the RSPO in May 2015. Subsequently, SML’s then owner, PT Sawit Sumbermas Sarana (SSMS) – CBI Group’s only publicly traded subsidiary -was suspended by three of its major buyers, and its profits deteriorated by about USD 30 million in a two-quarter period. Ultimately, SSMS lost 81 percent of its customer base in 2014-2015. In December 2015, SSMS sold SML to PT Metro Jaya Lestari (MJL). Because MJL is not an RSPO member, the RSPO closed the complaint after the sale was finalized.

Though it is no longer a formal subsidiary of CBI group, PT SML retains convoluted and indirect ties to the group, a fact that has helped CBI Group’s owners and financiers to avoid scrutiny.

As of April 2020, SML’s only shareholders were MJL (99.9%) and PT Agro Jaya Gemilang (AJG) (0.1%) (per the notarial deed of April 21, 2020). Both MJL and AJG are owned by Afrian Fanani (51%) and Ahmadin (49%). Fanani is AR’s stepson, and Ahmadin is AR’s brother-in-law. In addition to being shareholders of PT MJL and PT AJG, Fanani is one of three shareholders at PT Surya Borneo Energy, and Ahmadin is a commissioner of PT Pelayaran Lingga Marintama – both subsidiaries of the CBI group. This means that, while SML no longer has any formal relationship to PT CBI or CBI Group, it is owned by the same family. The strong ties between SML’s owners and CBI Group raise questions around the independence of operational decision making.

As the chart shows, SML is far from the only CBI Group company that has engaged in deforestation.

PT SSMS, for instance, has continued to run afoul of its buyers’ NDPE policies since it sold SSMS in 2015. As a result, it was suspended by Unilever in 2017 and by IFFCO in 2018. At the time, the latter accounted for 20 percent of SSMS’s revenues. Its initial suspension by Wilmar, Golden Agri Resources (GAR), and Apical in 2015 combined with these subsequent suspensions, has likely contributed to the underperformance of SSMS’ share price versus relevant benchmark indices.

CBI Group’s record of deforestation began long before its expansion into the palm oil business. In the 1990s and early 2000s, it was involved in logging, much of it illegal. The group’s founder, AR, was reportedly the driving force behind profiting from valuable timber located inside Tanjung Puting National Park, including Ramin and Ironwood.

CBI Group is effectively controlled by the group’s founder, AR, and his family.

After he became a member of the People’s Consultative Assembly (MPR) of Central Kalimantan in 2002, AR’s nephew, Sugianto Sabran, the current Governor of Central Kalimantan, became the President Director of SSMS, as well as a minority shareholder. Ownership of the company has since been transferred to AR’s children, Jemmy Adriyanor, Jery Borneo Putra, Ernis Desidistrina, and Monica Putri. They own PT Mandiri Indah Lestari and PT Prima Sawit Borneo, the majority shareholders of the group’s parent company, PT CBI. AR remains on the Boards of Commissioners of PT CBI, PT Citra Borneo Utama, and PT Jery Borneo Puta.

Many other family members serve on the boards of directors and commissioners for CBI companies within the CBI Group, and some family members hold governance positions in multiple member companies. In addition, some member companies are linked through cross share ownership relations, in which company A holds shares in company B, which in turn holds shares in company A.

The family also has significant political connections and influence. In fact, four family members currently hold government positions. As mentioned above, AR’s nephew, Sugianto Sabran, currently serves as the Governor of Central Kalimantan. Another of AR’s nephews, Hendra Lesmana, currently serves as Regent of Lamandau for 2018-2023. Nurhidayah, AR’s sister-in-law, has been the Regent of West Kotawaringin since 2017. Finally, Muhammad Ruslan Ahmad Saleh (M. Ruslan), AR’s older brother, served as Chairman of the Golkar DPD Central Kalimantan from 2016-2019 and was re-elected last March for the 2020-2025 period.

The relationships between CBI Group’s member companies and the group’s relationship to AR are obscured through these complicated ownership structures, which raise concerns around conflicts of interest. Similar to the relationship between CBI Group and PT SML, this arrangement enables the group’s owners, offtakers, and financiers to avoid scrutiny.

CBI Group is listed on the Indonesian stock exchange by way of SSMS. Since 2018, PT CBI – the parent company of CBI Group – has been SSMS’s largest shareholder at 53.75 percent. Other shareholders include several prominent western banks, asset managers, and insurance companies, including Blackrock, State Street, Dimensional, NYLife, Avantis, and Nuveen (see table).

Given the extensive formal and familial connections between SSMS and the rest of CBI group, SSMS financiers are connected not only to SSMS itself, but also to CBI Group as a whole and, by extension, to AR, his family, and SML.

CBI Group is listed on the Indonesian stock exchange by way of SSMS. Since 2018, PT CBI – the parent company of CBI Group – has been SSMS’s largest shareholder at 53.75 percent. Other shareholders include several prominent western banks, asset managers, and insurance companies, including Blackrock, State Street, Dimensional, NYLife, Avantis, and Nuveen (see table).

Given the extensive formal and familial connections between SSMS and the rest of CBI group, SSMS financiers are connected not only to SSMS itself, but also to CBI Group as a whole and, by extension, to AR, his family, and SML.