Indonesia: Wilmar-01/West Kalimantan

Date Filed
01 Jul 2007
Status
Closed
Phase
Compliance
Country
Indonesia

Case Tracker

Eligibility
Eligibility
Assessment
Assessment
Dispute Resolution
Mediation
Monitoring
Closed
Compliance
Appraisal
Investigation
Monitoring
Closed
Closed
CURRENT Status
Closed(DISPUTE RESOLUTION)
Closed (COMPLIANCE)
Closed

Project Information

Region
East Asia & the Pacific
Institution
IFC
Name & Number
Wilmar Group 25532 & 26271
Company
Wilmar Trading Pte. Ltd.
Sector
Agribusiness
Department
Manufacturing, Agribusiness & Services
Category
C
Commitment

$33.3 million (Guarantee) & $17.5 million (Loan)

Synopsis

Complaint

The Wilmar Group is a large agribusiness conglomerate specializing in the production and trade of palm oil, operating in Asia, Eastern Europe, and Africa. Since 2003, IFC has undertaken four investments in the Wilmar Group. In July 2007, 19 signatories from community groups, and local and international NGOs lodged a complaint with the CAO raising the following concerns about adverse environmental and social impacts of Wilmar Group operations with particular reference to Indonesia:

1. Land clearance without appropriate community approvals, legally required permits, or completion of Environmental Impact Analysis (EIA) processes;

2. Violation of national regulations and laws as well as the Principles and Criteria of the Roundtable on Sustainable Palm Oil;

3. Inadequate compliance with IFC operating procedures and due diligence requirements. 

CAO Action

Dispute Resolution process

During the course of CAO’s assessment of the issues raised in the complaint, Wilmar and community members chose to enter a dialogue process to help resolve the conflict.  A moratorium on further land clearance was announced by Wilmar Group, and the CAO team worked with the communities and Wilmar to build capacity for representation and negotiation.  After several rounds of dialogue, a settlement agreement was announced in late 2008 which contained the following provisions:

• Agreement for community access and use of land that had not been converted to plantations;

• Compensation for households for appropriation of land;

• Enhanced community investment funds for collective benefits and access to development opportunities for the broader community.

A joint Monitoring and Evaluation (M&E) team has been established to ensure implementation of these agreements.

CAO's dispute resolution team remained engaged for several more years to support monitoring and implementation of agreements by the parties.  Once the parties signaled that the final agreement has been substantially implemented during M&E team activities in June and July of 2013, CAO started to conclude its involvement.   CAO planned to close the case in early 2014 utilizing a formal process of engagement with the relevant stakeholders to reflect on the process to date.  With insufficient interest by key stakeholders regarding such a process, CAO determined to go ahead and close the case without such an engagement in June 2014.   

Compliance process

Questions relating to IFC’s due diligence were transferred to CAO Compliance for appraisal. In September 2008, based on the findings of the appraisal, the CAO determined that an audit of IFC was merited to examine whether IFC had complied with its standards and procedures. 

CAO released its audit report in August 2009, together with IFC's official response. The audit concluded that IFC had failed to apply its own standards, and that its actions were counterproductive to its mission and mandate and to its commitment to sustainable development. With regard to IFC's Wilmar Group investments, the CAO found that IFC applied a de minimis approach toward assessing each project‘s supply chain, and that commercial pressures were allowed to prevail and overly influence the categorization of the project, as well as the scope and scale of IFC’s environmental and social due diligence.

IFC acknowledged the shortcomings identified by CAO in its official response, and communicated an action plan to CAO on how to address them. As part of the action plan, IFC committed to develop a comprehensive strategy for oil palm investments, with specific focus on Indonesia. In September and October 2009, the World Bank Group President instructed IFC and the World Bank Group to suspend financing of oil palm projects until such a strategy had been developed. 

Subsequently, in March 2010, IFC embarked on a global consultation to inform its strategy and its future involvement in the oil palm sector. IFC also immediately changed its procedure for processing single commodity trade finance, embarked on re-assessing its exposure in Indonesian Oil Palm, and committed to report back to CAO on a quarterly basis on progress toward address the shortcomings identified by the CAO audit.  CAO participated in IFC’s global strategy consultations as an observer until IFC concluded the consultation process in February 2011. 

In April 2013, CAO released a final monitoring report based on information provided by IFC as of March 2013. CAO finds that IFC’s commitments and actions constitute a substantial approach to addressing the conclusions reached in the CAO Audit Report. CAO has determined that the audit can therefore be closed. 

Status

CAO closed both the dispute resolution and compliance processes. Relevant process documents are available under "View Documents" below in English and Bahasa.

A CAO compliance investigation in relation to another Wilmar complaint (Wilmar-3) is ongoing - see link below.

 

Updated: July 01, 2014

Case Documents

  • Dispute Resolution

    Complaint
    Procedural irregularities and standards violations in IFC support for Wilmar Trading
    Jul 18, 2007
    English
    Procedural irregularities and standards violations in IFC support for Wilmar Trading
    Assessment Report(s)
    Wilmar Status Report
    Feb 17, 0009
    English
    Wilmar Status Report
    Final Assessment Report, Complaint from Communities in Kalimantan and Civil Society in relation to activities of the Wilmar Group of Companies
    Mar 01, 2009
    English
    Final Assessment Report, Complaint from Communities in Kalimantan and Civil Society in relation to activities of the Wilmar Group of Companies
    Assessment Report, Regarding Community and Civil Society concerns in relation to activities of the Wilmar Group of Companies
    Dec 11, 0007
    English
    Assessment Report, Regarding Community and Civil Society concerns in relation to activities of the Wilmar Group of Companies
    Agreement(s)
    Memorandum of Agreement Co-Management of Land Utilization Between Sajingan Kecil Hamlet Community and Agronusa Investama Co
    Nov 01, 2008
    English, Indonesian
    Memorandum of Agreement Co-Management of Land Utilization Between Sajingan Kecil Hamlet Community and Agronusa Investama Co
    Memorandum of Agreement, Conflict Resolution of Land Utilization Between Community Members Of Senujuh Village and Wilmar Sambas Plantation, Co
    Oct 01, 2008
    English, Indonesian
    Memorandum of Agreement, Conflict Resolution of Land Utilization Between Community Members Of Senujuh Village and Wilmar Sambas Plantation, Co
    Additional Notes of The Results of Negotiation Between Senujuh and WSP Co. Pontianak
    Oct 15, 2008
    English
    Additional Notes of The Results of Negotiation Between Senujuh and WSP Co. Pontianak
    Close-out Report(s)
    Notes of the Monitoring and Evaluation Team Meeting for Implementation of the Agreement between WSP Co and the community of Senujuh
    Dec 12, 2009
    English
    Notes of the Monitoring and Evaluation Team Meeting for Implementation of the Agreement between WSP Co and the community of Senujuh
    Conclusion Report: CAO Ombudsman's work in Sambas
    Oct 01, 2009
    English
    Conclusion Report: CAO Ombudsman's work in Sambas
    Conclusion Report: CAO Ombudsman's work in Sambas
    Oct 01, 2009
    Indonesian
    Conclusion Report: CAO Ombudsman's work in Sambas
    Monitoring Report
    Jun 13, 2013
    Indonesian
    Monitoring Report
    Monitoring Report
    Jun 13, 2013
    Bilingual
    Monitoring Report
    Monitoring Report
    Jul 30, 2011
    English, Indonesian
    Monitoring Report
    Monitoring Report
    Jun 17, 2011
    English, Indonesian
    Monitoring Report
    Closure Report
    Jun 01, 2014
    English
    Closure Report
    Closure Report
    Jun 01, 2014
    Indonesian
    Closure Report
  • Appraisal Report(s)
    CAO Appraisal Report III "Fourth investment" for Audit of IFC
    Mar 01, 2009
    English
    CAO Appraisal Report III "Fourth investment" for Audit of IFC
    CAO Appraisal Report II "Group 2 Issues" for Audit of IFC
    Mar 01, 2009
    English
    CAO Appraisal Report II "Group 2 Issues" for Audit of IFC
    CAO Appraisal Report for Audit of IFC - Case of Wilmar Group
    Sep 01, 2008
    English
    CAO Appraisal Report for Audit of IFC - Case of Wilmar Group
    Audit Report(s)
    CAO's AUDIT REPORT
    Jun 19, 2009
    English
    CAO's AUDIT REPORT
    CAO's AUDIT REPORT
    Jun 19, 2009
    Indonesian
    CAO's AUDIT REPORT
    IFC's Response to CAO Audit
    Aug 04, 2009
    English
    IFC's Response to CAO Audit
    IFC's Response to CAO Audit
    Aug 04, 2009
    Indonesian
    IFC's Response to CAO Audit
    President Zoellick's Letter to International Accountability Project & Others
    Nov 25, 2009
    English
    President Zoellick's Letter to International Accountability Project & Others
    President Zoellick's Response to Forest People's Programme
    Aug 28, 2009
    English
    President Zoellick's Response to Forest People's Programme
    Letter to President Zoellick from Forest Peoples Programme
    Aug 14, 2009
    English
    Letter to President Zoellick from Forest Peoples Programme
    Terms of Reference for Audit of IFC - Expanded scope
    Mar 01, 2009
    English
    Terms of Reference for Audit of IFC - Expanded scope
    Terms of Reference for Audit of IFC
    Dec 01, 2008
    English
    Terms of Reference for Audit of IFC
    Monitoring Report(s)
    Monitoring and Closure Report: IFC's response to the CAO Audit of IFC's Investments in Wilmar Trading
    Mar 27, 2013
    English
    Monitoring and Closure Report: IFC's response to the CAO Audit of IFC's Investments in Wilmar Trading
    Monitoring and Closure Report: IFC's response to the CAO Audit of IFC's Investments in Wilmar Trading
    Mar 27, 2013
    Indonesian
    Monitoring and Closure Report: IFC's response to the CAO Audit of IFC's Investments in Wilmar Trading
    Monitoring and Update of IFC’s response to the CAO Audit of IFC
    Apr 22, 2010
    English
    Monitoring and Update of IFC’s response to the CAO Audit of IFC