Munich (9/2- 44.44). Sukanto Tanoto, who has been called the top driver of deforestation in the world, used companies in Luxembourg to purchase the so-called “Ludwig” complex.
Nestled in the center of Munich the OCCRP report the link between Asian money, power, deforestation and suggestion of corruption continued as Business As Usual. The new generation of leaders of the powerful Tanoto clan has taken over, but the Organized Crime and Corrupt Reporting Program, a European-US funded joint program again, raises question about this mega billionaire family.
The corporate response was swift and… well nothing. So far, the bombshell fizzled out. One thing is likely OCCRP will likely have a lot more coming into the public space that is shared with investigators of the various agencies in Europe and the United States handling corruption.
The report is sensationalized. No doubt, the contributors from the Indonesian magazine Tempo and the NGOs have a long history of reporting critical of the Tanoto family. And rightly so.
The Tax evasion by Asian Agri alone was revolutionary for Asian standards, so was the capability to pay it off the penalties, which raises the question how much wealth these companies have amassed and really withheld from the Indonesian and Chinese or Singaporean governments?
The tax evasion case only provided an insight into the mindset of the company. The family is not known for showing mercy to the notoriously underpaid local staff. It created a desperate case turned whistle-blower, a TEMPO investigation, a book in English and Indonesian and finally a Government tax investigation that was defeated by half-hearted legal challenges that the family trying to bluff their way through. It was defeated in the administrative court and the rest is history.
Although the patriarch is in the crosshair anyone who ever dealt with the mega super-rich in Asia recognizes power, corruption as a ‘culture’, and Chinese money culture mixed individual greed goes hand in hand.
But the report by Auriga, a front for Greenpeace, Tempo, and their partners at the OCCRP is superficial. It again, lacks naming individuals identified with the issue. Who are the executives responsible for the community abuses reported? What is the accountability of the individual vice presidents and “managers” often promoted as Yes-minister types loyal to their pay checks and perks? Who is responsible for deforestation.
A company that holds a set of former general staff officers of the Singaporean army, extraordinarily little, accountability is seen. The financial officers are not named in the report. The question about the origins of the money is not addressed. The role of Allianz Insurance and its role with RGE and its brands APRIL, PT Toba or PT RAPP is not addressed?
NGOs lack the understanding of the inner works of this family business. Many honest and professional managers were booted out because they did not follow the megalomaniac Asian culture of kowtowing to the all-powerful bosses. Despite the glossy reports and corporate images in slow motion the reality on the ground is very different.
“Standing up to the managers trying to appease the family instead of highlighting the issues is not a strength of the company.”, said a former employee. “The executives do not want to bring problems to the family. A Singaporean culture of “we know it all” is prevalent.”, she said.
PT Toba Pulp Lestari, previously known as Indorayan is a known complicated problem since 1997. “The day I warned the APRIL president about the issue and he told me to shut up, because he did not want the family to know, was my last day. I warned this guy two years ago.” She was in the Medan office dealing with the local community issues.
She explains the management attitude as “Hubris”.
“The Singaporean boss fly in with the son [Anderson] make big waves and do not like to listen to problems.” According to her the issues with the community listed by the OCCRP report was already known to the Singaporean president of APRIL in 2019.
“Yes, the Toba problem was well known and documented”, said a former senior advisor confirming the story of the Medan office manager. “The Toba issue as we called could be solved but family surrounds itself individuals who serve their own interests. Who is in the favor of the bosses son is more important than fixing serious issues,” he added.
The result is that good, experienced staff, with decades of experience just walk out. Cost cutting is used to penalize staff, condescending, arrogant described another the climate. A well known story involved a veteran planter in charge of the nursery.
After an exchange with the 30-something newly minted owner, the Singapore president blasted the 30-year veteran raving to impress the owners son. The expatriate veteran left them sitting in the room.
The abusive culture within RGE/APRIL and its companies is typical said a business consultant. The well known management and staff turnover in APRIL are legendary in Asia. The case of the Canadian manager thrown in jail because he wanted to leave the company is one of such example of a long list.
Hence the culture of Waste, Abuse and Fraud is not addressed by the family owned business. The dictatorial leadership by the President has fostered and unhealthy climate.
“Once your people stop bringing problems to the boss you are in deep trouble”, said insurance underwriter in Singapore who deemed the company as ‘toxic’.
The OCCRP does not hold individual executives of the company responsible. It should. They are responsible for deforestation, corruption, tax evasion, and human rights abuses listed by the OCCRP and the NGO reporting.
NGOs believed if the owners are named and shamed the company will change. The strategy is considered by many a failure. ‘Why would anyone change”, said an activist with Transparency International, a Swiss based NGO which monitors corruption and money laundering issues.
“Like in any other organized crime syndicate or even terrorism the structure is not dismantled nothing will change”, she added. 24-hours after the APRIL/ RGE story went public the OCCRP broke another Luxembourg report. This time about the Serbian mafia money laundering operations.
Greenpeace’s tried to work with APRIL and APP to change the culture. However the appeasement tactic created an outcry within the NGO community leading Emmy Hafild at the time the Executive Director of Greenpeace SEA threaten to resign.
‘It does not work’, said a Medan based activist who is close to Tanoto investigation and Greenpeace.
Hafild, the fiery activists from the 1998 reformasi period has a point. So far, this tactic has only resulted reports like OCCRP counter sophisticated PR machines to manage the image for the Sukanto family. The root cause and culture remain unchanged, the executives are the same.
An ex-employee in Singapore remaining unnamed out of fear of his ex-employer said, “Anderson [Tanoto], is the now leading RGE businesses is a Singaporean but no record of his national service is ever known. Any other PR [Permanent Resident] or Singaporean will be hauled off to prison and face harsh jail terms. Even the ruling Lee family kids have served national service. How come he can escape NS [National Service]?”.
Singapore still has mandatory 2-year military service and draft dodging is strongly condemned by the government.
However, Anderson Tanoto is busy with his Audi racing course exploits in Nürburgring which is close to Munich spending his family fortune on fast cars and Ducati bikes in Bali is more fun.
According to Audi the 2018 Audi Sport R8 LMS Cup season, was the Tanoto first ‘real’ race, the latest progression of a hunger for motorsport which began a decade ago. One the other hand his Singapore directors fail to pay social security and pension plans is less important.
Some of the financial issues with this family goes as far back as the 1997 financial crisis as a 2005 article by Jan Willem van Gelder shown and more critical examination of the company as a whole is warranted.
The OCCRP piece does not address individuals of the operating companies such as the president of APRIL, the operating company for example, an Indian, now naturalized Singaporean, the former head of the Singapore Airforce, the newly appointed former Singaporean Army chief, now somewhere emerged in the RGE empire in Malaysia, and others in the inner circle who are the enablers escaping the issues raised by the OCCRP.
“The concentration of former ex-Generals working in APRIL and APP is just another sign that these companies change to a pre-1998 business model instead of modernizing is a concerning trend”, a reporter familiar with the OCCRP report said.
The report illustrates only a tip of the iceberg of problems with the reporting of the super-rich and powerful getting to continue business as usual. The Indonesian president Jokowi, once hailed the Obama of Indonesia has failed to curb corruption and recent polling shows an ever declining confidence level in what many see is the cabal of ex-army and police generals in the orbit of the Indonesian Chinese conglomerates.
In the world of murky Indonesia, the soft power strategies to ease countries is changing is not working. For a start the net value of 1.2 billion of Sukanto Tanoto according to Forbes, will unlikely result in any changes.
The usual question after a bombshell report like this is, Ok what’s next? Unless the European Union and its agencies does not take a stance truly little will change for the Indonesian or the European on the street.
We continue to buy expensive paper from countries who do not respect their people and are more concerned about the cricket season than tax payments for their staff, contractors, or villagers.
It is certain the concentration of power into two families controlling the global paper production would violate every trust and anti-competition law in the European Union and the United States.
The “Ludwig”-complex has a rich history of the Bavarian Royal Ministry of War, the address Ludwig Strasse 14 held the Bavarian State Archives, and was a prominent address throughout Nazi Germany. Today the German Allianz insurance company and Boston Consulting is housed in the building now owned by one of the most controversial families in Asia.
The link between Allianz and RGE is not yet clear since the insurance risk of RGE and its businesses would qualify as a high-risk or ‘toxic’ risk, according to an insurance risk expert interview for this report. ‘Taken the history of the family and opaque ownerships, links to tax evasion, corruption cases, land and community conflict as a gauge this company remains a high-risk client for anyone’.
The infighting in the company is well documented and played out in the public, one former chief executive sued the company, executives are known to short-change staff on their legal obligations with Singaporean authorities, and spats with the Tanoto’s ex sister in law over ownership shares after the death of his brother who died in the tragic Silk Air crash.
A former staff of the company was blunt, ‘Why would I want to work for this family which is surrounded with Yes-minister bosses?’, she said. When asked if she would work again for RGE if she had the chance, the answer was a simple, “Never”.
The RGE corporate message machine was quick to response, “that the acquisition of the “Ludwig” building located at Ludwigstrasse 21 in Munich, Germany, we can confirm that companies managed by RGE Indonesia have no connection with this transaction.”
Well, the answer where is the money than coming from is not answered.
After all, 350 million euros is no pocket change. The RGE report by OCCRP provides serious questions about the origins of the money and its connection to the executives of RGE and the role in PT Toba Pulp Lestari, a company embroiled in controversy since 1997.
Violence, riots, a stoppage by presidential orders, links to the former Suharto regime and decades of community violence leaves more questions about the flow of money from Indonesia. Executives have been repeatedly investigated for corrupt practices.
EU officials off record said that the European Union member states taken this report very seriously and are for some years now aware of the company and its history of questionable issues.
One official remarked, “anyone with this history of well documented high-risk lifestyle as a company will be facing public scrutiny by EU agencies. In particularly if a hint of money laundering is suspected in today’s client the EU, the public and the market taking a dim view.”
When questioned if the EU will investigate and if found evidence will act the official replied, “Yes, it’s already addressed and tabled in a variety of law enforcement agencies.”, he commented without divulging more details.