Malaysian giant IOI sues world body for financial ‘losses’

Unilever, Mars, Kelloggs and Nestle, according to a lawsuit, reduced their palm oil purchases from IOI following the suspension of its suitability certification in April.

KUALA LUMPUR: Malaysian giant IOI, one of the world’s largest palm oil producers, has served the Roundtable for Sustainable Palm Oil (RSPO) with a lawsuit for suspending its suitability certification last month in the wake of allegations that it deforested forests in Indonesia, according to The Guardian. The suit was filed in Zurich, Switzerland, where the roundtable has its seat.

Apparently, RSPO is insured against such claims but only up to RM10 million (£1.72m).

RSPO, a body set up by the industry and NGOs to address environmental concerns on palm oil production, in fact warned of disruptions to supplies of sustainable palm oil production after the IOI suspension as the company not only owned the largest palm oil refinery in Europe but was a major player in the industry.

Unilever, Mars, Kelloggs and Nestle, according to the lawsuit, reduced their palm oil purchases from IOI following the suspension of the suitability certification in April. “We immediately ceased sourcing from the plantations at the centre of the concerns raised,” said a Nestle spokeswoman.

Palm oil, used in everything from margarine and biscuits to shampoo, is also the most widely-used vegetable oil. Wilmar International, Golden Agri Resources (GAR), Asian Agri and Cargill are among the big palm oil producers that have adopted zero deforestation policies.

“The decision to challenge the RSPO board’s suspension decision is a difficult and painful one for us to take,” said Lee Yeow Chor, IOI’s CEO in a statement. “While the company was committed to the RSPO, it had been ‘unfairly affected’ by the suspension.”

IOI is claiming that it did no wrong and that the RSPO had no right to suspend its suitability certification. “IOI remains committed to the sustainability principles of RSPO,” added Lee in the statement. “In fact, IOI has gone beyond the requirements of RSPO by signing an industry manifesto which specifies no HCS (high carbon stock) deforestation, no planting on peat and driving positive socio-economic impact for people and the communities.”

It’s not known how much IOI has lost as a result of the suspension of its suitability certification.

However, it has been learnt that the palm oil giant told Darrel Webber, CEO of the RSPO, that it had “suffered commercial and reputational losses as a result of this injustice”.

“IOI prefers if this legal action is kept low profile,” said Webber and expressed concerns on “the amount of time and money that will be wasted in this process (defending the legal challenge)”.

Richard George, head of forests at Greenpeace UK, said in a statement quoted by The Guardian that “no one should be surprised that IOI has chosen to bully its critics. The RSPO and its members must meet this intimidation head on by excluding IOI until it has cleaned up its act and repaired the forests and peatlands it has destroyed.”

Malaysia and Indonesia are the top palm oil producers in the world. Firms owned by nationals in these two countries have routinely been linked to deforestation and slash and burn methods which have contributed to forest fires in Indonesia and haze in southeast Asia.