SECTION 3: CASE STUDIES OF NEW OIL PALM DEVELOPMENTS IN THE CONGO BASIN

3.1 CASE STUDY: ATAMA PLANTATIONS, REPUBLIC OF CONGO

A Malaysian corporation known as a ‘pipe- and some of it may fall inside, a planned coating specialist’ is purchasing Atama National Park and Ramsar site. There is Plantations SARL, which has a concession no evidence of social and environmental agreement to occupy 470,000 hectares of assessments having been carried out, yet mostly forested land in northern Congo. It logging of the area has started. Official plans to develop at least 180,000 hectares inspectors uncovered numerous breaches of for oil palm, which would be the largest regulations in the logging which has occurred oil palm plantation in the Congo Basin. No to date. The identity of Atama’s original publicly available maps of the concession owners (who retain a large stake) is shielded are available, but evidence suggests that through a web of ‘shell’ companies registered the forests designated for clearance mostly in secretive tax havens. Some of the same appear to be virgin rainforest that is habitat shell companies have been used in the past for numerous endangered species, including to mask illicit activity. chimpanzees and gorillas. The area borders,

Atama Plantations’ oil palm concession, Republic of Congo

Sangha FIGURE 4 Congo Sangha

Location of ongoing clearance, near Epoma, Sangha province

Makoua

Makoua

Cuvette-Ouest Cuvette-Ouest Cuvette Manga Cuvette

Owando Manga

Owando Google Maps Satellite view

KEY Atama concession area First areas licensed for clearfelling Proposed national park

24 THE RAINFOREST FOUNDATION UK SEEDS OF DESTRUCTION FEBRUARY 2013 3.1.1 BACKGROUND expects to develop this over a period nursery in one area of 5,000 hectares of 15 years, commencing in early at Epoma in Sangha65, while a second On 17 December 2010, after 19 2013. It is possible the final area of the 5,000 hectare section of forest in the months of negotiations, the Minister plantation may be larger, if additional concession in Cuvette has also been of Agriculture and the Minister of suitable land is found.63 signed off for logging and clearance.66 Land Affairs and Public Domain in the Republic of Congo signed a concession Atama is owned through a complex 3.1.2 WAH SEONG PURCHASE agreement with a company called chain of companies registered in Atama Plantations to ‘occupy’ 470,000 various secretive tax-havens (see In February 2012, Wah Seong hectares of federal land for the Figure 5 for a representation of the Corporation, a Bursa development of an oil palm plantation company’s corporate structure). (formerly the stock and associated industrial complexes.60 The Congolese licensee, Atama exchange) listed company, announced The majority of the land (402,637 Plantation SARL, which was registered its intended purchase of a majority hectares) is in Cuvette Province, while in June 2008, is wholly owned by 51% stake in Atama Resources Inc, the remaining 67,363 hectares are in an associated company registered thus becoming majority owners of the Mokeko District in Sangha Province.61 in Mauritius in July 2011, Atama oil palm plantation project in Congo.67 Eventual palm oil production is Resources Inc, which until recently Previously, Wah Seong has principally expected to be 900,000 tonnes was wholly owned by a company been involved in the manufacturing per year. called Silvermark Resources Inc, of specialist metal pipes for the oil registered in the British Virgin and gas industry. The company’s only The concession agreement is for an Islands (BVI) in 2007. Silvermark is, previous connection to oil palm in initial, extendable, period of 30 years. in turn, wholly owned by a company Africa was the supply of equipment The licensee has to pay royalties of called Tanaldi Ltd, of which there is for palm oil refineries,68 and this will CFA 2,500 (US$5) per hectare of almost no information. In addition, be its first venture into the oil palm planted land (half the rate which will Atama Resources Inc owns a second plantation industry. Even if only the eventually be paid by Olam in Gabon, company, Signet Plus SB, registered initial 180,000 hectares are planted, see section 3.2), from when palm oil in Malaysia in December 2011, which this new project would be the largest production starts, but is exempted provides ‘management and accounting oil palm plantation in the Congo Basin from customs duties or VAT on imports services’ for the Congolese plantation and would catapult Wah Seong into of equipment, and from all taxes company.64 A number of questions are the top ten largest oil palm growers on profits for the first five years of raised in the following text about the in the world. production. Thus far, feasibility studies ultimate ownership of Atama. have identified 180,000 hectares of The $25 million purchase of Atama by plantable land, which is an area 17 To date, Atama has begun clearfelling Wah Seong is almost as complicated times the size of Paris.62 The company forests for roads and an oil palm as the web of companies behind Atama. When the purchase is completed, Wah Seong will, through a specially formed subsidiary WS Agro Industries Pte Ltd, own 51% of Atama’s shares, while the original owner (Silvermark/Tanaldi) will retain 39% and another BVI-registered company named Giant Dragon Group will hold the remaining 10%.69 As of December 2012, the first phase of the purchase was complete, with Wah Seong holding 41.7% of the shares.70 More detail on the purchase and the BVI companies involved is provided in section 3.1.6 below.

Aka man, statement community forest, Samuel Dieval

25 SECTION 3: CASE STUDIES OF NEW OIL PALM DEVELOPMENTS IN THE CONGO BASIN

3.1.3 POTENTIAL ‘TIMBER GRAB’? The overall concession is split into two areas. The northern area, in Sangha province, is Stock-watchers have questioned how Wah a 67,000 hectare zone of mixed forest and Seong can afford the costs of developing savannah between a logging concession and the massive new oil palm plantation, which a major river. The much larger southern they estimate at US$650 million. One analyst area, in Cuvette, covers 520,000 hectares has suggested that the cost “could be partly and is almost entirely made up of primary offset by forest clearance such as sale of forest, most of it swamp forest75 (see logs”.71 This has often happened in the past Figure 4). Of this second area, large parts in Indonesia72. Evidence obtained by RFUK are flooded, so only the licensed 402,000 suggests that the forests Atama is planning hectares is expected to be available for to convert are indeed primary forests with the plantation.76 significant timber stocks. The potential profits from harvesting this timber may According to official reports, by October be one of the main driving factors behind 2012 the company had already harvested the development. almost 15,000 cubic metres of timber at its first development in Epoma in Sangha, yet No maps are publicly available for the had thus far only cleared 120 hectares.77 If “The forests Atama Atama concession. Wah Seong declined to most of it is primary forest, by a rough yet plans to clear provide these documents when requested conservative estimate, the 180,000 hectares by RFUK, citing commercial confidentiality. the company plans to convert could yield could yield timber RFUK has, however, obtained copies of timber worth more than $500 million.78 official government reports which describe worth more than the boundaries of the concession73 and Wah Seong has admitted to RFUK that, $500 million.” the boundaries of the two 5,000 hectare “timber extraction is a necessary part of areas for which the company has obtained the process to make available land for an authorisation to log and clear.74 The most oil palm plantation”79. The company has recent available forest maps and satellite stated to RFUK that it has considered “the imagery suggest that the majority of the sustainability criterion” before deciding to broader area the company plans to convert become involved in the Atama plantation is untouched, primary, closed-canopy tropical project, but has not provided further detail forest, much of it swamp forest. of what this involves.80

Atama logs from forest clearance for oil palm, December 2012

26 THE RAINFOREST FOUNDATION UK SEEDS OF DESTRUCTION FEBRUARY 2013 Far left: Signing ceremony for the Atama plantation development, Dec 2010 | Middle: Atama Director Chua Seng Yong at second signing ceremony, July 2011 | Right: Atama oil palm nursery, July 2012: JTV Congo

3.1.4 HUGE POTENTIAL FOR NEGATIVE hydrological balance of the Congo instead told RFUK that it was “invited ENVIRONMENTAL AND SOCIAL IMPACTS Basin’ and its, ‘great cultural, historical by the Government of The Republic and religious value to the resident of Congo” to cultivate oil palm in the As explained above, documents population’.85 Aside from the obvious country, that it seeks to “alleviate rural obtained by RFUK indicate that devastating environmental impacts for poverty through meaningful long term the majority of the area slated for biodiversity which would stem from employment”, and that it is helping “an conversion for the Atama plantation is destruction of the forest inside the emerging economy to be self-sufficient virgin rainforest. Much of this forest concession, the improved transport in food and energy supply without would almost certainly be classified network and migration of workers to trampling on the hopes and rights as being of ‘high conservation the area associated with of the Congolese people”.86 Given Wah value’ (HCV) according to standard the plantation development Seong’s failure to provide evidence definitions. Evidence from IUCN bring further threats to wildlife in to the contrary, it is likely that there (International Union for Conservation neighbouring areas (including the has been little or no consultation with of Nature) suggests it is also habitat for rest of the new National Park) from local forest communities or indigenous large numbers of endangered species, increased commercial poaching. peoples. including western lowland gorillas, classified as ‘Critically Endangered’, Congolese law requires an chimpanzees, and elephants.81 The environmental impact assessment to “WAH SEONG DID NOT intact swamp forests which make up be carried out for a project such as the majority of the larger southern Atama’s, yet Wah Seong declined to PROVIDE EVIDENCE TO section of the concession are part of confirm in response to queries from the Western Congolian Swamp Forests RFUK whether any such assessment Ecoregion, identified by WWF as one had been conducted. The company RFUK THAT THE FREE, of the most outstanding areas of instead stated that it believed it was biodiversity on the planet.82 the responsibility of the Congolese PRIOR, INFORMED government to ensure that the impacts Around 28,000 hectares of the of the plantation were considered CONSENT OF THE LOCAL allocated concession land appears to before issuing the licence to operate. overlap with a proposed new National PEOPLE HAD BEEN Park, Ntokou-Pikounda, which was Wah Seong also did not provide any announced in 2006 and is in the last evidence to RFUK that the social OBTAINED.” stage of formal establishment.83 The impacts of the project had been park is believed to contain one of the properly considered and addressed or highest concentrations of great apes the free, prior, informed consent (FPIC) anywhere in the world.84 The Republic of local people sought or obtained. It of Congo has recently designated the should be noted that the Republic of Ntokou-Pikounda area as a Ramsar Congo passed progressive legislation (wetlands of international importance) on the promotion and protection of site, noting its rich biodiversity, its indigenous peoples in 2011, which may importance ‘in maintaining the general be of direct relevance here. Wah Seong

27 SECTION 3: CASE STUDIES OF NEW OIL PALM DEVELOPMENTS IN THE CONGO BASIN

3.1.5 ILLEGAL LOGGING 3.1.6 COMPANIES REGISTERED IN THE BRITISH VIRGIN In October 2012, a team from the Sangha ISLANDS (BVI): UNCLEAR ULTIMATE OWNERSHIP “THE INSPECTORS province forest department made an As stated above, Wah Seong will purchase FOUND NUMEROUS inspection visit to the first 5,000 hectare a 51% majority stake in Atama, while two area in which Atama had been licensed to companies registered in the British Virgin BREACHES OF clearfell, at Epoma. The team found that Islands will, once the purchase is completed, Atama had subcontracted the logging to a own 39% and 10% respectively of the REGULATIONS IN second company, Lawoncongo SARL, and Congolese plantation company. THE LOGGING BEING had set up a sawmill at the site. By the time of the visit, the company had cleared The first of these two companies, Silvermark CARRIED OUT BY around 80 hectares for roads (including in a Resources Inc, was registered in the British neighbouring part of the concession, outside Virgin Islands in November 2007 and prior Atama.” the initial 5,000 hectares), plus a further 40 to the Wah Seong investment was the hectares for the sawmill, log storage yards sole owner of Atama. Silvermark stands to 87 and an oil palm nursery. receive $25 million from Wah Seong for its shares in Atama. The official stock exchange The inspectors found numerous breaches of announcement for shareholders published by regulations in the logging being carried out. Wah Seong states that Silvermark Resources More than 350 trees had been cut but not Inc is owned by Tanaldi Ltd and lists another recorded in official felling reports. Records company, Greenland Limited, as its sole were found to have been altered with tip-ex director. The stock exchange announcement and there was evidence that multiple logs provides proper details on the intermediary had been given the same log numbers (a companies, but it does not state where or method often used to launder illegal logs). when Tanaldi was registered, who owns it, The inspectors concluded that Atama was in or the identify of its directors.89 Tanaldi and breach of the terms of the forest clearance Greenland are noteworthy, as explained license, and issued official forestry infraction further below. notices to the company.88

Western Lowland Gorilla, Sergey Uryadnikov-Shutterstock

28 THE RAINFOREST FOUNDATION UK SEEDS OF DESTRUCTION FEBRUARY 2013 The second British Virgin Island The best documented example Tanaldi Ltd as being owned by Rizvi, registered company is Giant Dragon comes from UK court papers from and also mentions that a company Group Limited, registered in May 2008, which relate to a case in which called Greenland Ltd is connected to 2006. Once the purchase is complete, a British man was found guilty of him.96 In addition, a stock- it is due to hold 10% of the shares falsely claiming an inheritance and exchange filing from 2007 relating to in Atama (worth US$5 million), even holding the proceeds in a British Virgin another company, states that Brunei- though there is no evidence that it Islands registered company named registered Tanaldi Ltd is “ultimately was connected to Atama prior to Trixilis. The sole shareholder of Trixilis beneficially owned by Mr Rafat A. the purchase agreement and there was Tanaldi Limited, and the sole Rizvi”.97 Wah Seong strongly denies is no mention of it contributing to director a company called Greenland that there is any link between Atama the cost of the Wah Seong purchase Limited91 (the same names identified Resources or Atama Plantations from which it will benefit. The official as ultimately controlling Atama and Mr. Rafat Ali Rizvi. However, stock exchange announcement by through Silvermark Resources Inc). the company declined to answer a Wah Seong states that Giant Dragon According to the court documents for request from RFUK to identify the Group is owned by a company called this case, the defendant was “shown current ultimate beneficial owners Marston International Ltd, and lists a list of available companies” by a of Atama (through Silvermark and another company - Eastern Sky Ltd Singaporean firm which specialises in Tanaldi) or Giant Dragon Group. - as its sole director. Wah Seong’s setting up offshore structures, and stock exchange announcement of the one was selected.92 There was also a intended purchase of Atama does separate formal document through “THE SAME COMPANIES not provide further details of either which Greenland gave the defendant Marston International or Eastern Sky. full authority to operate the British WHICH CONTROLLED Virgin Islands registered company Wah Seong has, for the interest of through his Swiss bank account.93 its shareholders, published detailed This allowed the defendant to control ATAMA PRIOR TO WAH information about the proposed the funds without being named at purchase, but the information stops all in official records. Although there SEONG’S INVOLVEMENT short of actually identifying the ultimate is certainly no direct link between a current owners of the plantation, UK inheritance case and a Malaysian- HAVE BEEN USED TO (through Silvermark Resources/Tanaldi) Congo palm oil development, the or the ultimate owners of Giant Dragon similarities in the names and functions SHIELD THE IDENTITY Group. This information is arguably of the shareholder and director appear of material interest to Wah Seong’s too striking to be a coincidence. In OF INDIVIDUALS FOUND shareholders. However, Wah Seong has another case, a British Virgin Islands stated to RFUK that it has, “made all registered company investigated necessary disclosures to Bursa Malaysia by Thai authorities in 2006-07 for GUILTY OF SERIOUS under the Bursa’s Listing Requirements criminal offences was also controlled in respect of its venture into the through a company called “Green OFFENCES.” Republic of Congo”.90 Land Ltd” in Brunei, and set up by the In summary, the evidence from the same Singaporean offshore services above cases suggests that Tanaldi is a Research for this report suggests provider involved in the 2008 British shelf company used by more than one that Atama’s ownership structure fraud case.94 person, on more than one occasion, may have been deliberately created and that it has been used specifically in order to shield the identity of its Other sources suggest that Tanaldi for the purpose of hiding the identity ultimate owner or owners. There Ltd might also at one time have been of beneficial owners of assets. may be legitimate reasons for this connected to a Mr. Rafat Ali Rizvi, a structure, but RFUK has found British-Singaporean businessman, evidence that the same companies who has been convicted in which controlled Atama prior to Wah for grand corruption and is wanted by Seong’s involvement (and continue Interpol.95 An article, from 2010, on the to hold a large minority stake) have website of the respected Indonesian been used on more than one occasion news magazine Tempo lists a Brunei- to shield the identity of individuals registered company by the name of found guilty of serious offences.

29 SECTION 3: CASE STUDIES OF NEW OIL PALM DEVELOPMENTS IN THE CONGO BASIN

FIGURE 5 Wah Seong Corporation Unknown ultimate owner Unknown ultimate owner Atama Plantation Oil & gas infrastructure Ownership Structure. supplier Malaysia 100% Chairman & Majority shareholder - Robert Tan MD/CEO & Minority Tanaldi Ltd Marston International Ltd shareholder - Chan Cheu (Poss registered in Brunei* (Location and date of Long date of unknown) registration unknown)

100% 100% 100%

WS Agro Ind Pte Ltd Silvermark Resources Inc Giant Dragon Group Holding Company Holding company Holding company Singapore British Virgin Islands British Virgin Islands Nov 2011 Nov 2007 May 2006 Dir - Greenland Ltd Dir - Eastern Sky Ltd

39% (100%) 51% 10% (0%) Atama Resources Inc (0%) Holding company Mauritius July 2011 Dir - York S Lim Voon Kee Notes: - Tommy Lo Seen Chong Countries represent countries - Chua Seng Yong of registration (incorporation) Dates are registration dates 100% Dir = directors of relevant company 100% (in some cases companies are listed as directors) Percentages represent ownership proportions: Atama Plantation SARL Signet Plus SB Percentages in brackets are those prior to Wah Plantation licensee Mgmt & acc services Seong purchase; Percentages in orange are those (License issued May 10) for licensee which will exist once the WSC purchase is Republic of Congo Malaysia completed (as of December 2012, the purchase June 2008 Dec 2011 was half complete, with Wah Seong owning 41.7%) Dir - Chua Seng Yong Dir - Chew Weng Leong - Ma Lai Wah

Sources: For information with asterisks, see report text and associated references; information on Wah Seong ownership and directors from Wah Seong Annual Report, 2012; all other information from official Wah Seong announcements to KLSE, February 2012’

30 THE RAINFOREST FOUNDATION UK SEEDS OF DESTRUCTION FEBRUARY 2013 Atama oil palm nursery, Epoma, 2012

3.1.7 CONCLUSION populations has been sought. the identity of its ultimate owners The evidence which is available – even potentially from its current A company with no significant suggests that high conservation purchasers, Wah Seong. It could be relevant previous experience has value, intact primary forests are that there are legitimate reasons begun felling tropical forests in the being converted, including habitat for this structure, but the past Republic of Congo to make way for for endangered great-apes and circumstances noted above raise what could be the region’s largest forest elephants. And while Atama sufficient suspicions for this to be a ever oil palm plantation. Almost no has only just started clearing forests, matter of potentially serious concern public information is available about its contractors have already been to the Congolese government, to the project, and its new owners have found to be breaching regulations. Atama’s purchasers, to Wah Seong, declined to provide even the most and to Wah Seong’s shareholders. basic information, such as concession In addition to the serious issues maps. There is no evidence of any regarding potential social and environmental or social impact environmental impacts, questions assessments having been carried must also be raised as to why out for the plantation, or that the Atama appears originally to have free, prior informed consent of local been deliberately structured to hide

31