Source: kaindonese Instagram account.

S’pore cannot compel GIC and Temasek to abstain from investing in haze-linked companies?

A Parliamentary question by Workers’ Party (WP)’s Member of Parliament Leon Perera regarding Singapore sovereign wealth funds GIC and Temasek Holdings’ possible investments in haze-linked companies was highlighted by the party’s unofficial support Facebook page One WP, One SG on Wed (18 Sep).

Over three years ago, Perera asked Finance Minister Heng Swee Keat if the Government was involved in monitoring GIC and Temasek’s investments so as to ensure that neither were investing in haze-linked companies – and if they were, how much did GIC and Temasek invest in said companies. He also asked Heng as to how GIC and Temasek will ensure that the funds invested will not contribute to activities that cause haze.

 

In a written reply to Perera on 28 Jan 2016, Heng said that while the Government oversees the performance of GIC and Temasek’s overall portfolio, their respective management teams are responsible for observing the two companies’ individual investments in particular.

“GIC and Temasek operate on a purely commercial basis in order to maximise long-term risk-adjusted returns, and the individual investment decisions are fully independent of any Government interference or influence. This is an important governance principle that we seek to maintain,” he added.

Heng also said that the investments of GIC and Temasek are geared for “long-term returns on a sustainable basis”, and that investing in companies with “environmentally unsustainable practices” such as those involved in open burning for land clearance “could negatively impact the commercial value of the investments over the long term”.

“Temasek has stated that it fully supports zero-burning policies for land clearance, and would urge palm oil companies and plantation owners to do the same.

“GIC has also informed the Government that the palm oil companies in Indonesia that GIC invests in have confirmed that they observe zero-burning policies for their plantations,” he said, adding that GIC’s investment teams engage closely with the management of the companies it invests in.

Does the recurrent haze issue demonstrate the possible ineffectiveness of Singapore’s Transboundary Haze Pollution Act?

Despite the enactment of the Transboundary Haze Pollution Act (THPA) in 2014 and its subsequent enforcement in Sep 2017, no legal action was taken against a pulp and paper company or its suppliers, as the National Environment Agency (NEA) did not succeed in obtaining information from the firm.

Jakarta-based Asia Pulp and Paper (APP) was served a legal notice under Section 10 of the Act in Sep 2015, in which NEA requested information from the firm on four of its suppliers, as fires had been detected on their lands.

NEA said in Mar 2017 that APP had been opaque with its information. Investigations remained inconclusive as a result.

The Straits Times reported Indonesia’s Environment and Forestry Minister Siti Nurbaya Bakar as saying at a climate change event in Jakarta three years ago that THPA is a hotly debated and “controversial” law among officials from Asean states, particularly those affected by the haze such as Singapore, Malaysia, Brunei and even Indonesia itself.

Thus, Singapore’s legal action under THPA against firms found guilty in causing the haze was thus an act that goes against “mutual respect” towards Indonesia.

Singapore, added Siti, should not step into Indonesia’s legal domain on the issue of forest fires as “there was never a bilateral agreement between Indonesia and Singapore”, adding that the Asean agreement on transboundary haze pollution is a “multilateral” one.

Then-Minister for the Environment and Water Resources Vivian Balakrishnan told Parliament in Aug 2014 – two months after Siti’s comments – that while “States have a sovereign right to exploit their own natural resources pursuant to their own policies” under the principles of international law, they “also have a responsibility to ensure that the activities within their jurisdiction or control do not cause damage to the environment of other States or areas beyond the limits of national jurisdiction”.

“For the lawyers in this House, you will also be aware of this principle called the Objective Territorial Principle, which basically gives us the right to take action against people whose irresponsible actions elsewhere have caused harm within Singapore.

“There were also questions on how exactly we are going to apply the extraterritorial provisions. Maybe it might be best explained by me citing a hypothetical example. For instance, this Bill allows us to act against errant foreign entities, and it gives us the legal power to serve notices on these entities – and this is an important point – including those with no assets in Singapore and no presence in Singapore.

“The notice will be served personally on an officer of the entity when the officer or the partner of that entity is within Singapore. The National Environment Agency (NEA) will work closely with the Immigration and Checkpoints Authority (ICA), so that we will know when such a person is in Singapore.

“We will serve the notice to him or her when he or she enters Singapore. Where necessary, the Public Prosecutor could apply for a court order to require the person to remain in Singapore to assist in investigations.

“Failure of the entity or of the officers of that entity to furnish information and the documents which we require for investigations – if they fail to furnish information and documents without a reasonable excuse – would be an offence, and the officers of such companies who come into Singapore may be charged in court and be liable on conviction to a fine or imprisonment, or both,” said Balakrishnan.

Balakrishnan maintained that THPA is not aimed at substituting “the laws and enforcement actions of other countries, but it is to complement the efforts of other countries to hold companies to account”.

He added: “We, in Singapore, cannot simply wait and wishfully hope that the problem will be resolved on its own. The Singapore Government would want to send a strong signal that we will not tolerate the actions of errant companies that harm our environment and put at risk the health of our citizens”.

Under THPA, companies involved in activities – such as open burning – outside Singapore that result in haze spreading to the Republic can be fined up to S$100,000 per day of haze pollution linked to said activities, or to a total maximum aggregate of S$2 million.

In addition to criminal liability, the Act also creates statutory duties and civil liabilities that companies must abide by, failing which the companies may face lawsuits for any death, injury, physical damage or economic loss of any individual in Singapore “whether or not that conduct is also actionable in the foreign jurisdiction where that conduct occurred”, as stated in Section 6(4) of THPA.

It can be theorised that the problems in applying THPA are largely due to the principle of extra-territoriality and the Asean agreement taking precedence, given that THPA is still, in essence, a domestic law that was drafted and passed by the Singapore Parliament alone, and not a bilateral agreement as the Indonesian Environment Minister had argued.

Given the case, one would question the role and purpose of enacting THPA in the first place, given that Singapore is still unable to take companies such as APP to task for contributing to – or even creating – the haze problem, despite Balakrishnan’s explanation regarding the scope of the Act.

S’pore-based unit Sampoerna Agri Resources Pte Ltd plantation sealed off by Indonesian govt, plantation owners risk prosecution

Meanwhile, AFP reported on Tue (17 Sep) that Indonesia had warned owners of plantations — including Malaysia and Singapore-based firms —  that they could be prosecuted should evidence of illegal burning in connection with them be discovered by its authorities.

The day prior, authorities announced the arrest of some 185 people who were suspected of being involved in activities that led to fires spreading across certain areas in the archipelagic nation.

National Police spokesman Dedi Prasetyo told reporters in Jakarta that “Indonesian Police will enforce the law against anyone who is proven to have carried out forest and land burning, whether it was done intentionally or through negligence”.

The Straits Times reported last Fri (13 Sep) that one Singaporean firm was one of the 29 companies that had their plantations sealed off by the Indonesian government after fire was detected in their concessions.

Singapore-based firm Sampoerna Agri Resources Pte Ltd owns two-thirds of Indonesia’s Sampoerna Agro, which was established by the family of Indonesian billionaire Putera Sampoerna, the tobacco heir to the cigarette empire established by his grandfather Liem Seeng Tee, known as the cigarette king of Indonesia.

Sampoerna Agri Resources Pte Ltd operates the palm oil plantations through a listed subsidiary in Indonesia named PT Sampoerna Agro Tbk. Its office is located at Haw Par Center along Clemenceau Avenue, according to Bloomberg.

Environment and forestry minister Siti Nurbaya Bakar reiterated that the government will prosecute a number of these companies as a means to deter future potential offenders.

Indonesian Environment and Forestry Ministry’s director-general for law enforcement Rasio Ridho Sani told the media that apart from levying criminal charges, the Indonesian government would be taking other steps against any errant companies found to have illegally involved in open burning. He said not only would their operational permits be revoked, they would also have to pay compensation for the burning and restoration of ravaged areas.

The authorities have identified four companies as suspects and are in the process of identifying individuals responsible for the fires, Rasio said, adding that investigations would also be carried out against the companies whose plantations were sealed off.