Tribes... A Middleman...
And Two Palm Oil Giants

101 East investigates how swathes of pristine Indonesian rainforest were bought for just $5 a hectare.


The Tribesman

Linus Omba is a leader of the Mandobo tribe who live in the heart of West Papua.

For centuries, tribes here have depended on the land for their spirituality and survival.

In 2012 their ancestral forest on this 3,000 hectare plot of land was bulldozed.

An Indonesian resource company called PT BIA converted it into a palm oil plantation.

Omba says this happened illegally without his tribe’s consent.

This was an injustice for all the Mandobo people of this forest. The company didn't follow the proper procedure."

Omba has receipts which show the company bought the Mandobo’s rainforest for just $5 a hectare.

The problem is - the tribe never sold it.

PT BIA’s contract was with two elders from the neighbouring Marind tribe.

When we confronted them with the historical evidence, the company told us that two people already claimed that they owned the land."

We spoke to the two Marind elders who signed the land deal and took money from PT BIA.

One of the elders, Damianus Yone Basik Basik, claims that he didn’t know that the Mandobo tribe’s forest was included in the sale.

He says his tribe was promised cars and housing in return for the land but never received these benefits.

Yes, I signed over the land. Mr Linus’ story is also true. I believe that they deceived me."

Basik Basik says he dealt with a South Korean land broker called Kim Nam Ku, the majority owner of PT BIA.

In a traditional ceremony, they split this pig’s skull to symbolise that a deal had been done.

Mr Kim Nam Ku was present when we did the ritual. He took the lower part and we kept the upper part. That is our contract."

Kim Nam Ku’s signature is on the documents that led to the sale and destruction of the Mandobo tribe’s forest.

In the years leading up to the deal, Indonesia lost more forest than almost any other country.


Source: Food and Agriculture Organisation

Over the last 30 years, the archipelago was extensively logged except for West Papua.

Slide to see the forest loss in Indonesia


Source: Hansen/UMD/Google/USGS/NASA, accessed through Global Forest Watch

Then just over a decade ago, the Indonesian government opened up West Papua to the resource sector.

The aim was to transform one of the country's poorest regions into a prosperous agri-business hub that produced food and biofuels.

Kim Nam Ku joined the rush to buy up land.


The Middleman

Kim Nam Ku has a lot of reasons to smile.

Since 2006, he has set up businesses to buy rainforests across West Papua, and sold them to palm oil companies for lucrative sums.

This photo was taken when he inked a land deal with local government officials.

I decided to do the business with big companies and eventually developed the land. I have expertise in the business area, the plantation development.That’s why I’ve been in Indonesia for 30 years now."

Kim Nam Ku’s right-hand man and local advisor was Nikolaus Mahuze.

The tribesman was paid a $300 monthly stipend to help Kim Nam Ku buy forests.

Mahuze says he witnessed many deals in which Indigenous communities were only paid $5 a hectare.

The source of our problems was his destruction of the forest and building of a factory. He is the source of our problems."

Kim Nam Ku’s company PT BIA acquired more than 36,000 hectares of forest in West Papua.

If he paid $5 a hectare as in other land deals, the forest would have cost him just $200,000.

But a leaked PT BIA business plan shows the company expected to earn more than $1 billion from timber and plantations on the land.

Based on industry data, a hectare of palm oil produces around $2,500 a year.

Palm oil is found in everything from chocolate to makeup to cleaning products.


The Politician

This former local government leader, Johanes Gluba Gebze, was instrumental in Kim Nam Ku’s land deals, according to Nikolaus Mahuze.

He served as a district regent from 2000 to 2010 and is now under house arrest for unrelated corruption offences.

Government maps show that on one day alone in 2007, Gebze granted land permits covering 160,000 hectares of rainforest.

Back then, Gebze said these deals would make West Papuans prosperous.

Now he tells us a different story.

It was exploitation from the beginning!


The Palm Oil Giants

Soon after Kim Nam Ku made these deals, Korean palm oil giant Posco International bought an 85 percent share in his company, PT BIA.

This agreement shows Kim Nam Ku made $10m from the sale.

PT BIA is now a subsidiary of Posco International, but Kim Nam Ku retains a 15 percent stake in the company.

He confirmed this on the phone.

I’m an advisor from PT BIA and still own some shares."

The forest was destroyed shortly after the Posco International takeover.

Given Kim Nam Ku’s continuing affiliation with the company, we ask Posco International who was responsible for the land dealings.

In a written response the company said, “PT BIA’s operations prior to the merger, are independent from Posco International’s operation.”

The company says the land was acquired through a fair process with Indigenous tribes in accordance with Indonesian customary law.

It claims Damianus Yone Basik Basik’s tribe and other communities received fair compensation and facilities for the land.

When asked if Kim Nam Ku was the main architect of land deals in West Papua, a company executive wrote, “Posco International is not in a position to answer this question.”

Another man is pictured in photos with the former politician Johannes Gluba Gebze and Kim Nam Ku.

At the time, he was a director of Korindo, West Papua’s biggest palm oil producer.

Korindo’s subsidiaries have cut down 40,000 hectares of rainforest across the province.

Kim Nam Ku’s former right-hand man Nikolaus Mahuze is one of several West Papuan tribesmen who say Korindo didn’t conduct business with them in good faith.

Mahuze now regrets selling some of his own community’s land to the company.

He says while Korindo’s investments have flourished, there’s been no rise in incomes or living standards.

They promise one thing today,
but a different thing tomorrow.
They do not care about our basic rights."

Kwangyul Peck, Korindo’s head of sustainability, denies those allegations.

We have been fair, we’ve been transparent,
we have been open
and we have conducted proper negotiations per the laws and regulations of the Indonesian Government."

Many of the tribe’s allegations were investigated for two years by the Forest Stewardship Council (FSC), of which Korindo is a member.

The timber certification body found Korindo violated the human rights of tribes through highly flawed land acquisition and compensation processes.

While the final report was heavily redacted, Al Jazeera obtained a copy of the original document.

The investigators found West Papuan tribes lost $300m in deals with Korindo.

And the company spent less than $5m on programmes to help the tribes.

Slide to reveal the full report

Korindo's head of sustainability, Kwangyul Peck, denies these figures.

The $300m revenue is pure fantasy.
That’s not the case at all.

Using industry data, Al Jazeera estimates that Korindo exported wood worth more than $327m from their projects.

In the redacted report, FSC investigators concluded that Korindo should lose its membership.

But rather than acting on that recommendation, the council instead warned Korindo it faced expulsion unless it made amends for the damage caused in West Papua.

Kwangyul Peck says Korindo will improve its practices.

I think we could have done more, we could have done better ... specifically I guess we could build more schools."


The $22M Payment

Kim Nam Ku also played a big role in helping Korindo.

These financial statements show a Korindo shell company in Singapore made a payment of almost $22m to an “expert in getting plantation rights”.

We ask Kim Nam Ku about this payment.

I can’t talk about this stuff right now.
Tell them to ask the company."

In a written statement, Korindo executives confirm the $22m consultant was Kim Nam Ku.

Korindo claims the payment bought it ownership of another of Kim Nam Ku’s companies, PT PAL, which owned almost 40,000 hectares of West Papuan rainforest.

That translates to around $560 a hectare.

There are two ways to enter the palm oil operation. One is approach the Indonesian Government that has the ownership of the land and go through the lengthy and complex regulatory process.

The other is to acquire a firm that has gone through the regulatory process and secured the rights to the land. Korindo Group chose the latter option."

We asked 10 anti-corruption experts to review the $22m payment. They all said it raised numerous red flags.

That’s because plantation permits have no official cost in Indonesia.

Bruce Searby is a former financial crimes prosecutor at the US Department of Justice.

Any consultancy payment of tens of millions of dollars in a calendar year is going to raise some questions."

There certainly are lots of bribery cases where the term consultancy is used as a euphemism for bribe payments through an intermediary or a “bag man”, for corrupt public officials."

Indonesian government officials declined to answer Al Jazeera’s questions.

Posco International and Korindo deny all allegations of misconduct.

After logging a combined 76,000 hectares of land in West Papua, both companies say they have stopped large-scale deforestation in the region.

The land deals are worth billions of dollars.

Kim Nam Ku refused our requests to comment further.

He made $32m buying and selling land in West Papua.

Watch the documentary