With a Transparency Score of Only 3.50 Points, What is the Condition of Indonesian Palm Oil Companies?

Transparency International Indonesia (TII) has compiled transparency scores for 50 palm oil companies in Indonesia. Overall, the compiled score reached only 3.50 points out of a scale of 1-10.

TII states that this score indicates that the average score, falling below the median, is not sufficiently good in revealing the transparency of the companies' political activities.

The transparency of reporting and the involvement of companies in the political governance of the palm oil commodity, according to TII, urgently requires improvement in the governance of this sector, which is rife with political factors and injustices impacting the community.

"Therefore, in realizing efforts towards fairer and more sustainable palm oil commodity governance, the relationship between corporations and the government also needs to be regulated and monitored to prevent political corruption and conflicts of interest," wrote TII in its report.

Based on TII's findings, only 26 companies, or approximately 52% of the 50 palm oil companies, have a company-wide anti-corruption commitment. This commitment applies to all levels of company employees.

Furthermore, only 4 companies, or 8%, have an anti-corruption program applicable to all company staff, including the board of directors and commissioners.

(See also: 10 Largest Palm Oil Companies in Indonesia in 2020, SMART in Top Position)

Next, TII explains that only 7 out of 50 companies, or 14%, hold Roundtable on Sustainable Palm Oil (RSPO) certificates at the global level and Indonesia Sustainable Palm Oil (ISPO) certificates at the national level.

These two certificates are mandatory standards and certifications for palm oil companies to operate in Indonesia.

TII also mentions that only 5 companies, or 10%, are willing to disclose detailed tax data in the country where the company operates. TII regrets this low percentage.

"In fact, tax data disclosure should be necessary to avoid the flow of dark money and money laundering that could be carried out by companies," wrote TII.

The phenomenon of revolving door practices in the public and private sectors has become a global concern for TII to prevent conflicts of interest and the opening of opportunities for corruption.

However, only 1 out of 50 companies, or 2%, has revolving door regulations.

TII also stated that 34 companies, or 68%, reported beneficial owners to the Ministry of Law and Human Rights (KemenkumHAM).

However, of those 34 companies, only 5 companies have reported owners by declaring a legal person as the beneficial owner of the company, not reporting individual names.

In conducting the assessment and data analysis, there are six assessment dimensions encompassing 29 indicator questions as a reference for assessment in this report, namely:

* Anti-corruption program
* Corruption prevention and inclusivity
* Responsible lobbying
* Revolving door practices
* Sustainability and certification standards
* Data disclosure

TII explains that each assessment dimension has indicator questions weighted at 2, 1, and 0 points.

"The awarding of scores of 2, 1, and 0 to companies is also based on justifications for evidence that can be provided by the company through publicly available documents," wrote TII.

Data collection and analysis of companies were conducted from August 2022 to November 2022.

(See also: Despite Export Decline, Domestic Palm Oil Consumption Increased in 2022)