In November 2006, 93 NGOs in 27 countries signed on to a letter to Merrill Lynch, Australia, New Zealand Banking Group (ANZ), Cornell Capital, Development Bank of Singapore (DBS) and Cellmark about their involvement in UFS’s pulp projects in Kalimantan, Indonesia.
The letter, which is available here, expresses NGO’s “deep concern” regarding these banks and companies “current or potentially expanded involvement in these projects.” It points out the “tremendous level of environmental and social risk associated with the UFS and Kiani Kertas mills”. Perhaps most importantly, it raises the issue of the high level of political and financial risk associated with UFS’s pulp projects “due to the substantial involvement in these projects of ‘Politically Exposed Persons’, convicted felons, ‘Politically Exposed Companies’, and an impenetrable maze of Indonesian and European shell companies registered in the British Virgin Islands and Mauritius.”
(To give an idea of the complexity of UFS’s corporate structure: UFS’s wood chip mill is owned by Pacificwood Investment [Mauritius], which is owned by Shinning Spring Resources [British Virgin Islands], which is owned by Anrof Singapore [Mauritius] which in turn is owned by UFS.)
The NGO’s letter points out that European Union, the Monetary Authority of Singapore, and United States and Indonesian law requires full compliance with Financial Action Task Force (FATF) Anti-Money Laundering rules. FATF recognises a category of people which it describes as “Politically Exposed Persons”. These are:
“individuals who are or have been entrusted with prominent public functions, for example current and former heads of state, senior politicians, senior government, judicial, militaryofficials, senior executives of state-owned companies, major political party officials and their close associates and family members.”
The letter points out that there are several people who fit this description involved in one way or another in UFS’s proposed projects.
In 2003, Indonesia passed a law making banks and other financial institutions responsible for transactions which involve forest and environmental crimes. According to the letter, banks financing projects that involve illegal logging can be charged with money laundering.