IOI Corporation Berhad (IOI) would like to announce that we have recently filed a challenge proceeding in the Zurich District Court of Switzerland against the suspension decision made by RSPO’s Board of Governors against us. Under Swiss Law, an action to challenge the decision of an association must be filed within 30 days after the decision was made and IOI had filed the action just within the 30 day timeline. Following that, the court will set a date for a conciliatory hearing by the Justice of Peace (JP) with both parties present. A formal legal action will be sanctioned by the JP only if both parties fail to reach agreement in the conciliatory proceeding.

The decision to challenge the suspension decision follows an appeal submitted by us to RSPO Complaints Panel more than a month ago which was not considered by the Panel. Our appeal was principally made on two aspects of the suspension decision: one is that the suspension decision which is based upon findings of breach in the Principles and Criteria for Sustainable Palm Oil Production in IOI Plantations should not cover the downstream processing units which are certified under a different set of rules; another is that the decision should not affect existing certified palm oil purchase and sales contracts which have already been entered into prior to the suspension decision.

The decision to challenge the RSPO Board’s suspension decision is a difficult and painful one for us to take: On the one hand, we have great commitment and attachment to RSPO, an organization of which we are a founding member and on whose Board we have been actively contributing since ten years ago; on the other hand, we feel that we have been unfairly affected by the extent and scope of the suspension decision which was recommended by the Complaints Panel and subsequently endorsed by the Board of RSPO.

The suspension of our RSPO certifications, which affected our prevailing RSPO oil contract commitments and caused significant disruptions to certain segments of the European and American food manufacturing sector, has inflicted many stakeholders of IOI: IOI’s 25,000 shareholders, the suppliers of IOI who include small holders, the customers of IOI and other users of certified palm oil down the supply chain, and lastly thousands of the employees of IOI who have put in so much effort over the last ten years in enabling all our Malaysian plantation units and downstream processing units to be RSPO–certified.

We therefore believe the scope and effect of the suspension decision is highly disproportionate to the findings by the Panel, and the decision has not duly taken into account the corrective actions taken by us and verified by an RSPO–accredited auditor during the one-year period between the complaint and the decision dates.

Nevertheless, IOI remains committed to implementing the action plan which is required for the lifting of the suspension. Since the suspension decision, we have had several discussions with the complainant, conducted a 4-day field verification visit with Global Environmental Centre (GEC), a specialist firm in peat and HCV matters, and have started to implement the improvement measures suggested by GEC. Beyond the actions in addressing the complaint, IOI has taken steps to enhance its sustainability practices and procedures. These include appointing an international firm Proforest as our sustainability consultant and implementation partner for our last remaining new development, deferring the clearing for this new development until end September to enable Proforest to verify our procedures and institute control measures, and lastly agreeing to test and compare the two existing HCS methodologies on the new development.

We regard the challenge of the RSPO Board’s suspension decision as a separate matter from taking the concrete actions required by the Panel to lift the suspension. The challenge action which has to be filed within the 30-day time period is not intended to influence the Complaints Panel decision on lifting the suspension. Rather, it is a last-resort measure to draw serious attention to the weaknesses in the decision-making process in certain parts of RSPO, which we have observed over the last one year, and hopefully will help to catalyse some needed improvements to the process and mechanism within it.

IOI remains committed to its membership in and the sustainability principles of RSPO. In fact, IOI has gone beyond the requirements of RSPO by signing an industry manifesto which specifies no HCS deforestation, no planting on peat and driving positive socio-economic impact for people and the communities. We remain committed to the principles of sustainability which are embedded in our Vision IOI as advocated by the founders of the Group since twenty years ago.

Dato’ Lee Yeow Chor
Chief Executive Officer
IOI Corporation Berhad