Asia’s Hatfields and McCoys: A Rare Look Inside Pulp and Paper’s Dueling Dynasties

Source: Hatfield and McCoy Jerky

 

Asian Pulp & Paper (APP), based in Jakarta, Indonesia, holds the top spot as the world’s leading pulp and paper supplier. Chinese Indonesian tycoon Eka Tjipta Widjaja started the company in 1972, when he formed APP’s parent company, the Sinar Mas Group, with co-founder, Singgih Wahab Kwik, who was linked to the Suharto ruling family. Sinar Mas is one of the largest conglomerates in Indonesia. He is the patron of a global empire comparable to the Hatfield’s who controlled the lumber trade in Kentucky in the 1800’s.

Asia Pacific Resources International Limited (APRIL) ranks as the world’s second-largest maker of pulp and paper products. As a member of the RGE Group, which was founded by Sukanto Tanoto in 1973 and headquartered in Singapore, APRIL itself was formed in 1993 when it began plantation development and mill construction in the town of Pangkalan Kerinci, located in Sumatra’s Riau province. At the time, the town only had  200 households, yet it boasted more than 200,000 homes by 2010 thanks to APRIL. The company had successfully developed the local communities.

Now accounting for about 80 percent of Indonesia’s total pulp and paper output, both APP and APRIL have intertwined histories.

APP’s Widjaja has a net worth of $6 billion, and Widjaja’s second son, Singapore tycoon Oei Hong Leong, has a net worth of $355 million. In 2011, APRIL’s Tanoto had a net worth of $1.77 billion.

In 1975, the APRIL-linked Suharto, who was then-president of Indonesia, approved Tonoto’s request to open a plant after Tanoto convinced him of its potential economic benefits and both companies suffered considerable during the 1997 financial melt-down.

Celebrated by the environmental action groups consistently getting it wrong of the impending collapse both companies despite the claims made by all sort of extremist activists the two Indonesians control 80 percent of the global market, much to the dismay of foreign powers and their activists.

The Green industrial-complex of so-called green experts with heavy foreign funding emerged targeting the two competitors viciously with product boycotts, divestment campaigns. The Indonesian policy officials lack the comprehension, and some argue, the wisdom to protect the two companies which despite the allegations, innuendos and deliberate false reporting are a fixture in the embattled national economy of Indonesia.

APRIL and APP employing over 500,000 employees across the prime industry spread. Much to the dismay of the environmentalists who attacked both companies in a protracted campaign since 1995/96 both companies continue the global paper and pulp and palm oil market much needed quality in both paper and palm oil. The green action groups have without doubt harmed both, APP and APRIL and the national economy. 

SCANDALOUS SUCCESS

Since the 1970s, the two global powerhouses have faced political and personal drama, often seen as masterful moguls aging over decades and not unlike their western counterparts, and their second and third generations of great wealth – have grown up.

Widjaja’s four sons, who are in their 40s and 50s, hail from Asia’s “go-go” dancing years from the late 1980s through mid-1990s and therefore never learned the same lessons of hardship as their father. None of Widjaja’s children has been named as an APP successor. To make matters worse, in 1999 the Indonesian government kicked the Widjajas out of their own bank.

APRIL’s Tanoto gained a reputation for being street-smart and tough, and to combat negative press, he is known for generous philanthropic acts. Tempo was sued and lost a defamation suit filed by Tanoto who since then has been at war with the Indonesian conglomerate by the local paper. Tempo has a long said to be a leftist paper that lost since the post-reformasi period its direction and increasingly gathers to a foreign audience.

But in an open letter published on 16 February 2015 by the daughter of his brother who died in the 1997 plane crash, Tanoto faced harsh accusations by his niece. In an ugly spat over the spoils the niece used the foreign NGOs and Tempo to press more money out of her uncle. According to Forbes.com the dispute was settled in 2002 but seemingly the dispute continues to rage on much to the delight of the environmental groups. Her claims are more over money than principle.

INDONESIA’S HATFIELDS AND MCCOYS VERUS GREENPEACE

The saga of the Widjajas and Tanotos, two powerful families who dominate one of the major industries in Indonesia, is not unlike the legendary feuding families of the postbellum American south, the Hatfields and McCoys.  The metaphor grows even stronger with William Anderson “Devil Anse” Hatfield being the patriarch of a wealthy timbering enterprise.  It is generally agreed that it was Devil Anse’s uncle who fired the first shot in what would turn out to be a three-decades-long feud that would claim the lives of family members on both sides.  More than a century later, the feud between the Hatfields and McCoys remains synonymous with the perils of family honor, justice, and revenge.

In similar fashion, the Widjaja and Tanoto families have been bitter rivals for decades.  However, they share a similar challenge in that both APP and APRIL have faced brutal accusations from eco-groups, such as Greenpeace, over their companies’ deforestation practices, exaggerated human rights violation which turned out to be fabrication of imagination and abuses of the narrative by the eco-groups.

APP first fell to Greenpeace demands in 2013, when it radically declared that it would stop using any logs from Indonesia’s natural forests. Since then, it enjoyed a generally smooth relationship with Greenpeace that raised eyebrows within the environmental scene claiming Greenpeace has sold out for a hefty contribution and payment for services.

That is, until a farmer was killed on 28 February 2015 in a melee allegedly involving security guards employed by an APP subsidiary.  Within hours of the incident Greenpeace distanced itself from APP, suspending its cooperation with the company and proving true to its philosophy of “no permanent friends, no permanent enemies.” On 2 March 2015, Greenpeace threatened, “If APP doesn’t take this seriously, it will cost them their reputation.” Greenpeace is only adding to APP’s financial worries with its fair-weather friendship.

Aside from this bump in the road on what was until recently a not-so-rocky relationship, when it comes to APRIL, APP and Greenpeace behave like mischievous children. At a recent summit in Jakarta, Indonesia, a heckler shouting accusations at APRIL turned out to be a Greenpeace activist with dangerous liaisons. The activist was found to be a plant associated with a local socialist extremist currently serving a 16-year prison sentence for the execution-style murder of an APRIL contractor.

The action was paid by Greenpeace according to sources in Greenpeace but it is part of the overall plans to bring APRIL to its knees. Free along the lines, the enemy of my enemy is my friend; Greenpeace continues to drive the wedge into the Indonesian economy without any consequence or concern for others.

In January 2014, APRIL attempted to repair its eco-reputation when it announced that its mills would only take wood fibers sourced from plantation forests by 2019, a promise APP previously made on 31 August 2013. By the time APRIL meets the 2019 deadline, APP will have already been free of natural rainforest wood since 2013, according to the thinking of the NGOs.

However, checking the fine print, the Hatfield’s feud with APRIL is about market share losses APP has suffered by the actions of Greenpeace. In its localized Asian thinking the engagement with Greenpeace serves competitive advantage however the animosity between the two companies are exploited to the hilt by the green action groups and their agents provocateur.

Free along the motto, ‘the enemy of my enemy is my friend’, Greenpeace for now has subdued the Hatfield but at great cost. APP financial performance remains in the pits and the NGOs continue with a delay tactic attempt to delay the construction and activation of the largest mill in Southeast Asia by all means. Eventually APP may figure it out that the wait-and-see attitude by their distant cousins, APRIL is likely a better strategy than kowtowing to the green truth-benders and volley of agent provocateurs.

Even though APP more swiftly has given into Greenpeace demands, the strategy only monetarily helps its reputation in the erratic eyes of Greenpeace, who proves time and time again that they are only loyal to the cause.  In the end, APP’s losses might soon become APRIL’s gain. Hence Greenpeace must defeat the McCoy’s since a defeat will see a collapse of the green strategy.

By: Anne-Marie Gris

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