Investigation Report finds no corporate control between Paper Excellence and Asia Pulp and Paper

Statement last updated on 20 November 2024.

An investigation commissioned by the Forest Stewardship Council (FSC) reveals that Asia Pulp and Paper (APP) and Paper Excellence (PE) do not currently share a “relationship of control”. This is based on the findings of a third-party evaluation of the corporate linkages between the two corporate groups. The investigations concluded that Mr. Jackson Wijaya Limantara is the sole direct or indirect legal owner of the Paper Excellence Group Entities and holds the sole and exclusive right to control them. 

FSC worked with McMillan LLP to review PE corporate group through a robust process. The review was based on the Accountability Framework Initiative’s definition of corporate group, which has also been adopted by FSC in its Policy for Association (version 3).  APP’s corporate group review is part of FSC’s due diligence exercise, which is undertaken prior to entering into an agreement to remediate social and environmental harms conducted by APP since 1994. With the signing of this agreement, APP will commence their remedy process, which will be governed by the provisions of the FSC Remedy Framework. 

In terms of the methodology used in the investigation, McMillan LLP conducted a corporate forensic audit exercise to evaluate financial, managerial, and other elements of control between APP and PE in March 2024. This included examining the originals or copies (certified or otherwise identified as being satisfactory/credible) of:  

• Public and corporate records, documents and certificates of government, government department, ministry, agency, tribunal, commission, board, or other authority exercising regulatory functions of government (any such entity, a “Governmental Authority”)  
• Documentation provided by directors or officers of the PE Group Entities as it considered necessary or appropriate (“Corporate Authority”).  

Due to the confidential nature of the source documents examined in this exercise, FSC cannot share these documents. FSC also signed a non-disclosure agreement with PE, which prevents FSC from sharing any information about their corporate group.  

Reviews of corporate groups in the FSC remedy processes are not static, and FSC will commission additional reviews when new information about corporate structures makes this relevant. In the specific case regarding APP and PE, FSC International will complement the information obtained through the current review by commissioning an independent expert to conduct a second review of PE. This evaluation will review publicly available information about the company and its connection to APP, including by reaching out to concerned stakeholders. Further details will be shared in due course.

Background

In 2007, FSC disassociated from the entire APP corporate group. In the year 2009, FSC adopted the method of defining a corporate group, which is determined by a majority ownership relationship between a parent company and its subsidiaries, into its Policy for Association (version 2).

In 2022, FSC published the Policy for Association (version 3), in which the definition of a corporate group was changed. According to this new definition, a corporate group is defined according to the concept of “control” which is based on the Accountability Initiative Framework’s definition of corporate group. In 2024, as a part of the remedy process, FSC is using this definition of control to evaluate APP’s corporate group. The results of this evaluation will be published on FSC’s website in the coming months. 

In 2023, Greenpeace Canada and Auriga Nusantara submitted a Policy for Association complaint to FSC alleging that PE should be included within APP’s disassociated corporate group due to its corporate links to PE. However, upon assessing the evidence presented by the complainants, FSC found that the complaint does not fall within the scope of a Policy for Association complaint, as defined in FSC’s procedure for Processing Policy for Association (PfA) Complaints. The allegations did not include any mention of PE violating the Policy for Association by engaging in any of the six unacceptable activities listed in the policy.  

In November 2024, ties between APP and Domtar got closer due to the transfer of APP to Jackson Wijaya, the owner of Domtar. We are currently analysing the potential consequences of this change in ownership and will conduct a legal evaluation on the links between APP and Domtar to evaluate implications under the FSC Policy for Association. We will ensure a consistent application of the consequences of ownership changes and mergers and acquisitions as we have done in the past.  

Read the full statement here.