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n environmental group is calling on two major manufacturing industries, Nestle and Unilever, to boycott tcrude palm oil (CPO) produced by the giant US agribusiness Cargill Group which it said has “encroached” on forests outside its concession area in South Sumatra.

Greenomics said on Wednesday that Nestle and Unilever should be consistent in not buying products from questionable sources, in the same way that was done with SMART, a unit of the Sinar Mas Holding Group whose CPO products were dropped for breaching Indonesian forestry and environmental laws.

Greenomics executive director Elfian Effendi said he had strong evidence that PT Hindoli, a unit of the Cargill Group, has conducted land clearing in a large swathe of forest outside the company’s concession area, a serious violation which carries hefty penalties, such as obligatory reforestation and fines.

Government should impose sanctions to deter others from committing the same offense, he said.

“The Forestry Ministry demanded that PT Hindoli pay Rp 4.25 billion in fines to the state but the company is not obliged to reforest the cleared land,” he said.

He added Hindoli’s offence has been confirmed by an audit by the Supreme Audit Agency (BPK) and by a recent investigation conducted by an American NGO, Rainforest Action Network (RAN).

RAN also found Cargill had four agrobusiness companies in the province but none has secured complete administrative and legal requirements for their operations, according to Elfian.

“At least three companies, including Hindoli, have yet to meet all administrative and legal requirements needed to run their operations in the province,” Elfian said, adding that manufacturing companies should obtain CPO from plantation firms which support government reforestation and conservation programs.

Cargill denied Greenomics’ claim that it occupies a large swathe of forest outside its concession area in South Sumatra. It said the company had purchased the land from farmers who had cleared the trees.

“Cargill did not deforest 1,976 hectares of land in South Sumatra as Greenomics has claimed. Prior to Cargill taking over responsibility for this land, it was farmland that had previously been opened up and cultivated by local farmers. When we became aware that we had developed farmland outside the boundary of our izin lokasi [location plan] a number of years ago, we brought this to the attention of Indonesian Forestry Department for resolution,” Cargill spokeswoman Maretha Sambe told The Jakarta Post here on Wednesday.

 She also said the company’s management has paid all of the financial penalties and it was now processing all of the necessary government permits to use the land.

 “We are aware of the recent report from the Indonesian Supreme Audit Agency [BPK] on the discrepancies with the fine we have already paid. We are also aware that the forestry department has issued a letter ordering us to pay the amount. We have received the letter from the Forestry Ministry on this and we are working with the ministry in an open and transparent manner to settle this matter,” she said.