<!–GA_googleFillSlot(“Business_Story_toptext”);–>

KUALA LUMPUR: IOI Corp Bhd, the country’s second-biggest listed palm-oil company, is being scrutinised by an industry group following allegations about land disputes and illegal deforestation.

IOI was given 28 days to respond to the allegations, the Roundtable on Sustainable Palm Oil said in a statement on its website.

The group would consider further sanctions, including the suspension of licences for new certified sustainable transactions, if IOI didn’t deliver the required response by May 2, it said. IOI shares fell 17 sen, or 3%, to RM5.55, the most since Feb 10.

The dispute concerned plantation land in Sarawak occupied by IOI Pelita Plantation Sdn Bhd, which is 70% owned by IOI, the company said.

The complaints were made by “several non-governmental organisations (NGOs) and the local community of Long Teran Kanan in Sarawak,” the RSPO statement said.

The organisations weren’t named. Calls to the company’s head of corporate communications after office hours weren’t answered.

“The nature of the grievance covers two locations and three specific matters land dispute over native customary land leased by IOI for palm oil production in Sarawak; drained peat land on endangered wildlife habitat and clearing of forest area; and illegal deforestation,” the statement said.

“IOI accepts this decision and will work closely with RSPO in developing a plan to find an acceptable solution to the issue of compensation,” the company said in an e-mailed statement yesterday.

“However, IOI is concerned over the sustained actions by various NGOs and some online news websites, which seek to mislead public opinion on the issue by repeating various false statements and unfair allegations against IOI.”

RSPO certification indicates that palm oil used in a particular product is “produced without undue harm to the environment or society,” and that “volumes are traceable,” according to the group’s website.

“Current and ongoing certification” of IOI’s production had been suspended with immediate effect, the group said.

“IOI welcomes an independent organisation like RSPO to appoint representatives to observe the proceedings of the meetings between IOI Pelita and the natives and possibly mediate in the negotiation over the affected land area and the amount of compensation,” the company said.

Nestle SA, the world’s biggest food maker, and Unilever, the largest palm oil user, last year suspended purchases from Indonesia’s Sinar Mas Group after allegations from Greenpeace that the company was illegally destroying rainforests. An independent study cleared Sinar Mas. – Bloomberg