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Monsanto Bribes in Indonesia

Monsanto Fined For Bribing Indonesian Officials to Avoid Environmental Studies for Bt Cotton.
Food. Health. Bribery

ANTJE LORCH / ifrik 1sep2005

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On 6 January 2005, Monsanto (USA) was fined US$ 1.5 million for bribing government officials in Indonesia to avoid a decree that demanded an environmental risk assessment for the Bt cotton Bollgard. The US Securities and Exchange Commission (SEC) charged Monsanto with illicit payments in violation with the Foreign Corruption Act (FCAP), with bribery including US$ 50,000 in cash to repeal an decree requiring an environmental risk assessment, falsifying books and invoices, and “questionable payments” such as for the purchase of land and the design and construction of a house in the name of the wife of a senior Ministry of Agriculture official. Such payments of approximately US$ 700,000 were made to at least 140 current and former Indonesian government officials and their family members from 1997 to 2002 (SEC 2005).

Monsanto has agreed to pay US$ 500,000 to settle the bribe charge and other related violations, and to pay US$1 million to the US Department of Justice, to adopt internal compliance measures including an having an independent compliance expert and to cooperate with continuing civil and criminal investigations (SEC 2005)

The “financial irregularities”, as Monsanto calls the bribery, were discovered by Monsanto itself in 2001 and investigated internally before the disclosed to the US authorities in November 2002. The explicit case of bribery in order to avoid an environmental took place while the internal investigation was under way, and it was disclosed to the US authorities at a time when it was obvious that this specific bribery was not successful.

The employees were sacked, and in a press release Monsanto announced a new programme to comply with anti-bribery regulations. In Indonesia, the Corruption Eradication Commission (KPK) announced that it would also investigate the matter (Saraswati 2005).

In the main case that drew the attention here, the bribery appeared to be unsuccessful since the decree in question was not repealed. But doubts remain over the influence the continuous bribery of 140 officials over 5 years (1997-2002). What is clear, is that the Indonesian government showed a much more positive attitude towards Monsanto's Bt cotton then the Indonesian farmers.

Bt cotton in Indonesia The history of Bt cotton in Indonesia begins in 1996 when PT Monagro Kimia, a Monsanto subsidiary, started variety tests to find a cotton variety for cultivation in Indonesia, especially in South Sulawesi. Glasshouse and field trials with genetically modified, Bt cotton started in 1998, and in 1999 Bt cotton was approved and declared as environmentally safe by the Indonesian government. However, PT Monagro Kimia has been reported to distribute Bt cotton seeds since 1998 without proper approval. (GRAIN 2001, PAN AP 2001).

In February 2001, the government issues a decree to grow Bollgard Bt cotton (Bt DP 5690B, NuCOTN 35B) in seven districts in South Sulawesi. These plans met strong opposition from Indonesian farmers. Even the state Minister of Environment had repeatedly expressed his strong opposition and with reference to Indonesia's signing of the Biosafety Protocol. Before the Minister of Agriculture for the district government in South Sulawesi gave his agreement for the importation of seeds, the Minister of Environment said he would order Monsanto's Indonesian subsidiary PT Monagro Kimia to stop using GM cotton seeds (GM Watch 2004).

In March 2001, only five weeks after the decree to importing Bt cotton was issued, 40 tons of GM Bollgard cotton seeds were flown into Indonesia. The plane from South Africa landed on the airport's military area, tightly guarded by military to keep protesting farmers and press away (GM Watch 2004). The seeds were driven away under armed guard in trucks marked “rice delivery' to be sold to farmers in seven districts in the province (Down to Earth 2001a, b, FoE International 2004).

In August 2001, the NGO Coalition for Biosafety and Food Safety (representing six NGOs and supported by another 72) sued the government and PT Monagro Kimia in 2001 for allowing cultivation of Bt cotton without proper assessment and public consultation. They claimed it violated Indonesia's Environmental Law, since no environmental impact assessment was conducted, and that the decree was issued by the minister as a way of legitimizing past violations by the seed distributors, PT Monagro Kimia. The coalition lost the case in September 2001, but an appeal to the Supreme court is still pending (GRAIN 2001, PAN AP 2001, Down to Earth 2001a, b, Li 2004). In September 2001, the environmental ministry, however, issued a decree demanding prior environmental impact studies.

It is now know that during this period (1997-2002), Monsanto was bribing 140 government officials and family members.

Farmers protests continued; now also by farmers who grew the Bt cotton. Instead of the promised yield of 2 to 4 metric tons per ha, farmers just got 1.1 tons on average. A quarter of the over 4,300 ha planted with Bollgard cotton produced nothing at all. Even the Indonesian government revealed that more then 70 percent of the Bt crop locations did not produce the promised yields (GRAIN 2001, FoE International 2004). Farmers could not settle their loans with the Indonesian subsidiary of Monsanto which provided the seeds. Worse, the following year, prices for seeds were raised, but lowered for cotton, so farmers had higher production costs, produced less, and were paid less for their harvest (Li 2004).

While Monsanto blamed misplanting for the failure of the GM crop, local scientists from Indonesia's National Consortium for Forest and Nature (Konphakindo) see a combination of factors. Firstly the wrong pest was targeted. Bollgard is designed to resist Helicoverpa armigera but not Empoasca sp., the more serious pest in Sulawesi. The local dry climate was overlooked and a drought triggered a massive increase of another pest which badly affected Bollgard, although no other cotton variety. Farmers ended up spraying more pesticides to curb the pest infestation (Li 2004). Claims were made that Monsanto's GM cotton was being promoted in Indonesia through abuse of statistics to give a totally false impression of its potential yield (GM Watch 2004). In the end, farmers preferred to burn their fields instead of doing business with Monsanto.

The experience of Indonesian farmers matches that of farmers in India and Thailand which banned Bt cotton in 2000. Cotton production has a high chemical dependence, using about 10 percent of the world's pesticides and nearly 25 percent of the world's insecticides, so it is not surprising that it has been one of the most rapidly adopted GM crops since its commercial debut in 1996. However, even in the US, the homeland of Bt cotton, evidence is compelling and yield performances of Monsanto's Bollgard Bt cotton varieties have been eratic and disappointing. In some regions in the US, seed and pest control costs have been shown significantly higher for Bt cotton, while yields were the same as for non-Bt varieties. Pest control is still needed because Bt toxins only can make the plants resistant to caterpillars, but not to any other pest (GRAIN 2001).

Monsanto's permit in Indonesia was based on a limited, annual decree from the Ministry of Agriculture. The first approval in February 2001 did not require environmental testing, but later in 2001 the Ministry of Environment issued a decree requiring environmental impact assessment prior to Monsanto's cultivation of Bollgard cotton. Since such a decree was likely to have an adverse effect on Monsanto's business interests in Indonesia, Monsanto lobbied the environmental ministry to withdraw the decree. Sometime in February 2002, an employee of the consulting firm which represented Monsanto visited an senior official at his home and gave him an envelope containing US$ 50,000 in $100 bills. Despite the cash payment, the official never repealed the requirement of an environmental assessment of Monsanto's products (Saraswati 2005).

When the approval ended December 2002, Monsanto did not asked for a new permit for 2003 (Hajramurni 2003). In February 2003, farmers were no longer supplied with Bt cotton seed. According to Monsanto, its cotton business was no longer economically viable. In December 2003, the Indonesian Minister of Agriculture announced that Monsanto had pulled out of South Sulawesi. Indonesia the first Southeast Asian country to commercially approve Bt cotton was pulling the plug on Bollgard and switching to a locally developed non-GM variety (ISIS 2004).

Bribery and corruption might be a common feature in many countries to ensure that even normal procedures are undertaken, but this case lies different. For decades Monsanto has been claiming that their GM crops are tested and safe. Now it appears that Monsanto employees use bribery to try to buy the company out of the need for an environmental impact statement. To make matters worse, Monsanto tried to buy itself out of the requirements of environmental studies in a region where it had been shown that the environmental differences between the US and Indonesia were so big that Bt cotton varieties released earlier failed and had to be taken off the market.

The questions now go beyond Indonesia. If Monsanto finds it necessary to bribe at least 140 officials and family members for half a decade in a country that only makes less then 1% of its overall revenue (0.8% of the overall revenue of 5 billion USD, Monsanto 2004) - what is there to expect in other places where there's more at stake? All safety data for Monsanto's GM crops - in terms of human health - are provided to regulators in countries around the world by Monsanto themselves. As GM Watch (2005) asks: “If they go to corrupt lengths to avoid impact studies, what chances are there of data manipulation when it is totally under Monsanto's control?”

Or should we see it as a success story? The farmers and NGOs protesting against Bt cotton were right all along, and not even bribery in a country that is in the Top Ten of the most corrupt countries in the world could get Monsanto out of the need for environmental testing.

source: http://ifrik.org/index.php?id=52 1sep2005 
Mindfully.org note: the original article has many valuable links.


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