B.C. under pressure to cut LNG deal with notorious Asian billionaire

B.C. Premier Christy Clark’s all-out push to ignite a brand new Liquefied Natural Gas (LNG) industry on Canada’s western shores to feed an energy-hungry Asia isn’t going so well.

The plan for a massive industrial transformation of northern B.C., that's been described as akin to the early days of the Alberta oil sands build up, is floundering.

Of an astonishing 19 LNG export terminals and six pipeline proposals, none have reached a final investment decision. Most spectacularly, the Lax Kw’alaams First Nations voted unanimously in May against a $1-billion offer to embrace a Petronas-led complex in Prince Rupert. Worries include fracking, air pollution, and salmon impacts.

So, for a premier who pledged to use the LNG bonanza to wipe out the provincial debt and create 100,000 jobs, the hydraulic political pressure is on to crack an LNG deal—any deal, and soon—before other countries, such as the U.S. and Australia, beat Canada to the punch.

Some fear this could lead the province to approve an LNG deal with Indonesian billionaire, Sukanto Tanoto, whose massive-tax evasion and rainforest destruction record across the Pacific has put his business reputation into serious question.

“We should not, in my mind, be doing business with people like that,” said Squamish, B.C. Mayor Patricia Heintzman on Friday. "It’s difficult for the community to have trust that this person will not cut corners or be disrespectful to our environment.”

The District of Squamish, population 17,000, is slated for Mr. Tanoto’s "Woodfibre LNG" terminal on the site of an old pulp mill that ceased operation a decade ago. The new natural-gas-export operation, if green-lighted with a B.C. environmental permit in just weeks, would be seen from the awe-inspiring Sea-to-Sky highway between Vancouver and Whistler.

But for an environmentally conscious community hoping to transform the fjordal estuary’s post-industrial revival of wildlife —including orcas, herring and bald eagles — into a world-class eco-tourist destination, the LNG plant doesn’t fit into the picture. Nearly 2,000 tourism buses visit the area annually, a 40 percent spike over the year before.

Crowded city council meetings about Woodfibre LNG have flared with angry citizens. The council of the neighbouring West Vancouver—one of the wealthiest municipalities in Canada—unanimously voted to ban the project's LNG tankers in Howe Sound. Forty of the tankers per year (or 80 transits) would be needed to transport the gas to China.

Yet Mayor Heintzman knows that local government opposition matters little. The province makes the final decision, and analysts have long seen the LNG project as an early favourite for approval, due to its small-scale, versus the giant terminals proposed up north.

“It’s always been seen as the one [LNG project] that’s most achievable,” said the mayor. "As the other ones drop off, I think the pressure does increase for its approval.”

And while B.C.’s other LNG projects would be owned by giant energy companies —such as Shell, Exxon, Chevron, Mitsubishi and several Chinese, Japanese and Malaysian oil companies —Mr. Tanoto’s sole ownership has raised eyebrows with locals.

Billionaire’s business record

Sukanto Tanoto is the 65-year-old chairman of the $15-billion Royal Golden Eagle empire —a global conglomerate running Asia Pacific businesses ranging from palm oil, to paper, to power generation.

His palm oil company, Asian Agri, was ordered by the Indonesian Supreme Court to pay $205 million USD in fines in the biggest case of tax evasion in the country’s history. The scandal, involving a whistle-blower financial controller turning in thousands of corporate records to tax authorities, was chronicled by an Indonesian investigative journalist, Metta Dharmasaputra, in the book “Key Witness.”

The Indonesian tax department found many more of Tanoto's company records —1,400 boxes (about 9 truckloads) —hidden in a "lamp shop," Dharmasaputra said, in an email from Jakarta on Monday.

As part of a five-page response to the National Observer, Mr. Tanoto’s office explained his company's failure to pay the millions in owed taxes. "Asian Agri repeatedly wrote to the Tax Department requesting for the amount of the payment shortfall, if any. However, there was no reply."

The company official added that Mr. Tanoto's "companies have never been charged, convicted or given the opportunity to present itself [sic] in court on the matter.”

The denial of the conviction is somewhat cryptic, since the Indonesian Supreme Court found his Asian Agri paper company had committed massive "criminal acts in taxation" and this is a matter of public record -- and available here (in Indonesian).

Mr. Tanoto's companies’ stewardship of rainforests has also been heavily criticized.

Following massive land clearing projects in Sumatra Indonesia to plant fast-growing acacia trees for paper, the international Forest Stewardship Council, headquartered in Germany, withdrew its logo certification program from his “APRIL” company in 2013 over sustainability concerns. Other multinationals, such as Xerox, had already stopping buying his paper for similar environmental reasons. A detailed 2013 Greenpeace report showed Tanoto's destruction of rainforest led to a "staggering" decline in Sumatran tigers.

“Sukanto Tanoto, through his business empire, carries the dubious distinction of being the single largest driver of deforestation in the world identified by Greenpeace,” said the report.

Tanoto's RGE office initially responded: "Claims that [Mr. Tanoto’s company] APRIL is deforesting Indonesia are false.”

"APRIL’s plantations account for just 0.4 per cent of forested areas in Indonesia and it manages its concessions with rigorous approaches to sustainable forest management as embodied in its Sustainable Forest Management Policy.”

Greenpeace hopeful about Tanoto's newly announced "No new rainforest destruction" policy

Just last night, Tanoto's company announced a major rainforest protection policy that appears to have even Greenpeace and the World Wildlife Federation changing their tunes. APRIL announced "new measures to ensure deforestation is completely eliminated from its supply chain” — a climate change and sustainability push said to be 15 years in the making.

The company, pressured for years by environmental NGOs and his nearby resident country of Singapore over plantation-burning-smog concerns, will no longer level new forested lands or peatlands beyond the 480,000 hectares of plantation it has already taken for profits. Resolving "social conflict" with locals over the past destruction remains a major goal said the company this week.

"It's a good step forward," said Bustar Maitar, Greenpeace's Global Head of Indonesia Forest Campaign on Wednesday when reached by phone in Jakarta. "Their job now is to make that commitment real. We, as Greenpeace, will give them a chance to implement that. We will watch that closely."

Tanoto's no 'new rainforest destruction' move follows his main corporate rival —Asian Pulp and Paper —which made a similar rainforest pledge in 2013. Photocopy-paper customers for both companies faced heavy campaigning from environmental groups not to buy their products. Obama was also urged to pressure Indonesia over the rainforest loss —a major climate change concern.

But controversy still lingers. An Indonesian governor was sentenced last year to 14 years jail time for accepting bribes to advance illegal logging permits for Mr. Tanoto's pulp and paper company.

The bribes were not proven to be the company’s doing, said Mr. Tanoto’s office.

"Among many other companies that were investigated at the time, APRIL cooperated fully and transparently with the investigating authorities….The investigations of these matters found no wrongdoing or involvement in illegal activities that warranted further action by the authorities in relation to APRIL."

Business is business: local MLA

B.C. Liberal MLA Jordan Sturdy, whose riding is contains the Woodfibre LNG plant, says Mr. Tanoto’s international reputation should not matter in whether his B.C. project goes forward. It’s the business itself that needs proper regulation, he said.

“The government tends not to get into the business of vetting ownership,” Mr. Sturdy said in a recent phone interview.

“Ownership changes hands, and you don’t make these decisions based on a particular individual I don’t think. It’s got to work for British Columbia in terms of how a business operates,” he added.

Mr. Sturdy’s re-election campaign was recently given a boost by Woodfibre LNG in February, when the company sponsored the head table at a swanky fundraising dinner. Mr. Sturdy would not disclose the amount last week, and said the company’s sponsorship was not significant.

Yet the stories about Mr. Tanoto’s background continue to swirl with locals. Mr. Tanoto’s face is shown on posters at public forums where anti-LNG views are exchanged.

The billionaire’s niece

Squamish resident Les McDonald discovered a scorching blog written last year by Mr. Tanoto’s niece, Wendy Tanoto, and then reached her recently via Skype in Taipei. The 23-year-old web developer describes her powerful uncle bluntly. "He just doesn’t care about nature and the environment."

Wendy Tanoto details all of the accusations mentioned above about his businesses, as well as her own blood feud with Mr. Tanoto over a disputed family fortune. She alleges Mr. Tanoto duped her family out of $200 million in stocks and real estate, after her father, Mr. Tanoto’s brother and long-time business partner, died in 1997 plane crash.

"Sukanto's companies refused to return [the assets] to my family and have been illegally utilizing them as offices / factories until today,” she wrote in an e-mail.

She tells of "gangster like” investigators sent to follow her in Singapore last year, where Mr. Tanoto also resides. Ms. Tanoto’s blog shows red-circled photos of men following her in hotels, and on the streets in cars and motorbikes, to back up her allegations.

Mr. Tanoto’s spokesperson called the investigator allegations "untrue and baseless." He added that Wendy Tanoto has long tried to cause media trouble for Mr. Tanoto with her family-feud story before — when one of his companies, Sateri, went public in Hong Kong. Mr. Tanoto also claims he settled a deal with Wendy Tanoto’s family over her father’s assets in 2002, and paid for her U.S. education. "Assets of [Wendy’s father] Polar Tanoto were not taken away by the Chairman or anyone else at any time," the spokesperson said.

Wendy Tanoto responds to this with exasperation, saying that settlement was for a sliver of the fortune. And following, Mr. Tanoto had continued for years to urge her and family members to sign away remaining disputed assets, using the denial of scholarship funds in an effort to do this, she claims.

When she learned of the LNG project proposed for Squamish, B.C, Wendy Tanoto wrote to Premier Christy Clark last year. Clark responded by saying, "We are sorry to hear about what your family has experienced and appreciate your bringing it to our attention. On your behalf, we have shared your comments with the Honourable Rich Coleman, Minister of Natural Gas Development, for his information as well,” wrote Premier’s Clark's office, her spokesperson confirmed.

Christy Clark pushes ahead

While in China in late 2013, a cheerful Clark filmed a provincial government video to pump the Jiangsu Rudong LNG receiving terminal. Mr. Tanoto’s Pacific Oil & Gas company owns 35 per cent of the facility.

"I saw the most incredible feat of engineering you’ll find just about anywhere —the longest LNG pipeline in the world overland."

"And that is where we are going to connect Squamish British Columbia to China as Woodfibre builds their facility in B.C. to export natural gas,” boasted the premier.

The province and industry have long promoted LNG as the cleanest burning of fossil fuels, and one that would switch out coal-burning in China's power to reduce that country's greenhouse gases and address smog.

Back in Squamish, and expecting a decision about Woodfibre LNG any day now, the mayor hopes the provincial government will hold a high standard for who it chooses to do business with.

“I’ve spoken… about the importance of Canadian and B.C governments making sure they do business with people who have good records internationally.”

“Should there be enough people out there wanting to buy our gas, then we should not have to do business with people who put either the environment or people at risk.”

“I think we expect that of our upper orders of government, that they are scrutinizing, that they are making sure that we are not encouraging or facilitating bad practices elsewhere, whether its human rights, environmental issues or [neglecting a] government tax base, or anything like that.”

Naturally, Mr. Tanoto has a very different view of his reputation. In a Chinese-language TV interview, he stated his business commitment to safeguarding the planet.

"Recycling, saving energy, cutting down on emission. Doing all this not because the government ask you to, but because you have to."

"And because it also contributes to the long-term development of the company,” Mr. Tanoto told the audience.

The Woodfibre LNG company declined to comment on this story. It’s owned by Pacific Oil and Gas, which is owned by Mr. Tanoto’s Royal Golden Eagle conglomerate.

Sukanto Tanoto's full media response regarding his record and allegations made against him