Peruvian palm oil producer the Ocho Sur group has been linked to deforestation in the South American country, according to a report by non-profit journalism organisation, the Pulitzer Center.
The US$160M that the company’s backers, primarily US venture capitalists and private equity funds, have spent on its operations represents the largest foreign investment in agriculture in the history of the Peruvian Amazon, according to the report.
Although Ocho Sur, whose palm oil has been used in products ranging from Cheetos to Colgate toothpaste, had signed pacts with local communities to conserve the native ecosystem, exclusive documents had revealed ties between US investors and businesses that cleared the Amazonian rainforest, the 31 December report said.
The documents obtained from a criminal investigation into Ocho Sur – along with internal company e-mails, bank records and spreadsheets covering eight years of plantation operations – linked the company to US businessman Dennis Melka.
A Peruvian prosecutor had claimed Melka was the ringleader of a “criminal organisation” that passed mature plantations from one firm his company had bankrolled, United Oils, to a second, Ocho Sur, the report said. After the transfer, the documents showed key personnel from United Oils remained in place, including Melka.
In addition, prosecutors claimed United Oils had illegally cleared much of the plantation land, and that Ocho Sur, despite its sustainable initiatives, was in many respects the same entity as its predecessor.
Corporate records indicated that 18 of the 19 shareholders in Ocho Sur had funded entities that bankrolled Melka’s work clearing and planting in the rainforest from 2012-2014, the report said.
With Melka and other key personnel from the earlier company remaining involved, the only new player was Amerra Capital Management, a New York private equity firm whose funds purchased US$10M of United Oils’ bonds, the Pulitzer Center wrote.
Melka had not responded publicly to the prosecutors’ allegations and had not responded to the Pulitzer Center’s requests for comment.
Ocho Sur robustly denied claims about the company being a continuation of a previous company.
“It is incorrect and impossible to attribute to it any alleged actions that occurred before its existence,” the company wrote in February in response to a report by the Environmental Investigation Agency.
However, Julia Urrunaga, who leads research in Peru for a Washington, DC-based environmental organisation, claimed almost all Ocho Sur’s exports had been “illegally produced”.
“They need to be sanctioned, and they need to be ordered to reforest and leave.”
Ocho Sur’s links to deforestation have profound implications for businesses, consumers and the environment – and what counts as “sustainability” in the palm oil industry, according to the report.
Since the 1960s, more than 13% of the original Amazonian rainforest has been cleared, according to the report. Although most of the deforestation had been concentrated in Brazil, Peru was second on the list, the report said.
