This story is the first in a new series of investigative reporting commissioned by FoodNavigator-Asia to follow the legalities and loopholes of Asia's produce growing and production network. Please feel free to comment in the box below.
This month, one of Britain’s biggest sugar producing companies resigned from a voluntary ethical sugar initiative it founded amid suggestions of illegal land-grabbing.
Tate & Lyle Sugars, one of the co-founders of Bonsucro, whose mission is to improve sugar sustainability and limit the environmental impact of sugarcane production, had already been suspended by the organisation’s board of directors last July after a group of over 200 Cambodian farmers lodged a complaint against it.
In their complaint, the farmers claimed Tate & Lyle had benefited from land-grabbing by buying sugar from a plantation in the southwestern province of Koh Kong that had illegally been taken from them.
Prior to Tate & Lyle’s resignation, the Bonsucro board urged the company to carry out a third party review of the compensation package it gave to the farmers in 2006, and conduct an independent audit of its suppliers’ compliance with the company’s own code of conduct.
However, the sugar giant reportedly refused to cooperate in the dispute resolution process, failing to provide Bonsucro with information and ignoring the calls for the compensation review the organisation called for.
According to Eang Vuthy, executive director at Equitable Cambodia, one of the two local NGOs that filed complaints against Tate & Lyle with Bonsucro, Tate & Lyle had abdicated its responsibilities by leaving the initiative.
“We are really disappointed with Tate & Lyle because they were involved with the land-grabbing and now they resigned from Bonsucro to avoid responsibility. They also failed to implement the recommendations issued by the board“, Vuthy said.
In an e-mail statement sent to the FoodNavigator-Asia, Tate & Lyle said it resigned from the scheme because it was “not able to play an active role in Bonsucro“ until the conclusion of the court proceedings in a related suit filed against it in a UK court.
“This does nothing to change our rigorous ongoing independent ethical audit programme of our sugar suppliers," the company added.
Bonsucro under fire
However, Eang was equally critical of Bonsucro, saying the scheme “did not work“ as it allowed participating companies to benefit from ethical sugar labelling while failing to ensure the code of conduct was followed.
“This case shows a clear weakness of Bonsucro and its dispute resolution mechanism as the board has no power to implement its recommendations,“ Eang claimed.
This, he added, “really affects the legitimacy of the initiative and the reputation of the other corporate members, who should now speak out against what happened.“
Asked about the future of the ethical sugar initiative after one of its co-founding companies chose to resign, Bonsucro head of engagement Natasha Schwartzbach refuted claims that the legitimacy of the scheme has been hit.
“This is just one company. Bonsucro has been growing from strength to strength. We started with eight companies and now there are over 200 participating in the scheme“, she said.
With over 200 Cambodian farmers refusing the terms of a settlement offered by Tate & Lyle in a related lawsuit, a case is now heading for trial in London.
Lawyers representing the Cambodian plaintiffs filed the lawsuit against the company with a UK court in March 2013, claiming Tate & Lyle benefited from land-grabbing by buying sugar from a plantation that was illegally taken from them.
According to an article published in the Cambodia Daily on 10 June, the sugar giant had offered the plaintiffs $305,000 and 134 hectares of land for dropping the suit. But with the company’s offer rejected, the first hearing is scheduled to take place in October.
Narin Chum, head of the Land and Natural Resources Program for the Community Legal Education Center, a local NGO that helped file the complaint on behalf of the farmers, hopes the UK court will rule in his clients‘ favor.
“We are using international mechanisms because the Cambodian judicial system is not independent. I hope the UK court is different and that justice can be done,” he said, refusing to comment further for legal reasons.
Tate & Lyle's lawyers were also unable to provide further comment on the case.
Tough times for Tate & Lyle
It is worth bearing in mind that Bonsucro had already suspended the company from membership of the scheme last July, after Tate & Lyle failed to cooperate in a dispute resolution process with the Cambodian farmers.
In 2012 and in 2013, European parliamentarians urged the European Commission to investigate the allegations of abuses on Cambodian plantations. However, last March, EU Trade Commissioner Karel de Gucht said the EU will not be making any enquiries, at least for now—a move Equitable Cambodia’s Eang Vuthy claims was dictated by economic interests.
“There is a fear it would become an open door for similar complaints that could jeopardise other industrial sectors, such as garments.”
In 2001, the EU adopted an “Everything But Arms” trade scheme, making Europe the top destination for Cambodian exports.
In 2009, Tate & Lyle signed a five-year deal with Khon Kaen Sugar, the Thai firm owning the plantation in question, and accused of orchestrating the land grabs.
Since then, the UK firm has shipped 48m kg sugar from Cambodian plantations, worth more than $32 million, back to the UK.
We will return with the latest developments in the case.