JAKARTA (Reuters) - The Widjajas, owners of palm oil giant PT SMART Tbk, rank among the many oligarchs who prospered under former President Suharto and who still dominate Indonesia’s economy even under a more reform-driven regime.
Patriarch and founder Eka Tjipta Widjaja, now in his late 80s, is among the country’s wealthiest with a personal fortune put at $2.4 billion by Forbes.
The family’s palm oil and paper operations have long been criticized by environmentalists, with Greenpeace recently alleging its Jakarta-listed palm oil business SMART had cleared peatland and high conservation value forests.
SMART said on Tuesday that an independent report showed a campaign by Greenpeace was exaggerated or wrong, but the audit said the firm’s planting of deep peatlands — which trap greenhouse gases — on two estates contravened Indonesian and SMART’s own rules.
While the environmental controversy has cost SMART business from big palm oil buyers, the group’s history has already tended to scare off those in the financial community with long memories.
Eka Tjipta Widjaja started off trading coconut oil, but moved into the palm oil business and got his break in the 1970s when he secured timber concessions. Today, the family’s conglomerate, Sinar Mas, has substantial listed and unlisted interests in pulp and paper, palm oil, banking and property.
The ethnic Chinese Widjaja is something of a local legend, famous for owning a belt with a diamond-encrusted buckle spelling out his name EKA. Various books and newspaper articles have put the number of his wives at seven or more, with a total of at least 30 offspring.
“It’s a huge family. We have different ideas, ways of thinking. As we have grown up, we seek advice from each other, we build connections,” one of Eka’s grandsons, Megain Widjaja, told Reuters in an interview this week.
Several of Eka’s children run key divisions of Sinar Mas — his son Franky Widjaja is in charge of the palm oil operations, while another son Teguh headed the pulp and paper division — and family members are prominent at Indonesia Chamber of Commerce, or Kadin, events.
Grandson Megain, 28, grew up hearing his grandfather’s stories about trading coconut oil in Surabaya.
He heads a new commodity exchange in Indonesia which this year launched a palm oil futures contract in a bid to challenge Malaysia’s dominance in setting palm oil prices and provide a venue for Indonesian palm firms to trade futures.
Being a Widjaja can be both a plus and a hindrance, he said.
“Yes I come from the Sinar Mas family, obviously it helps build credibility especially at a very young age. But family names are traded carefully,” he said.
Sinar Mas, once considered a leading player on Indonesia’s resources sector, fell sharply out of favor with international investors in 2001 when the group’s prize asset, New York-listed Asia Pulp & Paper, defaulted on $14 billion of debt.
Foreign government credit agencies, international banks, bondholders, and shareholders fought a prolonged battle to recover their funds, but the Widjajas outsmarted them.
The group upset investors by announcing several surprise losses — on foreign exchange deals, bank loans, and receivables — and at one point argued in court that its billions of dollars of international bonds should be considered void because they were illegal under Indonesian law.
The family businesses later bounced back thanks to a commodity boom and have been able to thrive and expand using internal cash rather than tapping the international capital markets.
Additional reporting by Fitri Wulandari; Editing by Miral Fahmy