Wharton Dean's Medal Recipient owns controversial companies

The Wharton School announced in October of last year that 2001 graduate Sukanto Tanoto, along with 1960 graduate Alvin V. Shoemaker, was the recipient of the Wharton Dean’s Medal, one of the highest honors presented by Wharton. What was not announced was that Tanoto’s companies are affiliated with rainforest destruction and tax evasion.

Tanoto, who completed the Wharton fellows Executive Education program in 2001, is a member of the Wharton Board of Overseers and the Wharton Executive Board for Asia. He also founded RGE, a group of resources-based companies in Asia.

Between 2008 and 2011, Tanoto’s company, Asia Pacific Resources International Limited, cleared at least 346,000 acres of the natural Riau forests of Sumatra, Indonesia, according to a report titled “APRIL: Riau, Sumatra’s biggest forest pulper 2009 to 2012.”

The report was created by Eyes on the Forest, an organization that investigates the well-being of forests in Indonesia.

In addition, another one of Tanoto’s companies, Asian Agri, was accused of tax evasion of up to $130 million.

“The Wharton School Dean’s Medal is bestowed to business leaders who have made positive and significant contributions to society and the economy,” said an official statement about the decision to honor Tanoto from Wharton. “Recipients were honored for their individual achievement and for creating prosperity on a global scale.”

Wharton declined to comment further.

“In recent years, [Tanoto] has tried to reinvent himself as a philanthropist and environmentalist and it would appear that the University of Pennsylvania believes he has done so,” said Chris Wright, a freelance journalist who has covered business in Asia.

A lawsuit was first brought forward in 2008 against APRIL for allegations of illegal logging, according to Rhett Butler, founder of Mongabay.com, a website noted by Time magazine as one of the top worldwide environmental sites. The lawsuit was dropped, but, according to Mongabay.com, Indonesia’s Ministry of Environment is preparing to pick up the civil suit against APRIL and other Indonesian pulp and paper companies involved in illegal land-clearing in Indonesia.

According to Butler, there are certain trees that are protected by Indonesian law. “APRIL’s big issue is they are accused of sourcing wood illegally,” he said, explaining that the company purchased licenses for trees from corrupt practices.

Butler added that APRIL representatives often said that they are operating within Indonesian law.

“When you call them out on a certain point, they won’t respond,” Butler said. “It’s frustrating for journalists to figure out what’s really happening.”

APRIL rejected the accusations made in the report by Eyes on the Forest.

“Many of the accusations made in the report are repeats of allegations made in previous EoF reports to which APRIL has comprehensively responded to previously,” a statement from APRIL in Dec. 2012 read.

The Tanoto Foundation, an organization founded by Tanoto himself to address issues of poverty in Indonesia, said in an email that “the world needs paper and pulp. We want that demand to be met.”

They admitted “there are genuine, challenging issues involved in balancing that equation” between demand and conservation.

On Dec. 18, 2012, one of Tanoto’s companies, Asian Agri, an Indonesian palm oil company, was ordered to pay $260 million for tax evasion, according to the Jakarta Globe. Media reports stated that the company underpaid taxes from 2002-2005. An investigation on the company’s finances began in 2007. In March 2012 and July 2012, the Central Jakarta District Court and then the High Court dismissed the case. However, prosecutors appealed to the Supreme Court in November 2012, and according to Channel News Asia, the court found Asian Agri guilty of “deliberately not filling tax forms properly between 2002 and 2005.”

A statement made by Asian Agri stated that the company is “firmly convinced that it has filed and paid the correct amount of taxes.” Channel News Asia reported that the company might consider judicial review, according to Asian Agri general manager Freddy Widjaya.

Butler, however, is curious about Wharton’s decision to present Tanoto with the award. “The issues are pretty well-known and pretty well-documented, so why didn’t those come to play in Wharton’s decision to give the award [to Tanoto]?”

A previous version of this story incorrectly reported that Tanoto received an executive MBA in Wharton. Instead, he completed the Wharton fellows Executive Education program.

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