Tag Archives: illegal logging

Rich Environmental Criminals

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“The brutality and profit margins in the area of environmental crime are almost unimaginable. Cartels have taken over entire sectors of illegal mining, the timber trade and waste disposal,” according to Sasa Braun, intelligence officer with Interpol’s environmental security program  Braun listed examples. Villages in Peru that had resisted deforestation efforts had been razed to the ground by criminal gangs in retribution, he said, while illegal fishing fleets had thrown crew overboard to avoid having to pay them.

Environmental crime has many faces and includes the illegal wildlife trade, illegal logging, illegal waste disposal and the illegal discharge of pollutants into the atmosphere, water or soil. It is a lucrative business for transnational crime networks. Illegal waste trafficking, for example, accounts for $10 to 12 billion (€10.28 to 12.34 billion) annually, according to 2016 figures from the United Nations Environment Program. Criminal networks save on the costs of proper disposal and obtaining permits. For some crime networks, the profits from waste management are so huge that it has become more interesting than drug trafficking…The profits from illegal logging have also grown…

According to the European Union Agency for Law Enforcement Cooperation (Europol), environmental crime — the third most lucrative area of crime worldwide after drug trafficking and counterfeit goods — generates profits of between $110 billion and $280 billion each year.

Excerpts from Environmental crime: Profit can be higher than drug trade, DW, Oct. 16, 2022

100 Ways to Finance Criminal Cartels Logging Forests

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The report – Green Carbon, Black Trade (2012) – by UNEP and INTERPOL focuses on illegal logging and its impacts on the lives and livelihoods of often some of the poorest people in the world set aside the environmental damage. It underlines how criminals are combining old fashioned methods such as bribes with high tech methods such as computer hacking of government web sites to obtain transportation and other permits. The report spotlights the increasingly sophisticated tactics being deployed to launder illegal logs through a web of palm oil plantations, road networks and saw mills. Indeed it clearly spells out that illegal logging is not on the decline, rather it is becoming more advanced as cartels become better organized including shifting their illegal activities in order to avoid national or local police efforts. By some estimates, 15 per cent to 30 per cent of the volume of wood traded globally has been obtained illegally…

The much heralded decline of illegal logging in the mid- 2000s in some tropical regions was widely attributed to a short-term law enforcement effort. However, long-term trends in illegal logging and trade have shown that this was temporary, and illegal logging continues. More importantly, an apparent decline in illegal logging is due to more advanced laundering operations masking criminal activities, and notnecessarily due to an overall decline in illegal logging. In many cases a tripling in the volumes of timber “originating” from plantations in the five years following the law enforcement crack-down on illegal logging has come partly from cover operations by criminals to legalize and launder illegal logging operations….

Much of the laundering of illegal timber is only possible due to large flows of funding from investors based in Asia, the EU and the US, including investments through pension funds. As funds are made available to establish plantations operations to launder illegal timber and obtain permits illegally or pass bribes, investments, collusive corruption and tax fraud combined with low risk and high demand, make it a highly profitable illegal business, with revenues up to 5–10 fold higher than legal practices for all parties involved. This also undermines subsidized alternative livelihood incentives available in several countries.

[It is important to discourage] the use of timber from these regions and introducing a rating og companies based on the likelihood of their involvement in illegal practices to discourage investors and stock markets from funding them.

Excerpts from Nellemann, C., INTERPOL Environmental Crime Programme (eds). 2012.Green Carbon, Black Trade Illegal Logging, Tax Fraud and Laundering in the Worlds Tropical Forests. A Rapid Response Assessment United Nations Environment Programme

How to Discover an Illegal Logger

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Tropical forests nearly the size of India are set to be destroyed by 2050 if current trends continue causing species loss, displacement and a major increase in climate-changing greenhouse gas emissions.  Prior to the launch of the Global Land Analysis and Discovery (GLAD) alerts, researchers would have to manually track images of logging in specific areas.

The new process, developed by scientists at the University of Maryland and Google, uses an algorithm to analyze weekly updates of satellite images and sends automatic notifications about new logging activity.”This is a game changer,” said Matt Finer from the Amazon Conservation Association, an environmental group.

His organization tracks illegal logging in Peru, sending images of deforestation to policymakers, environmentalists and government officials to try and protect the Amazon rainforest.  In the past, he would rely on tips from local people about encroachment by loggers, then look at older satellite images to try and corroborate the claims.

“With this new data we can focus on getting actionable information to policy makers,” Finer told the Thomson Reuters Foundation.  “We have seen how powerful these images can be,” he said, citing a case where his group brought pictures of illegal gold miners cutting down trees to the Peruvian government, who then removed the miners.

Excerpt from  CHRIS ARSENAULT, New satellite program aims to cut down illegal logging in real time, Reuters, Mar. 2, 2016

Deforestation and Supply Chains

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366 companies, worth $2.9 trillion, have committed to eliminating deforestation from their supply chains, according to the organization Supply Change. Groups such as the Tropical Forest Alliance 2020, the Consumer Goods Forum and Banking Environment Initiative aim to help them achieve these goals.  Around 70 percent of the world’s deforestation still occurs as a result of production of palm oil, soy, beef, cocoa and other agricultural commodities. These are complex supply chains.  A global company like Cargill, for example, sources tropical palm, soy and cocoa from almost 2,000 mills and silos, relying on hundreds of thousands of farmers. Also, many products are traded on spot markets, so supply chains can change on a daily basis. Such scale and complexity make it difficult for global corporations to trace individual suppliers and root out bad actors from supply chains.

Global Forest Watch (GFW), a WRI-convened partnership that uses satellites and algorithms to track tree cover loss in near-real time, is one example. Any individual with a cell phone and internet connection can now check if an area of forest as small as a soccer penalty box was cleared anywhere in the world since 2001. GFW is already working with companies like Mars, Unilever, Cargill and Mondelēz in order to assess deforestation risks in an area of land the size of Mexico.

Other companies are also employing technological advances to track and reduce deforestation. Walmart, Carrefour and McDonalds have been working together with their main beef suppliers to map forests around farms in the Amazon in order to identify risks and implement and monitor changes. Banco do Brasil and Rabobank are mapping the locations of their clients with a mobile-based application in order to comply with local legal requirements and corporate commitments. And Trase, a web tool, publicizes companies’ soy-sourcing areas by analyzing enormous amounts of available datasets, exposing the deforestation risks in those supply chains…

[C]ompanies need to incorporate the issue into their core business strategies by monitoring deforestation consistently – the same way they would track stock markets.

With those challenges in mind, WRI and a partnership of major traders, retailers, food processors, financial institutions and NGOs are building the go-to global decision-support system for monitoring and managing land-related sustainability performance, with a focus on deforestation commitments. Early partners include Bunge, Cargill, Walmart, Carrefour, Mars, Mondelēz, the Inter-American Investment Corporation, the Nature Conservancy, Rainforest Alliance and more.  Using the platform, a company will be able to plot the location of thousands of mills, farms or municipalities; access alerts and dashboards to track issues such as tree cover loss and fires occurring in those areas; and then take action. Similarly, a bank will be able to map the evolution of deforestation risk across its whole portfolio. This is information that investors are increasingly demanding.

Excerpt from Save the Forests? There’s Now an App for That, World Resources Institute, Jan. 18, 2017

Why Illegal Logging Persists

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The European Union (EU) adopted in 2010 Regulation (EU) No 995/2010 laying down the obligations of operators who place timber and timber products on the market (the Timber Regulation,, as part of the implementation of the Action Plan on Forest Law Enforcement, Governance and Trade……[The EU adopted the Regulation because] llegal logging is a pervasive problem of major international concern. It has a devastating impact on some of the world’s most valuable remaining forests as well as on the people who live in them and who rely on the resources that forests provide. It contributes to tropical deforestation and forest degradation, which may be responsible for 7 to 14%3 of total CO2 emissions from human activities; it threatens biodiversity and undermines sustainable forest management and has a negative impact on poverty reduction…..

The following major challenges to the effective application of the Timber Regulation have been identified in the evaluation process: insufficient human and financial resources allocated to the [authorities dealing with implementation], varying types and level of sanctions across EU states and a lack of uniform understanding and application of the Regulation throughout the EU. Those challenges have translated into uneven enforcement, which creates a non-level playing field for economic operators….

In order to address the shortcomings identified, EU states should significantly step up their implementation and enforcement efforts. The current level of technical capacity and resources (both human and financial) allocated to the [authorities dealing with implementation] does not match with the needs and must be reinforced in most of the Member States with the aim to increase the number and quality of compliance checks.

Excerpts from REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Regulation EU/995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (the EU Timber Regulation, Feb. 18, 2016,  COM(2016) 74 final

 

Deforestation: Rubber Barons and their Bankers

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Along Route 7 in Cambodia’s remote north, dozens of small tractors known as “iron buffaloes” are plying a dilapidated piece of highway. Under cover of darkness, they transport freshly cut timber into nearby sawmills. The drivers wear masks, their tractors fitted with just one dim lamp at the front. Each carries between three and six logs which locals say were felled illegally on or near the Dong Nai rubber plantation, owned by Vietnam Rubber Group (VRG).

Illegal logging and land-grabbing have long been problems in Cambodia. A new report entitled “Rubber Barons” by Global Witness, a London-based environmental watchdog, has highlighted the issue once again. Dong Nai features prominently in the report, which claims that luxury timbers like rosewood, much in demand for furniture in China and guitars in the West, were culled as a 3,000-hectare (7,400-acre) section of forest was illegally cleared.

Global Witness says that local and foreign companies have amassed more than 3.7m hectares of land in Cambodia and Laos since 2000, as governments have handed out huge land concessions, many in opaque circumstances. Two-fifths of this was for rubber plantations, dominated by state companies from Vietnam, the world’s third-largest rubber producer.

The report claims that VRG and another Vietnamese company, HAGL, are among the biggest land-grabbers, and have been logging illegally in both Cambodia and Laos. It says that, through Vietnam-based funds, the two companies have received money from Deutsche Bank, while HAGL also has investment from the IFC, the private-sector arm of the World Bank. The two Vietnamese companies have denied any wrongdoing. Deutsche Bank and the IFC say they are studying the findings.

The report says that the two companies have failed to consult local communities or pay them compensation for land they formerly used. The companies routinely use armed security forces to guard plantations. Large areas of supposedly protected intact forest have been cleared, in violation of forest-protection laws and “apparently in collusion with Cambodia’s corrupt elite”.

Global Witness is urging authorities in Cambodia and Laos to revoke the two companies’ land concessions, which cover 200,000 hectares and are held through a network of subsidiaries. It thinks both companies should be prosecuted.

Logging in South-East Asia: Rubber barons, Economist, May 18, 2013

See also Bankers with Chainsaws

 

Bankers with Chainsaws – logging companies and their banks

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Some big banks do little more than pay lip service to environmental issues. HSBC likes to think of itself as different. It has signed up to many initiatives, including the Equator Principles, a set of social and environmental standards launched in 2003 for project financiers….

Sarawak (Malaysia) has lost more than 90% of its “primary” forests to logging and has the fastest rate of deforestation in Asia. Sarawak has only 0.5% of the world’s tropical forest but accounted for 25% of tropical-log exports in 2010. As timber stocks have become depleted, the loggers have moved into the palm-oil business, clearing peat-swamp forests to make way for plantations. The deforestation has been accompanied by abuses against indigenous groups, including harassment and illegal evictions. Allegations of corruption and abuse of public office dog Abdul Taib Mahmud, Sarawak’s chief minister, finance minister and planning-and-resources minister, who is believed to have firm control over the granting of logging licences. Mr Taib has long denied being corrupt.

Global Witness, a campaigning group, has analysed the publicly available financial records of seven of Sarawak’s largest logging and plantation companies.  It identified loans and other financial services from HSBC that it estimates have generated at least $116m in interest payments and $13.6m in fees for the bank since 1977. Although lending has declined over the past decade, HSBC continues to list Sarawak loggers among its clients, in apparent violation of its own Forest Land and Forest Products Sector Policy.

On paper HSBC’s forest policy gets high marks, including from BankTrack, a network of NGOs that monitors lenders. When it was drawn up in 2004, the policy required clients to have 70% of their activities certified by the Forest Stewardship Council (FSC), or equivalent, by 2009, with evidence that the remainder was legal. (The FSC is a global non-profit body that sets standards and does independent certification for logging and forest products.)

Not only did the seven firms analysed fail to meet that deadline, but none has any FSC-certified operations today. Ta Ann Holdings, for example, listed HSBC as a “principal banker” in its 2011 annual report. Ta Ann does not have FSC certification, and has failed to obtain full verification of the legality of its Sarawak concession under the independent “Verified Legal Origin” scheme. The firm has been accused of clear-felling rainforest that is home to endangered orangutan and of cutting down conservation forest for plantations. Ta Ann told Global Witness it is “collaborating closely with HSBC towards achieving full compliance” with its forest policy.

Another forestry conglomerate that is still banking with HSBC, according to its annual report, is WTK Holdings, whose intensive logging is widely believed by pressure groups to have caused landslides that ended up blocking a 50km (31-mile) stretch of river in 2010. None of WTK’s operations is FSC-certified.

In all, Global Witness identified six loans, totalling $25m, made by HSBC to non-compliant Sarawak loggers since the bank introduced its forest policy. HSBC said in 2004 that it would stop doing business with clients that failed to make a reasonable effort to comply by 2009.  The Economist asked HSBC to comment. The bank declined to discuss its clients because of confidentiality, but said it is “not accurate” to state that its clients are in violation of its forestland and forest-products policy. It said current data show that 99% of its forest-sector clients worldwide (by size of lending) are “compliant” or “near-compliant” with its policy. What precisely it means by “near-compliant” is unclear…..HSBC’s  continued involvement, however modest, allows logging firms to claim credentials they don’t deserve. Ta Ann, for instance, has run adverts saying it holds forest-policy certification from HSBC. That looks like a figleaf.

Deforestation in Sarawak: Log tale, Economist, Nov. 3, 2012, at 75