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Illegal logging worth $30-100B annually

Illegal logging accounts for 15-30 percent of forestry in the tropics and is worth $30-100 billion worldwide, alleges a new report published by the United Nations Environment Programme (UNEP) and INTERPOL. Consuming countries play a major role in the trade, which is increasingly sophisticated and in some places is facilitated by the expansion of industrial plantations.

“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,” wrote Achim Steiner and Ronald Noble — the heads of UNEP and INTERPOL — in the report’s preface. They go on to add that illegal logging is jeopardizing REDD+ (Reducing Emissions from Deforestation and forest Degradation), a program aimed to reduce rural poverty and recognize the value of services afforded by healthy forests.

“If REDD+ is to succeed, payments to communities for their conservation efforts need to be higher than the returns from activities that lead to environmental degradation. Illegal logging threatens this payment system if the unlawful monies changing hands are bigger than from REDD+ payments.”

The health of our forests
The health of our forests. Courtesy of Green Carbon, Black Trade.

The report, titled Green Carbon, Black Trade: a Rapid Response Assessment Illegal Logging, Tax Fraud and Laundering in the World’s Tropical Forests, notes that although the world heralded a seeming decline in illegal logging during the mid-2000s, “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 not necessarily due to an overall decline in illegal logging.”

Causes of illegal logging
Causes of illegal logging: The Indonesian model. Courtesy of Green Carbon, Black Trade.

The report outlines more than 30 ways of producing, trafficking, and selling illegal timber, including “falsification of logging permits, bribes to obtain logging permits (in some instances noted as US$ 20–50,000 per permit), logging beyond concessions, hacking government websites to obtain transport permits for higher volumes or transport, laundering illegal timber by establishing roads, ranches, palm oil or forest plantations and mixing with legal timber during transport or in mills.”

Ten ways to conduct illegal logging
Ten ways to conduct illegal logging. Courtesy of Green Carbon, Black Trade.

In Asia particularly, timber plantations for pulp and paper production are being used to launder illegal timber. The report points to a flatlining in the extent of timber plantation coverage in Indonesia but a surge in “plantation timber” production.

“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.”

Plantation in Indonesia: a new frontier in black wood laundering?
Plantation in Indonesia: a new frontier in black wood laundering? Courtesy of Green Carbon, Black Trade.

Illegal logging and log laundering
Illegal logging and log laundering. Courtesy of Green Carbon, Black Trade.

Illegal logging is facilitated by corruption at high levels of government in some countries. Leaders in countries ranging from Malaysia to Liberia have lined their pockets with the proceeds of illicit timber extraction. But damage goes beyond taxpayers. Illegal logging can be tied to violent conflict, as the report notes in a case study from the Democratic Republic of the Congo. The report says that illegal logging can also be a threat to traditional forest-dependent communities.

Illegal logging and the Congo conflict
Illegal logging and the Congo conflict. Courtesy of Green Carbon, Black Trade.

“Illegal logging operations have also in some cases involved murder, violence, threats and atrocities against indigenous forest-living peoples,” it states. “The challenges already facing indigenous peoples are further compounded as companies now launder illegal logging under fraudulent permits for ranches or plantation establishment schemes.”

Illegal logging is a big international business. The report says that “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.” It provides an example in Samling Global, a Malaysian firm linked to illegal logging in several countries. When Samling’s activities were exposed by environmental campaigners, Norway’s sovereign wealth fund stopped funding the company. Yet finance continued to flow through some of Wall Street’s biggest names, including Goldman Sachs, Charles Schwab, and BlackRock.

By-passing flow of investment to illegal logging
By-passing flow of investment to illegal logging: A case study from the Norwegian sovereign wealth fund. Courtesy of Green Carbon, Black Trade.

By-passing flow of investment to illegal logging
Black wood dependency: Main bilateral flows of illegal timber. Courtesy of Green Carbon, Black Trade.

The report argues that various certification bodies and programs — ranging from Voluntary Partnership Agreements (VPAs) to the Forest Stewardship Council (FSC) to CITES — aren’t enough to stem the trade in illegal wood products.

“They were not designed to combat organized crime and are not effective in combating illegal logging, corruption and laundering of illegal timber in tropical regions,” the report states. “To become effective, voluntary trade programs and the effective implementation of CITES, must be combined with an international law enforcement investigative and operational effort in collaboration with domestic police and investigative task forces in each country.”

Unsurprisingly given the INTERPOL’s co-authorship, the report makes a case for channeling more money into law enforcement and training efforts.

CITATION: 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, GRIDArendal.

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