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Top U.S. flooring retailer linked to Brazilian firm snagged in timber bust

  • An investigation by Brazil’s environmental enforcement agency and the federal police led to allegations that Indusparquet, a prominent supplier of tropical wood flooring, was using fraudulent permits to hide illegally harvested wood.
  • Government authorities fined the company, made the largest seizure of timber ever in the state of Sãa Paulo, and shut down Indusparquet’s primary warehouse for three weeks.
  • Indusparquet has denied wrongdoing and appealed the sanctions, and U.S.-based flooring retailer Floor & Decor has continued to source tropical wood flooring from the company.
  • Timberleaks, which first reported the link between Indusparquet and Floor & Decor, contends that the Lacey Act requires companies like Floor & Decor to go beyond the documentation provided by their suppliers — which in this case was alleged to be fraudulent — to ensure the source of those products is legal.

Floor & Decor, a leading flooring retailer in the United States, has continued to purchase products that contain tropical timber from Indusparquet, a supplier in Brazil, despite accusations that the latter had recently trafficked in illegally harvested timber.

The website Timberleaks reported the connection between the two companies on Nov. 15.

A two-year investigation led Brazil’s environmental enforcement agency, IBAMA, to allege that Indusparquet, a supplier that sells high-end tropical wood flooring to retailers in dozens of countries, had hidden illegally harvested timber with false permits for thousands of cubic meters of wood. As a result of the probe, IBAMA confiscated 1,818 cubic meters (64,200 cubic feet) of sawn logs worth $2.5 million in the state of São Paulo’s “greatest seizure of illegal timber,” the agency announced on June 1 this year.

The allegations against Indusparquet arose from a two-year investigation by IBAMA, Brazil’s environmental enforcement agency, pictured here in the state of Pará. Image by Vinícius Mendonça/IBAMA via Flickr (CC BY-SA 2.0).

Authorities also fined Indusparquet more than $171,000 and temporarily shut down its main warehouse. IBAMA reported that the investigation, called “Operation Patio,” yielded 13 arrests in the state of São Paulo. The term “patio” refers to a lumberyard.

Indusparquet spokeswoman Flavia Baggio told Mongabay in an email that “the investigation made in our factory never found any illegal lumber and there was NO notice of any illegality in the patios.” Baggio said IBAMA discovered “only temporary administrative issues related to the way the company reports into the IBAMA system in regard transfers of finish[ed] material from the primary factory to the secondary one.”

In a statement released on June 5, Indusparquet said that forest origin documents, which indicate where the wood had been harvested, weren’t filed during these transfers, and that some of the timber that should have been labeled as “beams” were instead marked as “planks.” All of the wood that ends up in its products has documentation to prove its origin, the company said.

Baggio also said there was confusion over Indusparquet’s production of plywood-like paneling called multistrato made from lumber waste at the company’s mills.

“When IBAMA conducted the audit, they did not know how to account for this item because they were unfamiliar with the recovery process of this product line,” she said.

On June 18, IBAMA lifted the suspension on Indusparquet’s primary warehouse, Baggio said.

IBAMA made the largest seizure of timber in the history of São Paulo state in May 2018. Image by Felipe Werneck/IBAMA via Flickr (CC BY-SA 2.0).

However, Timberleaks’ investigation turned up evidence through a public records request that, as of Oct. 1, the government was continuing to block operations at a secondary Indusparquet warehouse.

Baggio said only the multistrato products were currently on hold. Indusparquet staff are working with IBAMA agents, she said, and the company expects the release of the products in December. The secondary warehouse is a deactivated mill that now only holds finished products for the domestic market, Baggio added, and IBAMA has told the company that the suspension should be lifted by the end of 2018.

Despite these questions, Floor & Decor started receiving shipments from the supplier just days after the primary warehouse restarted operations, Timberleaks reported. The continued flow of goods between Floor & Decor and a firm suspected of illegal logging struck Sam Lawson, the executive director of the U.K.-based nonprofit Earthsight, which runs Timberleaks, as irresponsible.

“If you’ve got a situation where your supplier has had timber seized and [been] accused of widespread wrongdoing,” Lawson said in an interview, “then it might be wise to stop buying their products until the appeal is completed rather than just carry on buying from them.”

IBAMA staff, pictured here in the state of Roraima. Image by Felipe Werneck/IBAMA via Flickr (CC BY-SA 2.0).

Timberleaks’ records searches revealed that Floor & Decor typically imports $500,000 or more in flooring from Indusparquet every month — likely the bulk of tropical wood flooring that Floor & Decor then sells to consumers in the United States. Since IBAMA and the federal police announced the charges against Indusparquet, Floor & Decor has imported flooring from the supplier worth more than $1.6 million at retail prices.

“We can’t say for certain that they’ve imported wood that was illegally sourced,” Lawson said. Still, he added, “They should be taking a precautionary approach.”

The U.S.’s Lacey Act requires companies to exercise “due care” in verifying the legality of imported goods, going beyond the documentation provided by the supplier of those goods. In this case, Brazilian authorities argued that the documentation was fraudulent. If the U.S. Justice Department were to find that Floor & Decor had imported products that contained illicitly harvested timber, Floor & Decor could face fines and other penalties, Lawson said.

An IBAMA facility in the state of Bahia. Image by Vinícius Mendonça/IBAMA via Flickr (CC BY-SA 2.0).

In 2015, Lumber Liquidators, another U.S.-based flooring company, had to pay $13.2 million when investigators discovered that it had imported illegally harvested wood from Russia. The settlement also required the company to set up a program to check for illegality, Lawson said.

A spokesperson for Floor & Decor told Mongabay in an email that the retailer already “has a rigorous compliance program” that includes on-site inspections by a third-party expert.

“Floor & Decor’s Lacey Act compliance program involves much more than just verification of documentation,” the representative said. Staff from the company have also been involved in putting together training for the International Wood Products Association, an industry group, on the due care requirement of the Lacey Act.

What’s more, the spokesperson said, Floor & Decor “is committed to ensuring that all of its flooring is sourced legally and responsibly.”

But Lawson said it appeared likely that Floor & Decor did rely solely on documents from the Brazilian government to import flooring from Indusparquet in this case.

“If what IBAMA alleges is right, then there’s a good chance that some of the [illegally harvested] wood would’ve ended up at Floor & Decor,” he said.

Banner image of illegally harvested wood in the state of Roraima by Felipe Werneck/IBAMA via Flickr (CC BY-SA 2.0).

John Cannon is a Mongabay staff writer based in the Middle East. Find him on Twitter: @johnccannon

Editor’s note: Mongabay has an ongoing collaboration with Earthsight on the Indonesia for Sale series.

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