- Inversiones La Oroza, the company at the center of the largest seizure of illegal timber in Peru, was recently awarded $380,000 under a government stimulus program for the forestry sector.
- La Oroza was identified as the owner of 80% of the 60 freight trucks’ worth of wood seized in 2015 and believed to be bound for Mexico and the U.S.
- It was slapped with sanctions by the U.S., but not in Peru, where the government of the region of Loreto picked it to be part of the Reactiva Peru stimulus program.
- National prosecutors and environmental lawyers have condemned the move, but regional officials have defended their decision.
Inversiones La Oroza, a company under investigation since 2015 for alleged timber trafficking, has just been awarded $380,000 from Reactiva Peru, a stimulus program by the Peruvian government to revive the forestry sector hit by COVID-19.
In November 2015, La Oroza and 10 other logging companies came under investigation during Operation Amazonas, when authorities seized the cargo ship Yacu Kallpa carrying more than 1,300 cubic meters of timber — 60 freight trucks’ worth — of alleged illegal origin.
It was the largest timber seizure in Peru, an emblematic case that showed how official documents with false information were used to “launder” timber that was allegedly illegally extracted. Currently, two public prosecutors specializing in environmental affairs in the Loreto region are in charge of 52 case files that involve more than 100 people.
The regional governor of Loreto, Elisbán Ochoa, and the regional manager of forest development and wildlife, Kenjy Terán, appear to have overlooked La Oroza’s background in awarding it 1.36 million soles ($380,000) it recently as part of a bid to jump-start the forestry sector. They chose the company’s operations plant, located in Iquitos, the capital of Loreto, as the setting to launch the forest activities restart program, which will see 13 million soles ($3.6 million) invested in the regeneration of this sector.
“It is incredible that the Loreto regional government announced the regeneration of the forests using a company prosecuted for and implicated in the emblematic criminal proceedings of Yacu Kallpa,” said Julio Guzmán, a lawyer for the Ministry of the Environment.
Guzmán said there should have been a minimum criterion for selecting recipients for a program under the Peruvian state.
Guzmán also said it was regrettable that the Reactiva Perú program was open to companies facing criminal proceedings and that have been accused by the state, as is the case with La Oroza.
Wood of illegal origin
“This is a company investigated for the acquisition and export of illegal wood,” Alberto Yusen Caraza, from the office of the Loreto Special Prosecutor for Environmental Matters (FEMA), said of Inversiones La Oroza.
Caraza is in charge of 35 files in relation to the Yacu Kallpa case. The timber-laden boat seized in Iquitos in 2015 was suspected of being bound for Mexico and the United States.
According to reports from the Forest Resources Monitoring Agency (OSINFOR), 97% of the wood came from illegal sources. The investigation also determined that 80% of the cargo belonged to Inversiones La Oroza.
FEMA in Loreto is in the final stage of the investigation. In October 2017, the U.S. government also sanctioned La Oroza, citing the illegally extracted wood found in its supply chain. The sanctions are valid for three years.
Robert Lighthizer, the U.S. trade representative, ordered Customs and Border Protection (CBP) to block imports of La Oroza timber. “The Timber Committee — composed of officials from the Office of the U.S. Trade Representative, as well as the country’s Departments of Justice, State, Agriculture and Interior — asked Peru to verify if a specific shipment of wood from the company Inversiones La Oroza complied with all Peruvian laws and regulations,” the USTR said in a statement. “The verification process carried out by Peru revealed that significant parts of the La Oroza shipment did not comply with the Peruvian law, regulations and other measures on the extraction and trade of wood products.”
“I was surprised,” Caraza said of the recent decision by the Loreto governor to include La Oroza in its program. “The weak administration of the regional government has been heightened by this meeting with the companies investigated.”
Mongabay Latam contacted Terán, the regional forestry manager, to ask if they had considered the company’s background before choosing its facilities to launch the forest regeneration program in the region. “To us, the investigations are not important, we are convinced of the good faith of the industrialists,” Terán said.
He said the regional government doesn’t want to continue portraying the forestry sector in a negative light. “It is an opportunity for those companies that were involved with the vessel that was intercepted in the United States to get a different image. Here we do not judge the issue of whether a company is investigated or anything like that, but it is important that we have competitiveness,” Terán said.
Julia Urrunaga, the Peru director for the Environmental Research Agency (EIA), told Mongabay Latam that since the sanctions by the U.S., La Oroza has failed to show that its chain of custody of wood is completely legal. “In October 2017, they announced the embargo of La Oroza investments based on the amount of illegal wood discovered in their chain of custody, and to date the company has not publicly demonstrated that this no longer happens,” Urrunaga said.
Rolando Navarro, former executive president of the Organization for the Supervision of Forest Resources and Wild Fauna (OSINFOR), said it was regrettable that the government didn’t have appropriate vetting measures in place to prevent companies receiving public funds while being under criminal investigation. “Money should be given to those who have an unblemished record and the impression should not be given that there is impunity in Peru,” said Navarro, who participated in Operation Amazonas raid that netted the timber shipment.
He also questioned why Peru has not yet sanctioned La Oroza, despite the U.S. having already done so. Instead, he said, “what is being seen is a reward.”
Mongabay Latam contacted Luis Ascencio Jurado, an executive at La Oroza, who cited personal reasons for declining to answer any questions.
Mongabay Latam also reached out to the Ministry of Economy and Finance about the inclusion of the company in the Reactiva Peru Program, but received no response by the time this article was published.
Concessions contested
Of the total stimulus package for the forestry sector in Loreto, 8 million soles ($2.2 million) will be invested in supporting 169 forest concessions, while the remaining 5 million soles ($1.4 million) will be earmarked for medium-sized enterprises making wood products for public procurement by the regional government. Those products will go to the education sector and other state agencies.
Caraza, the prosecutor, said he’s concerned that some of the funds have gone to concessions that were initially awarded without having complied with all the legal requirements.
Between 2016 and 2017, the Loreto regional government granted 43 concessions in territories where applications are pending for designation as Indigenous reserves for peoples in voluntary isolation and initial contact, according to the Regional Organization of Indigenous Peoples of the East (ORPIO). The group and others recently filed a lawsuit against the forestry regeneration program in Loreto.
In 2019, the Loreto administration granted two forest concessions to La Oroza through an expedited process that allows the distribution of lands that have reverted to state control. “Last year, rights were granted to this company illegally, as the regional government did not meet all the requirements for the granting of these concessions,” said Caraza, who has opened an investigation into this case.
Terán said the 169 concessions included in the regeneration program are those granted since 2003 and that have been chosen from a total of 334 concessions awarded by the regional government.
He said what his administration is interested in is verifying that the wood shipments have a legal origin and “come from managed forests,” regardless of any legal inquiries the companies may be facing.
Urrunaga said there are risks in trying to stimulate the forestry rector in partnership with companies that have a history of illegality and that have shown they don’t comply with the law. She added that Indigenous organizations have also complained about the danger posed by outsiders passing through their territories, creating a real risk of spreading the coronavirus. “We are concerned that they do not respect protocols and regulations. The state does not have the capacity to deal with the health emergency in the Amazon, but it is obliged to open the doors for economic regeneration,” Urrunaga said.
Luis Alberto Gonzáles, former chief director of the National Forest and Wildlife Service (SERFOR), was also critical of the Loreto government’s program. He said that during his recent time in office, he sought to exclude the regions of Loreto and Ucayali from this stage of the forestry regeneration program due to the risk of spreading the coronavirus to communities in these regions. Now, Gonzáles said, the start of forestry activities in the San Martín and Madre de Dios regions should also be postponed due to the advance of COVID-19 infections there.
“The forestry sector in Peru is 80% informal. Therefore, the economic regeneration policy has to be very cautious. In other countries they did it while ignoring the fundamental element, which is to protect people’s health, and the pandemic surged again,” he said.
Banner image: Stockpiles of illegal timber in Peru’s Loreto region, courtesy of EIA.
This story was first reported by Mongabay’s Latam team and published here on our Latam site on July 23, 2020.