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Trafficking of banned Myanmar teak lands German company with $4m fine

Wood that was cut for charcoal production near Katha, northern Myanmar. Villages in this area used to cut teak and other valuable trees for export, but have since started producing charcoal. The charcoal being exported to China can be made from any tree, regardless of size or kind. This amount of trees could produce about 150 bags of charcoal. Photo by Nathan Siegel for Mongabay.

Wood that was cut for charcoal production near Katha, northern Myanmar. Villages in this area used to cut teak and other valuable trees for export, but have since started producing charcoal. The charcoal being exported to China can be made from any tree, regardless of size or kind. This amount of trees could produce about 150 bags of charcoal. Photo by Nathan Siegel for Mongabay.

  • German firm WOB Timber was ordered by a Hamburg court to pay $4 million in fines for illegally trading Myanmar teak.
  • Although there is a regulation that prohibits imports of Myanmar wood into the EU, companies take advantage of legal loopholes to evade it, says the Environmental Investigation Agency (EIA).
  • According to the EIA, demand for Myanmar teakwood contributed to the Southeast Asian country losing a Belgium-size area of forest between 2001 and 2018

WOB Timber, a logging company based in Hamburg, Germany, has been ordered by a court to pay a $4 million fine for illegally trading Myanmar timber. The April 27 decision was one of the highest financial penalties for this type of crime in the European Union.

The Hamburg Regional Court determined that WOB Timber had evaded EU sanctions by importing 31 different shipments of teakwood from Myanmar, worth several million dollars, between 2008 and 2011. Many of the shipments involved timber being processed in Taiwan and declared as originating from that country, rather than Myanmar, to get around the sanctions.

The court also sentenced the company’s director, Stephan Bührich, to 21 months of conditional prison and a fine of $243,000. Multiple attempts were made to communicate via email with WOB Timber about this matter but received no response.

The court’s decision comes within the framework of an investigation carried out by the Environmental Investigation Agency (EIA), related to the EU Timber Regulation (EUTR), a law introduced in 2013 to combat illegal timber imports into the EU.

The EIA is a London-based organization that investigates and campaigns against environmental crimes and abuses. Its undercover investigations expose transnational wildlife crime, with a focus on elephants, pangolins and tigers, and forest crimes such as illegal logging and deforestation for cash crops like palm oil, among others.

According to the EIA, the EUTR was necessary as, previously, a much smaller set of tools was available to address the illegal timber trade.

One of these tools was sanctions; between 2008 and 2011, there were sanctions on imports of wood from Myanmar to the EU. The ruling against WOB Timber is for violations of those sanctions.

According to the EIA, Myanmar teak is used in Europe for the market in luxury yachts owned by some of the richest people in the world. This demand contributes to Myanmar’s forests being destroyed at an almost unprecedented rate. The EIA says an area of forest larger than Belgium was lost during the period 2001-2018.

Natural Burmese teak on a deck at the London Boat Show. Photo by Sophie Cohen/Mongabay.

“This is having a devastating impact on people’s livelihoods, driving climate change through deforestation and destroying the country’s abundant biodiversity,” the EIA said in a May 2020 report.

“WOB Timber has continued to import wood from Myanmar, although for years there has been a common position among the EU authorities that it is not possible to import wood from Myanmar into the EU, in accordance with the EU Timber Regulation. Indeed, it is illegal to import timber from Myanmar into the EU,” Alec Dawson, EIA forest campaign manager, said in an email.

The EIA also said “WOB Timber has exploited regulatory loopholes to trade illicit timber more recently.” For example, EIA investigations have shown that WOB Timber has included the use of an intermediary in Croatia to avoid law enforcement in Germany.

Through a freedom of information request, the EIA obtained documents from the Croatian Ministry of Agriculture revealing that a group of European companies, among them WOB Timber, has been paying a Croatian company to land Myanmar teak in Croatia in an attempt to bypass the EUTR.

Fresh teak logs in Nongdao, Myanmar. Image courtesy of EIA.

“The information obtained by EIA shows many of the companies are doing this despite the previous warnings, in other words, knowing that the law is being broken,” the EIA says.

It adds that exporting companies inside Myanmar have evaded taxes by trading timber with WOB Timber, “which would raise further legal issues under the EUTR,” Dawson added.

A March 17 EIA report reviewed documents from 10 shipments of teak imported into Croatia and analyzed the trade data of the timber exports reported from Myanmar to several countries. From this, the EIA identified a pattern of apparent tax evasion by companies exporting wood products from Myanmar.

“We believe private companies exporting timber purchased from the state-owned Myanma Timber Enterprise (MTE) have been exaggerating how processed their timber is to avoid paying the Special Goods Tax (SGT) and paying a reduced Myanmar Customs Tariff (MCT), specifically in relation to shipments of teak boards,” the EIA says.

The documents inspected by the EIA also raise concerns about other illegal actions. The EIA found that four companies in the EU — ABC in Slovenia, HF Italia in Italy, Houthandel Boogaerdt in the Netherlands, and WOB Timber in Germany — have received this illegally harvested timber and have benefited from having paid a reduced price for its wood.

“The court’s sentencing is welcome and the timing significant,” said Faith Doherty, EIA’s forests campaigns leader. “Since the military coup on 1 February 2021, we have been urging the international community to respond by sanctioning the export of Myanmar timber to its markets. Profits from timber exports benefit the military junta and the criminal syndicates operating in an even more brutal and chaotic Myanmar.”

The EIA says it has carried out more investigations into other issues related to Myanmar’s timber, especially since the coup and the brutal military crackdown on protesters in that country.

According to the EIA, its investigations against illegal timber traders will continue: “Much of Myanmar’s timber that reaches the EU passes through Italy. We recently found a company that trades in Italy showing off on social media about the trade despite the coup,” Dawson says.

Mongabay attempted to contact BLE, the competent authority of the EUTR in Germany, but did not receive a response.

Banner image: Wood that was cut for charcoal production near Katha, northern Myanmar. Photo by Nathan Siegel for Mongabay.