Chinese, Malaysian Timber Interests Loot PNG Rainforests

The rainforests of Papua New Guinea are being looted by Malaysian and Chinese companies shipping the timber to manufacturing hubs in China, where products are finished commercially – and some of which were previously delivered to some of the United States’ biggest retailers in contravention of US laws, according to an exhaustive investigation by the international environmental NGO Global Witness.

After being presented with the NGO’s findings, Home Depot, the biggest home products retailer, and Home Legend dropped purchases of flooring made of toun, the most commercially viable wood from the PNG rainforests. However, according to the report, it’s likely that smaller retailers won’t come under the microscope of the US Justice Department.

Probably the biggest question, in fact, is one that Global Witness hasn’t asked, and that is whether the violations of US law will continue to matter to the justice department, and whether the department, now under the leadership of former Republican Sen. Jeff Sessions, will resume the aggressive prosecutions that resulted in a case against the biggest US importer of Chinese-originated flooring.

The new administration under President Donald Trump so far has shown little inclination to go after violators of natural resource laws and in fact the Environmental Protection Agency under former Oklahoma oil industry crony Scott Pruitt is seeking to dismantle the agency he now heads as quickly as he can. The stance the US takes on such cases is closely watched by the rest of the world. If US concerns evaporate, they are likely to do so elsewhere.

Most of the wood spotlighted by the Global Witness probe is sold domestically in China although significant amounts are shipped to India, Japan, South Korea and Vietnam in addition to the United States, according to the 47-page report, released on August 1 in Washington, DC.

Global Witness, based in London and Washington, DC, has since 1993 issued a long list of hard-hitting, internationally respected reports ranging from blood diamonds in Sierra Leone and Zimbabwe to depredation of national resources in Cambodia, seeking to break the links between natural resources exploitation, poverty, human rights abuses and corruption worldwide.

The Papua New Guinea investigation spanned more than two years, from 2014 to 2016, and concentrated on case studies in East New Britain, West Sepic and New Ireland provinces. Although Papua New Guinea is home to the largest stock of tropical rainforest remaining in Asia, by 2011, according to the report, more than 12 percent of the land had been handed out to Malaysian-controlled timber companies in large agricultural concessions known as Special Agriculture and Business Leases, or SABLs.

The biggest of the Malaysian companies is Rimbunan Hijau, controlled by Malaysian Chinese businessman Tiong Hiew King. It has operations in 16 countries spanning Asia and stretching into Equatorial Guinea, Gabon, Russia, New Zealand and Vanuatu. Tiong is a crony of Abdul Taib Mahmud, the longtime former chief minister of Sarawak, who became enormously wealthy by handing out timber concessions to major logging companies that denuded Sarawak. Since it arrived in PNG in 2011, Rimbunan Hijau has clear-cut an area more than three times the size of Manhattan, exporting US$100 million of timber and planting rows of oil palms where the ancient forest once stood, according to the report.

Rimbunan Hijau equipment in PNG

In 2013, according to the Global Witness report, a government inquiry concluded that most of the SABLs reviewed had violated laws designed to protect land rights for the indigenous peoples. A single SABL, issued without consent of the landowners, had accounted for roughly 10 percent of all the logs exported under the leases. Although the court struck down the lease as in violation of the law, in the months following the decision, at least six more ships carrying millions of dollars of illegal timber sailed from PNG ports to China.

When Global Witness asked companies operating under the leases for comment, they challenged the validity and applicability of the government’s statements of illegality and said their operations were legal.

“Taken together, the evidence regarding SABLs shows how the PNG government is failing to follow and enforce its own laws, to the detriment of its people and to the benefit4 of foreign logging concessions,” the report said.

So far, more than 6.3 million square meters of rainforest logs worth more than US$1 billion have been cut and exported off the leases, according to the report, with the bulk of it going to China, the world’s largest timber importer. Roughly one of every 10 tropical logs entering the Chinese market has come off the PNG agriculture and business leases, Global Witness found. Time after time, according to the report, villagers denied they had given permission for their land to be included in the leases.

The timber arrives in huge timber ports on the Yangtze River and is transferred to sawmills and manufacturers in Ninxun, 125 km southwest of Shanghai near Tonle Lake.

Toun, the most commercially valuable species, is mostly used for flooring, 15 to 20 percent of it coming from PNG and the Solomon Islands. With few exceptions, according to the report, flooring manufacturers, including exporters to the US, do not typically keep track of the origin of the timber.

The Lacey Act, passed by the US Congress in 1900 and since refined, prohibits trade in wildlife, fish and plants that have been illegally harvested, possessed, transported or sold. The law also requires importers to disclose the country of origin of products like flooring.

In February of 2016, the Virginia-based Lumber Liquidators, the country’s largest importer of flooring, was found criminally liable for violations of the Lacey Act and was forced to pay US$13 million in damages.

That has considerably slowed exports to the US, with several Chinese toun manufacturers saying US buyers had increased scrutiny and even dropped toun flooring as a result of the Lumber Liquidators decision.

Nonetheless, Global Witness said, “We found toun flooring being sold by a number of US companies ranging from small flooring importers and distributors to giant retailers including The Home Depot, Inc., the largest home improvement retailer in the US, and a US subsidiary of Nature Home, which claims to be China’s largest flooring brand.”

Although both Home Depot and Home Legend, LLC said they are in compliance with the Lacey Act, once they were presented with Global Witness’s investigations, they discontinued their sales of toun flooring and “committed to reviewing their sourcing practices,” the report noted.

Home Depot asked to collaborate with Global Witness to strengthen its tracking processes to identify any wood that might be at risk of coming from illegal or unsustainable sources, the report said. Home Legend said it would stop purchasing wood from the PNG and the Solomons.