Logging Corruption in Vietnam and Cambodia

In a new report that promises to make waves all the way to Europe, the watchdog Environmental Investigation Agency takes aim at Vietnam's timber processing industry and the role it plays in the illicit timber trade from Cambodia. The study comes just days before Vietnam and the European Union are meant to finalize their discussions for a Voluntary Protection Agreement (VPA), a deal critics say would spell doom for Cambodia's environment.

That Cambodian timber ends up in Vietnam's factories is one of Pnom Penh’s worst kept secrets. Activists and journalists – not to mention the authorities – have always known that business interests hailing from Vietnam scoop up valuable timber across the border, pay a pittance to locals and resell it overseas.

But the numbers and the instances of corruption detailed in the study -- aptly titled “Repeat Offender” -- are staggering. Faced with a long-standing Cambodian ban on log exports and laws protecting endangered species, Vietnamese officials have opted for the easiest solution. They have ignored regulations and have provided well-connected companies with timber quotas in exchange for bribes.

“With about 300,000m3 of logs having been smuggled out of Cambodia and legitimized in Vietnam under these quotas, such kickbacks are likely to have amounted to more than US$13 million since the beginning of November 2016,” the EIA calculates. “Not only are Vietnamese officials corruptly profiting but so too is the Vietnamese state, formally taxing the illegal traffic of logs and so effectively taking a cut of the illegal businesses it has sanctioned,” reads the report.

Consequences are dire. Vietnamese companies have imported as much as US$386 million-worth of Cambodian wood in 2015 alone, the study says, a 52 per cent increase on the previous year. This is also the result of a shift in sourcing, with factories increasingly relying on Cambodia rather than Laos for their raw materials - again in 2015, imports from Laos decreased by 40 percent.

It is an embarrassment to the Cambodian authorities, who are supposedly fighting logging as never before. “As far as we’re concerned, all the major logging has been ended with operations that have been carried out in the last couple of months by the anti-logging task force,” Eang Sophalleth, a government spokesperson, told media last year. Such claims are common, but look hollower by the day.

The report is likely to cause headaches in faraway Bruxelles, too, for the European Union is about to finalize a Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (FLEGT VPA) with Vietnam. VPAs are agreements in which one country negotiates a “passport” for its timber exports with European authorities, after which products coming from that country are considered legal.

Given the lack of regard for laws and regulations, as well as widespread corruption in both Cambodia and Vietnam, observers are worried that the VPA may open the floodgates for fishy operators to enter the European market, driving logging to new heights.

“The European Union has to stop the VPA, or they will be responsible for deforestation in Cambodia,” says Ouch Leng, an independent forest activist who was awarded the Goldman Environmental Prize in 2016. “What we have here is a long-time mafia cartel which aims at getting rich and powerful. There is systematic collusion at all levels between Cambodian and Vietnamese authorities,” he says.

There is evidence that some Cambodian timber is already finding its way to Europe. The EIA found that a couple of years ago, two Italian companies, Andrea Bizzotto and Magazzini Cosma di Cosma Oliviero, had acquired furniture made from a Vietnamese manufacturer named Thanh Thuy Co Ltd. Its logs originated from a military-owned Vietnamese enterprise, the Company of Economic Cooperation (COECCO), whose employees worked around Attapeu, Laos, chopping trees to make way for the planned Xe Kaman 1 hydropower dam.

But it might be more accurate to say they were logging only around the hydropower site, for according to investigators most of the logging done by COECCO took place in protected areas beyond the planned inundation zone. In other words, loggers were using the excuse of building a dam to ratchet up valuable timber.

European authorities appear to have already been hoodwinked in the national parks of Cambodia's Ratanakiri province. There, the EIA found that O’Tabok Community Protected Area is a site where massive illegal logging takes place – yet, the same area is one of those funded by a US$1 million grant from the European Union signed by the Cambodian Ministry of Environment.

Corruption appears to be an inevitable problem for any control procedures that may be put in place to ensure compliance with the deal.

“The verification agencies involved in overseeing the proposed measures Vietnam will implement for the VPA are all variously involved in the timber smuggling EIA has exposed,” said Jago Wadley, a forest campaigner with the EIA. “The significant policy and legal reforms Vietnam needs to institute for the VPA will need to be accompanied by a massive anti-corruption drive in those government agencies that regulate it.”

In this sense, it may be useful to remember how Siamese rosewood has nearly disappeared from the country. This rare species is protected under the Convention on International Trade of Endangered Species (CITES), to which Cambodia is a party, but its red-and-black patterns made it too attractive to wealthy Chinese customers for loggers not to go after it. The latter were willing to do just about anything to lay their hands on rosewood logs and were highly successful in their endeavor, generating hundreds of millions dollars in revenue.

In Prey Lang, Cambodia's largest lowland evergreen forest, they penetrated deep into what is supposed to be a protected area, selectively targeting rosewood trees or doing away with entire swathes of jungle as part of Economic Land Concessions, areas granted by the authorities to set up plantations.

When Asia Sentinel reported on their whereabouts last year, they were approaching the core of the reserve. Rosewood had already disappeared and the chainsaws were buzzing for resin trees, many of which could be seen lying on the sides of the mud tracks.

They, too, are supposedly a protected species.