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ukraine / romania

Complicit in corruption? Illegal wood?

Article by Gerd Ebner (translated by Eva Guzely) | 23.07.2018 - 13:53

For two years, British NGO Earthsight carried out research into Ukrainian timber trade practices. Its final report is called “Complicit in Corruption”. Tara Ganesh from Earthsight sums it up: “Enormous quantities of illegally cut logs from Eastern European forests reach the EU, and well-known Western European companies happily help themselves.”

Wood from dubious sources

Wood panel manufacturer Egger was named as by far the biggest buyer of wood in the Ukraine. The Austrian company supposedly has numerous suppliers who have been involved in corruption cases. About one third of the wood purchased by Egger allegedly comes from such sources.

In a spontaneous statement, the Tyrolean company promises to “take further steps, especially regarding wood from the Ukraine. We count on the support of local authorities and European institutions. However, we will not be held responsible for criminal acts in a country whose victim we could be.”

FSC certification easy to obtain

What is ironical for the WWF as organiser of the event: Large quantities of the logs in question carry the FSC label which is actively promoted by the WWF. According to Ganesh, certification is easy to obtain in the Ukraine – a “child’s game” as she puts it.

Also on the podium in Vienna was Johannes Zahnen from WWF Deutschland who sees FSC as a way of reducing risks when buying wood. “We do know about the shortcomings of the FSC system. Nonetheless, FSC keeps making an effort to address them and close the gaps.”

Undercover operation in the Ukraine

According to Ganesh, one of Swiss-Krono’s representatives showed an interest in purchasing illegal wood during an undercover operation conducted by Earthsight. What is more, the representative supposedly invited the undercover agent to visit the premises of one production site.

Holzindustrie Schweighofer has been named as the biggest importer of Ukrainian wood up until 2016. Ganesh sees direct links between the company and Viktor Sivets, former head the State Forest Resources Agency of Ukraine and tennis partner of the former Ukrainian president Wiktor Janukowytsch with access to the highest levels of government.

Earthsight accuses Sivets, who had been in office from 2011 to 2014, of being the main architect of a system of corruption on a high level, a system which earned him and his family more than 32 million euros. Sivets is on the run from Ukrainian authorities and was wanted by Interpol up until recently.

Allegation of illegal payments

During Sivets’ time in office, Schweighofer was by far the biggest buyer of Ukrainian logs. In the Earthsight documents, the prosecution names Uniles s.r.o., a Slovakian subsidiary of the Schweighofer group, as one of four companies that made illegal payments of about 13.6 million euros to Sivets from February 2011 to February 2014.

According to Earthsight, the current Ukrainian president has already asked the EU for help in tackling illegal log harvests. He demands tougher action against companies which buy high-risk wood.

The problem of third party purchases

David Gehl, a representative of the Enviromental Investigation Agency (EIA), claimed that Holzindustrie Schweighofer still receives logs from national parks. His argumentation: “About half of the deliveries to Schweighofer come from third-party purchases. Therefore, the company cannot know the logs’ origins.” Gehl admitted that in many cases Romanian law does not prohibit log harvests in national parks. However, the EIA documented cases of overuse of wood, illegal river crossings etc.

“Every one of our suppliers has to disclose all sources of supply as well as logging permits”, responds Holzindustrie Schweighofer. “We employ 50 people who are responsible for supply chain security. The central elements are visits to suppliers and the place of use in the forests, strict controls of sustainability certifications and of suppliers’ company profiles as well as controls of jurisdiction of forestry administrations”, a spokesperson explains. “Whenever our security experts come to the conclusion that logs from national forests have been traded via a log yard, which is perfectly legal in certain areas of the country’s national parks, we do not accept deliveries from that log yard.”

According to the EIA, Holzindustrie Schweighofer’s use of national wood fell to 1.2 million m³ a year, which, however, makes the company more dependent on other countries, such as the Ukraine, Belarus or Slovakia. “With those imports nobody can prove that the wood comes from legal sources”, comments Gehl.

GPS tracking only for 20%?

The EIA appreciated Schweighofer’s creation of the GPS tracking system, reminding, however, that only 20% of the wood is registered. According to the NGO’s calculations, 60% of the wood is imported and of the other 40%, half comes from third parties.

As to the Ukraine, Holzindustrie Schweighofer stresses that “all ten EUTR inspections which took place at our various production sites since 2015 were passed positively”.

Zahnen complains that eight years after the adoption of the EUTR and five years after its coming into force, implementation is still progressing at a very slow pace. He sees Austria as having central responsibility when it comes to the flow of goods from Eastern Europe. “How can it be that high-risk wood reaches the EU via the Ukraine, Romania and Austrian companies? Checks in Austria are not enough”, he judged. “NGOs discover those illegal practices – and the authorities don’t?”

Shortcomings in the implementation of the EUTR

The WWF Austria will now issue a complaint at the Austrian Research Centre for Forests (BFW). “This step aims at keeping Austrian companies from purchasing wood from sources which are not a 100% safe”, explains Andrea Johanides from WWF Austria. “Austria has to use the presidency of the Council of the EU to finally implement the EUTR.”

Upon request, Zahnen and Johanides had to confirm that there is no proof that the companies in question knowingly bought and used illegal wood. Both speak of “strong suspicions”. Now, it is up to the BFW to investigate the accusations.