TNRC Blog Understanding how corruption is accelerating illegal logging and deforestation during the COVID-19 pandemic

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Targeting Natural Resource Corruption

Understanding how corruption is accelerating illegal logging and deforestation during the COVID-19 pandemic

September 2020 | TNRC Blog Post

This post captures insights on the connections between corruption and the accelerating illegal logging and deforestation occurring during the COVID-19 pandemic. Experts used case studies from Peru, Brazil and Mozambique to focus on the causes and criminal activity associated with deforestation and approaches for global practitioners to protect forest resources, address governance challenges, and safeguard rights. The speakers were Maureen Moriarty-Lempke, Senior Fellow, Duke University Center for International Development and Senior Associate, Land and Security, CDA Collaborative Cambridge; Julia M. Urrunaga, Peru Director, Environmental Investigation Agency (EIA); and Julia Marisa Sekula, Coordinator - Climate and Security, Instituto Igarapé. The panel was moderated by Debra LaPrevotte, Senior Investigator, the Sentry and introduced by Dr Louise Shelley, Director, Terrorism, Transnational Crime and Corruption Center (TraCCC) and University Professor, Schar School of Policy and Government, George Mason University. The virtual panel had a global audience of practitioners from 46 countries around the world. A recording is above, and a PDF of the slides from the event can be downloaded here.

Key Takeaways

Deforestation of the Amazon and Mozambique is proceeding at a rapid pace. In Brazil deforestation jumped 85% from 2018 to 2019. Peru’s timber exports grew 25% in July 2020, even though the country had been in lockdown for three months.
COVID 19 is making the situation worse. The door of criminal opportunity is ajar with fewer patrols and more social distancing; industry stakeholders are pushing for relaxation of regulations in the name of reviving the economy and local populations are in increasingly desperate straits. Also, donors are focusing much more on corruption in PPE and other COVID related procurement than other kinds of corruption.
Corruption is intrinsic and essential to illicit logging because the timber needs to be laundered for export. You can’t hide it in a suitcase. Public and private actors collaborate in corruption at all levels of the supply chain.
Workers engaged in illegal logging are vulnerable to labor rights abuses including forced labor, withholding of wages, deception, intimidation, hazardous conditions and child labor. In Mozambique, workers are often impoverished migrants from other countries in Africa with no recourse and no other options.
We need to eliminate “no questions asked” markets. In Peru participants in the supply chain accept false documentation “in good faith” even though it has been shown that over 80% of the production is illegal. Traceability is key and due diligence is essential.
Demand countries should continue to uphold and strengthen commitments to purchase only legally logged timber. We need to prioritize traceability and risk assessment for timber/wood products as well as other “forest adjacent” supply chains such as palm oil, soy, cattle, rubber, cocoa, and other forms of plantation-based agriculture.
We have the technology to improve traceability and transparency and know who many of the bad actors are. We need to shut down the laundering machine and provide strong sanctions for the private actors producing fake forest inventories and for the public officers validating them. We need the corporations at the consumer end to be more vigilant in regard to their supply chains.
Indigenous populations can serve as guardians of the forests, but without secure communal rights to their land, protection from imported disease, and protection from retaliation and attacks by other actors, they will consistently face danger and difficulties in fulfilling this role.

How is corruption facilitating deforestation in these countries?

Peru
Julia M. Urrunaga Peru Director, Environmental Investigation Agency (EIA)

Deforestation in the Peruvian Amazon is proceeding at a rapid pace. The EIA produced detailed reports in 2012, 2015 and 2018, showing that 80% of lumber production in Peru is illegal or illicit, and by now, even the government acknowledges this fact. This timber needs to be laundered for export – a complex process that requires active public and private corruption. It begins with the falsification of forest inventories and harvest permits that are then validated by public officials. Corruption continues throughout the whole supply chain with “no questions asked” markets facilitating sales and exports. We have detailed information on which companies are involved in the illegal timber trade, and which countries they are selling it to.

In recent years, Peruvian government agencies (SUNAT, OSINFOR and FEMA) in cooperation with INTERPOL, WCO and consumer country authorities, have carried out several successful operations against illegal timber exports. Millions of dollars of illegal timber have been identified and stopped and seventy containers of illegal timber stopped by US authorities in Houston and destroyed. There are many dedicated people in the government working to counter illegal logging, but their success brings pushback from the industry, who are seeking to eliminate the requirements for data collection in order to weaken traceability and transparency.

Brazil
Julia Marisa Sekula Coordinator - Climate and Security, Instituto Igarapé

Deforestation in Brazil jumped 85% from 2018 to 2019 and has accelerated under COVID, despite the lockdown. Equally, the culture of impunity has been fortified during the pandemic by the current minister of environment that continues to try to push through legislature that harms the environment and seeks to indemnify irregular and illegal actors. 70% of timber products from the Amazon come from illegal operations, which may involve theft of wood from conservation areas and indigenous reserves, use of slave labor, and laundering of stolen timber. This is just part of a larger scheme of environmental crime and corruption that starts with small fires, to destroy the shrubbery and undergrowth. Then the valuable timber gets cut and sold to international markets. More fires are set, so that cattle and soybean production can be brought in. Soybeans, beef and lumber are all important exports with powerful lobbies, making the cycle is hard to break.

Given the global impact, however, there is increasing international pressure on the government to do something about it. In Brazil, there are relatively few actors involved in this illegal activity. Findings identified three or four major export companies who are responsible for the great majority of the illegal exports. They export to 14 companies in Belgium, the Netherlands, Denmark, the UK, France and the U.S. These companies, in turns are funded by international banks. Much of the data is in government hands. So the private sector and the financial sector need to step in here, and demand technological solutions to promote transparency.

Mozambique
Maureen Moriarty-Lempke Senior Fellow, Duke University Center for International Development and Senior Associate, Land and Security, CDA Collaborative Cambridge

Mozambique is one in a series of southern African countries to experience a boom and bust cycle of the exploitation of a rosewood look-alike species, called Nkula. Ninety percent of Mozambique’s Nkula exports go to China for Hongmu furniture. Mozambique’s rosewood exports spiked in 2017 and have been declining ever since, with labor conditions deteriorating as the bust deepens. However, illicit timber exploitation continues to thrive in the context of corruption, weak governance, and poverty in a post-conflict state, enabling a range of activities that underpin both labor rights abuses and deforestation.

The system depends on migrant workers who are vulnerable to wide array of labor abuses including forced labor, deceptive recruiting, withholding of wages, intimidation, hazardous working conditions and child labor. Wages have been decreasing as the species has declined and the remoteness of the area makes it difficult for outside observers to penetrate. The institutional arrangements intended to protect workers are ineffective due to rampant corruption, fraud and self-dealing. As one worker reported, “the Police protected Chinese, not us workers. We stopped complaining to the police since it was known that they were on their side...”

What has been the Impact of COVID 19?

In Mozambique the door of criminal opportunity is ajar because social distancing restrictions mean fewer patrols are policing the forests of the world preventing logging crime. The retreat of the state has been made even more damaging by the concurrent increase of terrorist activity in the region, including their recent seizure of the main port in Pemba. When it comes to corruption, donors are concentrating on corruption in public procurement related to PPE and donor assistance.

In Peru regional authorities are trying to “reactivate” the timber sector with special incentives and regulatory exemptions, increasing the risk of spreading the virus over indigenous communities and uncontacted tribes, as well of illegal logging. This has exacerbated the vulnerability of Amazon indigenous communities and forests. There has been an increase in attacks on environmental defenders, with four leaders killed during the pandemic. Industry leaders are demanding incentives and relaxation of standards, and the Director of the National Forest Sector, who was pushing for reinforcing transparency and traceability, was arbitrarily removed. Peru’s timber exports grew 25% in July 2020, even though the country had been in lockdown for three months.

In Brazil there has been an unprecedented increase in all indices of corruption. The Minister of Environment announced that he would use the COVID moment to relax environmental regulations. This is a strong signal to illegal actors, since every time there is a hint of relaxation in restrictions, there is a big surge in illegal activity. Unfortunately, COVID is halting patrols by police and inspectors, but it is not halting the activities of criminals. And the precarious economic conditions resulting from the pandemic are providing a greater incentive for individuals to participate in illegal activities.

What are the solutions? Are there any positive trends?

Mozambique: Yes, there are solutions, and there has been progress. Nkula and its cousins have been placed on the CITES lists. That is helpful. We need to focus on traceability, supply chain accountability and risk assessments for supply chains that include social and environmental risks. These require an understanding of the human dignity and labor conflict aspects of deforestation and illegal logging. Technology can be a powerful supporting tool, in particular AI and geospatial analysis, which can provide us with granular details of what is happening on the ground.

Peru: It is not all negative. Operation Amazonas was an important step forward, and resulted in the destruction of more than 70 containers of illegal timber sent to the U.S. We have been making some progress working with shipping companies. But we need to work harder to educate consumers. A new app is about to be released to enable consumers to do research when they buy furniture. This could make a big difference. In Peru, there is corruption in government agencies, but there are still lots of amazing people in the public sector who are working very hard to protect the forests. China recently changed their laws and added references to legality in timber. It is not specific enough, but it is movement forward.

Brazil: We have the capacity and technology necessary to protect the forests. But we need to get companies to actually do the required due diligence. We need to provide them with technology to do so, because we can’t rely on the central government to do it. There is simply no political will at the top. So we need to work at the state and municipal levels, and work internationally. It will take an entrepreneurial attitude to solve this problem in Brazil.

How do you see the role of whistleblowers?

In Brazil there is no real way of protecting whistleblowers. It is very dangerous because powerful people in Congress own the land. The deck is stacked against local whistleblowers so we need to look at the demand side and rely on pressure from demand countries. The same is true of Peru. Many environmental activists and whistleblowers have been killed. In Mozambique it is a mixed bag. A case was brought up by whistleblowers and the local authorities prosecuted but at the provincial level all charges were dismissed.

What are the obstacles to greater participation by indigenous communities?

Land rights are the basis of everything that we are talking about here. In Brazil, officials register private property rights in indigenous lands. No one cares or checks. Indigenous communities want community property, not necessarily private property. There needs to be a continuum of rights to ensure the rights of indigenous communities are safeguarded, and a land adjudication mechanism that doesn’t automatically favor individual rights.

This is an important issue, because indigenous populations can serve as guardians of the forests, but without secure communal rights to their land, protection from imported disease, and protection from retaliation and attacks by other actors, they will consistently face danger and difficulties in fulfilling this role. We need to strengthen connections with indigenous communities, help them raise their voices and tell their stories. In Peru, the 2018 movie Antamiki, featuring a meeting of indigenous people and visiting musicians, fostered by our speaker from EIA, was a good example of this.

In South Sudan illegal teak trafficking is financing the fighting. Is there a terrorism or conflict nexus with illicit logging in Mozambique and the Amazon?

In Mozambique we hear anecdotally of timber and rubies financing Al Ansar, which has a growing foothold in the Cabo Delgado, especially since their takeover of the port in Pemba. But journalists and researchers have been arrested in Cabo Delgado, so it is hard to get good data. This is not so much the case in Peru and Brazil, but the money laundered from the illegal timber is used for many other criminal purposes.