Burma

German Company Found Supplying Illegal Myanmar Teak to EU

By Nyein Nyein 22 March 2019

YANGON — The London-based Environmental Investigation Agency (EIA) submitted evidence to German and European enforcement authorities showing serious repeated violations of the European Union Timber Regulation (EUTR) by a German company selling illegal Myanmar teak on Thursday.

The complaint against Alfred Neumann Co. Ltd. is the 15th complaint of “illegally harvested timber being placed on the market in Europe” filed by EIA on the EUTR. Numerous authorities in Europe have previously found companies selling Myanmar teak in violation of the EUTR.

EIA’s forest campaigner Alec Dawson highlighted the fact that companies such as Alfred Neumann “connect the world’s most corrupt teak traders with the world’s most prestigious yacht-builders and clients, contributing to the [continuous] destruction of Myanmar’s teak forests.”

EIA has urged European leaders to have “tougher enforcement” of laws in the European market where illegal teak is found to be entering. The agency also advocates for timber operators “to undertake due diligence to minimize the risk” of supplying illegally acquired timber like that from Myanmar.

Dawson told The Irrawaddy in an email that even though many companies have been found in violation of due diligence requirements of the EUTR, the “outcomes of all the concerns raised” by EIA are unknown as the “competent authorities do not always share [information about] the actions they have taken.”

EIA has raised complaints against 15 companies since 2015, namely Belotti SPA, Antonini Legnami, Timberlux Srl and Basso Legnami in Italy; Boogaerdt Wood, World Wood and Gold Teak Holdings in the Netherlands; Keflico in Denmark; Teak Solutions in Germany (transferred to Spain); Moody Decking, Stones Marine Timber, and Wattsons in the UK; Crown Teak and Vandercasteele Houtimport in Belgium; and Alfred Neumann in Germany.

Following the EIA complaints against these companies, one Dutch company, Boogaerdt Wood, was found in violation of the EUTR and threatened with fines. Denmark also issued an injunction to prevent placements of Myanmar teak on the market there and Germany has been turning back some shipments of Myanmar teak before they can be placed on the market.

Dawson added that despites these actions, no due diligence system for Myanmar teak meets the requirements of the EUTR, which are the responsibility of European government authorities.

“Myanmar teak has still been entering the European market and it appears companies are trying to test the will and resources of enforcement agencies, for example by routing shipments of wood through third countries to avoid liability. This means we still need to see better coordination and consistency in enforcement of the EUTR,” said Alec Dawson.

EIA said their evidence underpins EIA’s concerns that “multiple shipments of Myanmar teak for the company Alfred Neumann GmbH (Co. Ltd.) since 2013 were purchased from the businesses of corrupt Thailand-based teak kingpin Cheng Pui Chee, aka Chetta Apipatana.”

The “teak kingpin” has been the key supplier of the Myanmar teak to various foreign companies since late 1990s according to the report of the EIA’s two-year investigation titled, “State of Corruption: The top-level conspiracy behind the global trade in Myanmar’s illegal teak” which they released in February. The investigation carried out during 2017 and 2018 revealed how Myanmar teak was sold under “a secret off-the-books system of fraudulent trade” which was run in parallel to, and within, the Myanmar Timber Enterprise (MTE)-administered official legal trade.

The agency revealed that three suppliers to Alfred Neumann said that the late Cheng Pui Chee systematically bribed former senior Myanmar generals and forestry sector officials to secure “preferential access to harvests and impunity” and “under-declared teak grades to defraud the state.”

Cheng Pui Chee’s company Cheung Hing partners with Koh Seow Bean’s Singapore and Malaysia-based companies, including Pacific Timber Enterprise Ltd and Northwood Ltd, in Myanmar, and Timberlux Sdn Bhd and SCK Wooden Industries Sdn Bhd, in Malaysia.

The report reveals inducements delivered by Cheng Pui Chee [in the past two decades] included “tens of millions of dollars paid into personal accounts of Myanmar’s top generals; funding the private foreign education of senior military and timber sector officials’ children.” It exposed “payment of hospital fees, accommodation and ‘entertainment’ for senior forestry officials in Singapore; and purchases and gifts of exotic zoo animals for Naypyidaw Zoo [in 1990 and 2011] and other lower level bribes.”

Cheng Pui Chee’s Thailand-registered company Thai Sawat, led by his brother, was one of only five companies whose 1989-granted permission to log in Myanmar was renewed in 1993, gifted penguins to Myanmar’s forestry department in 1990 and Northwood donated zebras and giraffes to Naypyitaw Zoo in 2011, according to the report.

Teak logging and illegal trade over land fuels conflict

EIA’s complaint also details how another supplier in China claimed “101 percent” of its teak is illegally logged in Myanmar and smuggled to China and that a planned shipment for Alfred Neumann would have paperwork added in Malaysia to get it into Europe despite the EUTR.

Myanmar teak has its biggest direct markets in China, India and Thailand, “which between them imported a staggering 4.04 million [cubic meters] of teak logs and sawn timber direct from Myanmar between 2007 and 2017, worth $2.79 billion,” according to EIA’s report. Malaysia, Singapore and Taiwan have also historically imported large volumes of Myanmar teak.

In the last two years, although wood log exports are banned, illegal logs continue to be smuggled across the border into China, EIA revealed.

“High demand in China for teak logged in Shan State is also a contributing factor in outbreaks of conflict between Shan ethnic armed groups and the Myanmar military, as both sides seek to profit from the teak trade,” EIA said in its February report.

It said, “Apart from breaks when bad weather and sporadic local clampdowns and conflicts rendered the trafficking routes impassable, the teak smuggling business continued in 2017 and 2018. During this period, rudimentary sawmills sprang up in areas of Kachin near the border to cut the logs into planks or flitches for onward transport into China, reflecting the switch in demand for sawn timber and the need to conceal the contraband during transport.”

However, U Tin Tun, director of the government’s forestry department recently told The Irrawaddy that the government does not allow the land-border teak trade and it is considered illegal.

Citing official Chinese customs data, however, EIA said China imported 45,000 tons of teak logs from Myanmar, valued at $30 million in 2016, and 95 percent of that wood entered over the land border. In the final quarter of 2016 alone, 35,000 tons of sawn teak wood imported to China show that the trade actually increased.

Dawson told The Irrawaddy that, “EIA has submitted information to the Myanmar government regarding illegal trade into China, and the need for CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) protection of endangered rosewood and padauk.”

Dawson said that Myanmar should “acknowledge the corruption behind the rampant overharvesting conducted by MTE and its subcontractors leading up to the logging ban and conduct an investigation into corruption in the military, MTE and the forest department linked to Cheng Pui Chee’s operations in Myanmar.”

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