Bank estimated that the illegal logging sector in. Peru generated between $44.5 and $72 million dollars annually,2 while
THE LAUNDERING MACHINE HOW FRAUD AND CORRUPTION IN PERU’S CONCESSION SYSTEM ARE DESTROYING THE FUTURE OF ITS FORESTS
EIA-GLOBAL.ORG
CONTENTS 3
EXECUTIVE SUMMARY
6
1. INTRODUCTION TO THE FOREST SECTOR
8
2. SYSTEMATICALLY FAILING THE SYSTEM
For over 25 years as a non-
20
3. INSTITUTIONS GOVERNING PERU’S FORESTS
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22
4. THE INTERNATIONAL POLICY CONTEXT
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26
5. HOW TIMBER TRADE “SHOULD”
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WORK – AND WHAT GOES WRONG 28
6. HUNDREDS OF SHIPMENTS: THE US-PERU TRADE IN ILLEGAL WOOD
28!#12&2)7*"#)92)%(:&6"*92& ("#4)3&%02&;#":3$&:) -'0$),"$)+!%"!90'"#)04'(($"%$$"$) and stop it. Despite the fact that many of supervisions OSINFOR continues to conduct have detected multiple illegalities, the majority of these concessions known to be at fault continue to operate and sell to the export markets. The GTFs and false volumes that support them are the key to understanding how illegal logging is so systemic – and also to combating it. Without the necessary paperwork, lumber can’t be laundered, the exporters can’t make money, '"7)#4$)/,#!>'#!,"+)#,)$"%'%$)!"),&)9"'"0$) illegal logging evaporate. In various conversations with US importers and their trade association representatives, as well '+)2!#4)$;*,&#$&+)'"7)C$&8>!'"),-90!'(+:)/'".) have assured EIA that Peru is not exporting any illegal wood, because everything goes out “with legal documents” and they are purchasing on “good faith”. This cynical ‘no questions '+D$7E)'**&,'04)F.),-90!'(+)'"7)#&'7$&+)24,) are perfectly aware of how meaningless these 7,08/$"#+)'&$)4'+)'((,2$7)!(($%'(!#.)#,)1,8&!+4$&!9$7)#4&,8%4) &'"7,/)+#&'#!9$7)+'/*(!"%)#4'#)#4$)-,&$+#) census was entirely fabricated. This Chapter is also the story of Francesco Mantuano, a concessionaire who has spent two years attempting to get authorities to acknowledge the illegalities in his own concession, without succeeding attention beyond the ire of his trade association. EIA’s journey is documented with maps, GPS, videos and photos in an accompanying interactive website (Section 8, also see www.shootunit.com/eia).
I$.,"7)#4$)C$&8>!'")+*$0!90+:)$>$")F$.,"7) the forest sector, this report speaks to a problem applicable to the entire international trade in plants and wildlife: a “stamp” on an ,-90!'()7,08/$"#)!+)",#)+8-90!$"#)%8'&'"#$$) of something’s actual legality in many countries. This is a key issue in the context of laws like the Lacey Act, where the buyer is legally responsible for their products’ possible illegalities, even if s/he did not set out intentionally to buy illegal goods. This means that importers, to achieve real compliance, need to go beyond asking for an ,-90!'()7,08/$"#)!"),&7$&)#,)-$$()0,"97$"#) about the legal origin of the products they want to purchase. For Peru this could have tough consequences since, if importers conclude that they cannot rely on the oversight of national authorities, it is possible they will opt for suppliers in other countries where the system of control offers better guarantees of legal origin.
HOW TO READ THIS REPORT This report is divided into three principal parts: Part One: History and Context, which reviews the technical, political, social and environmental background relevant to Peru’s forest sector. It also includes a detailed diagram where EIA reconstructs the route that wood should follow from stump to US shores, according to Peruvian laws and regulations, and compares this with what happens in reality. (Sections 1 through 5) Part Two: Case Analysis and Results, which presents three inter-related EIA case studies about the methods of illegal timber laundering. First, we detail the analysis described above that reveals at least 112 shipments with illegal CITES wood. Through description of 14 emblematic cases – taken from the OSINFOR Supervision Reports – we lay out the intrinsic problems of the concession system: the lack of capacity or political will for enforcement; impunity for concessionaires, forest consultants '"7)*8F(!0),-90!'(+)0,/*(!0!#)!")*8##!"%)-'(+$)
Third, this section reviews the case of four watersheds where cedar and mahogany logging was theoretically banned between 2000 and 2010, but where a series of authorities approved the extraction, trade and export of wood going explicitly against this law. After .$'&+),-)*&,>!7!"%)0,"1!0#!"%)'7/!"!+#&'#!>$) interpretations, as the ban was about to expire the forest authority acknowledged that the law did not allow for any exceptions. However, until now EIA knows of no internal process with this agency to investigate the issue and sanction those deemed responsible. The General Comptroller of the Republic, however, does have an active investigation on the issue. (Section 9) Part Three: Conclusions and Recommendations, where we present suggestions that we hope will serve to open up the discussion about how to confront the problems documented here.
METHODS AND SCOPE This information is based on various sources of 0,/*($/$"#'&.)!"-,&/'#!,"$&+'#!,"+) off the record with experts, authorities, industry members and members of the indigenous movement, as well as analyzing many aspects of the legal and institutional framework. Given limitations of time and resources, we have focused on failures within the concession system and have not examined other types of forest harvest permits and authorizations, but believe this should be considered an outstanding need. In addition, authorities did not give us more recent information (post 2010), analysis of which is an important follow up point for future investigations – both by Peruvian authorities and by American authorities, under the FTA Annex on Forest Governance and/or relevant laws such as the Lacey Act. Why is the extraction of imaginary trees being authorized? Why are concessions that the government’s own inspections show to F$)!")1'%&'"#)>!,('#!,")'((,2$7)#,)0,"#!"8$) operating? Why does it take years even to initiate administrative processes against these violations? Why is all the information – already public under Peruvian law – not effectively accessible to the public in the government’s ,-90!'()2$F+!#$+L)6"7)24.:)'-#$&).$'&+),-)*8F(!0) evidence about Peru’s illegal logging problems, do US companies continue to import illegal CITES-protected wood? These are some of the questions that this report invites us all to ask, with the hope that civil society, the private sector, and authorities who read it will ask many more – and that we can begin to work together towards solutions.
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