30
July 2008 - Africa — Just as the need to
save the world’s forests for climate protection
is becoming widely recognised, we have discovered
that major logging companies - operating
in the Congo basin - are increasingly destroying
one of the most ecologically important forest
areas on the planet while dodging taxes
and robbing impoverished Congolese people
of revenue.
The Congo basin contains
the world’s second largest tropical forest
and is of incalculable importance not only
in terms of biodiversity and resources for
local people but also as a giant carbon
store that is essential for climate protection.
Yet over 25 percent of this precious ecosystem
is controlled by the logging industry with
the majority in the Democratic Republic
of Congo (DRC) and the Republic of the Congo
– two countries suffering from endemic corruption.
In a new report “Conning
the Congo”, published today, we expose how
companies like the German-Swiss Danzer group
are cheating the people in this region out
of vast amounts in tax revenue every year.
How are they getting
away with it?
Danzer have set up an elaborate profit laundering
system whereby their Swiss subsidiary company
(Interholco AG) buys timber from its African
sister companies (Siforco and IFO) at way
below the market price and then makes up
the shortfall by depositing money in offshore
bank accounts. In doing so the Danzer Group
evades paying a wad of corporate tax and
export duties.
This unscrupulous behaviour
appears to be indicative of the entire logging
industry operating in the area - exacerbating
the problem of illegal logging and cheating
one of the poorest regions of the world
out of millions of euros each year. We have
calculated that the loss to these governments
from the Danzer Group alone could be nearly
eight million Euros. This is equivalent
to the cost of vaccinating over 700,000
Congolese children under the age of five
or 50 times the DRC Ministry of Environment’s
annual operating budget.
Children peer through panels of wood in
the DRC.
Just one in a list of violations.
Last year we released a report “Carving
up the Congo”, which uncovered the social
chaos and environmental destruction brought
about by the logging sector and exposed
Danzer's involvement in illegal timber trading,
bribery and dealing with traders blacklisted
by the UN Security Council for illegal arms
trafficking.
This ongoing corruption
and scandalous accounting processes pose
a serious obstacle to genuine development
and undermine the effort made by the global
community to alleviate poverty in the region.
Ironically, while many governments continue
to pour billions into the war-torn DRC to
help it re-build, they are standing by as
their own corporations con the country out
of substantial wealth while plundering the
natural resources of the region - contributing
to climate change and depriving local communities
of sustainable employment.
The World Bank is currently
failing in its stated objectives of controlling
the expansion of industrial logging and
improving governance of the sector. In fact
some international donors are even considering
providing financial incentives to boost
the logging industry.
Illegal logging is
even taking place inside the Salonga national
park - the DRC's largest rainforest reserve.
Solutions
The sector clearly needs tighter legislation
and enforcement. In May 2002 the DRC Government
announced a moratorium on new concessions
and the extension or renewal of old ones.
The government has now committed to a legal
review of the logging industry and we are
calling on them to maintain and enforce
the moratorium - withdrawing any illegal
concessions. Currently the review is characterised
by secrecy and sloppiness so we’re demanding
the international community and the DRC
Government ensure this review process is
completely transparent, the moratorium is
maintained and enforced and that a participatory
land use plan is put in place.
International donors
must not subsidise the logging industry
and scarce public funds should be used to
finance measures that effectively control
logging while empowering local communities.
International aid should benefit the Congolese
people rather than the bulging bank accounts
of greedy European companies.
A child from a forest dependent community
in the DRC.
The value of the DRC’s forests as a carbon
store could be far greater than the income
generated for the country by industrial
logging. Deforestation accounts for about
one fifth of global greenhouse gas emissions
and replacing industrial logging in the
DRC by an internationally-backed forest
protection system would not only be financially
beneficial to the people of the DRC it would
make the country a key climate protector.
