Illegal timber from Ukraine floods European markets

Illegal timber from Ukraine floods European markets
By bne IntelliNews July 16, 2018

Wood from Ukraine that has been harvested or traded illegally is flooding European markets, according to an investigation by UK-based non-profit organisation Earthsight published on July 14.

The EU is by far the largest destination for Ukrainian wood exports, representing 70% of the total. EU purchases have been rising rapidly, breaking €1bn in 2017.

However, field investigations indicate that 40% of the timber being produced by the country's state-owned enterprises is illegally cut through the abuse of a loophole allowing trees to be harvested to prevent the spread of disease, according to the report.

"The EU buyers of this wood include a number of billion-dollar firms, whose owners are among Europe's wealthiest individuals," Earthsight believes. "Though they are not themselves formally accused of wrongdoing, Earthsight found some of these giant companies are actually mentioned in ongoing criminal investigations of officials in Ukraine."

These companies supply products allegedly sold in the largest retail chains in Europe, including the UK's Homebase, German's Obi and Sweden's Ikea. These products also include HP copy paper on sale in branches of Staples, the organisation believes.

"Recognising the need to address its role in driving illegal logging overseas, the EU has a law requiring importers to conduct due diligence to ensure that the wood they buy is legal," Earthsight underlined. "The report reveals how this law is not being meaningfully enforced, and points the finger of blame at the governments of the EU countries bordering Ukraine, including Romania and Poland. 

According to the organisation's director Sam Lawson, some of the 'due diligence' measures these companies are using are "laughable". "Yet the authorities are signing off on them. As far as Ukraine is concerned, right now the EU's law might as well not exist," he added.

Also in the firing line is the Forest Stewardship Council (FSC), which claims to be able to guarantee the legality and sustainability of wood through independent audits. Many big retailers rely on its systems, yet Earthsight's report shows "how dodgy Ukrainian wood has repeatedly received the FSC stamp".

Court records unearthed by the organisation also show that some top forestry officials in Ukraine's largest timber-producing provinces are "the subject of major criminal investigations, involving systematic illegal logging and timber exports".

At the top of that, Ukraine's fugitive former national forest chief Viktor Sivets (under ex-president Viktor Yanukovych) was earlier accused of having received over €30mn in illegal kickbacks into Swiss bank accounts from overseas log buyers in exchange for access to cheap wood.

The payments were routed through UK letterbox firms with owners registered in secrecy jurisdictions such as Panama. "Earthsight uncovered evidence that such high-level corruption has continued under his successors," the report reads.