Ukrainian officials and representatives of the European Union in Ukraine have strongly refuted allegations of collusion and corruption made by the London-based environmental watchdog Earthsight.
In July, Earthsight reported on collusion between Ukrainian state forestry enterprises and billion-dollar European firms to export illegally-felled timber, despite the effective ban on log exports imposed to fight smuggling and stimulate the domestic sawmill industry.
State forestry officials called Earthsight’s investigation false, while EU officials said it was unsubstantiated. The British nongovernmental organization, however, is not the first nor the only organization that has reported on corruption in the timber industry — an issue that campaigners say is contributing to the destruction of Ukraine’s pristine forests.
According to the latest report by the World Wide Fund for Nature, or WWF, up to a quarter of timber from the Carpathians is felled illegally: without permits and in unauthorized areas like national parks. It is equivalent to one million cubic meters of wood a year.
Earthsight’s findings
This week, Earthsight presented its two-year investigation into the Ukrainian timber industry in Ukraine for the first time. Originally released in July, the report revealed that illegality seeps into the entire wood supply chain, from licensing to harvest and export, and sparked a response from Ukrainian Prime Minister Volodymyr Groysman who ordered a crackdown on timber smuggling.
The investigation found that 40 percent of timber produced by a network of state-owned forestry enterprises that fall under the State Forestry Agency’s jurisdiction is logged illegally.
Abuse of a law that allows trees to be cut as a sanitary measure to prevent the spread of disease is being widely exploited, researchers have alleged.
And the EU buys this timber. In fact, 70 percent of Ukrainian wood exports go to the EU, bringing over 1 billion euros to Ukraine annually.
The investigation found further evidence that logs from Ukraine have been mislabeled as fuelwood in customs declarations in order to circumvent the ban on round log exports, effective since 2015, and the ban on pinewood exports, effective since 2017.
Earthsight claimed that it had copies of an email exchange between EU importers and officials of the State Forestry Agency that indicated that corrupt schemes had changed little from the times of Viktor Sivets, former head of the State Forestry Agency from 2011 to 2014. Sivets received multi-million dollar kickbacks from foreign wood importers through offshore firms.
In particular, Earthsight named major European wood-processing companies as complicit in the illegal trade and, allegedly, bribing Ukrainian officials. They are Austria’s Egger, Schweighofer, Kronospan, Lenzing, JAF Group; Switzerland-headquartered Swiss-Krono; and a Polish mill of an American firm International Paper.
Previously, journalistic investigations by Kyiv Post reporters and by the Organized Crime and Corruption Reporting Project found evidence of the involvement of Austrian firm Schweighofer in illegal logging in Ukraine. Schweighofer also lobbied the European Union to pressure the Ukrainian government officials to lift the moratorium, according to investigative findings.
Certification problems
Many Ukrainian state forestry enterprises use certification from the Forest Stewardship Council, an international nonprofit that verifies that logging in a particular forest is legal and environmentally friendly. Over 40 percent of Ukrainian woods, including over 70 percent of the Carpathian forests, are FSC-certified.
But the quantity doesn’t reflect the quality, said environmental scientist Petro Testov from a Kyiv-based non-governmental organization called Environment. People. Law.
In his words, FSC certificate are a formality in Ukraine, and state forestry enterprises regularly violate laws by felling trees without permits or in protected areas.
For instance, in the past two years, an FSC-certified state forestry enterprise cut a massive part off an old oak forest in the Tsumanska Puscsha national park in Volyn Oblast, where logging was forbidden.
The reason why FSC certification seems to be ineffective stems from a conflict of interests.
The majority of certifying auditors come from the forestry industry and often act as “advocates for forestry enterprises,” Testov said, adding that FSC compliance must be carried out by independent bodies and also involve biologists.
“When a European consumer buys an FSC-labeled product they don’t know that the wood it’s made of was logged illegally or in forest conservation areas,” he said.
According to the Earthsight NGO, EU firms that allegedly buy illegal Ukrainian timber are the suppliers to IKEA and H&M, HP and Xerox, as well as some big European chains like the UK’s Homebase and French Leroy Merlin.
Recommendations
Earthsight hoped to use its findings as a chance to discuss steps that must be taken to tackle corruption in the EU-Ukraine timber trade at a roundtable discussion in the Ukrainian parliament on Oct. 5.
The entire structure of Ukraine’s forestry system has to be changed, according to Earthsight director Sam Lawson.
Control and law enforcement functions have to be taken away from the state enterprises that do the logging and be given to a new independent agency that has investigative powers. Another urgent measure is a radical improvement to the transparency of data related to logging, licensing, etc.
“These two things are interdependent. If there’s information showing a wrongdoing, someone has to prosecute it,” Lawson said, adding that reforms require political will from Ukrainian officials and political and economic support from the EU.
Official rebuke
Instead, Earthsight has been accused of presenting false information.
Deputy Head of the State Forestry Agency Volodymyr Bondar called the Earthsight allegations “vague, unsubstantiated and incorrect.” He said that the researchers had not previously been to Ukraine and had not met with state forestry staff.
In an interview with the Ukrinform agency, Bondar claimed that there was no systemic smuggling of logs and that the exports of a banned type of wood, disguised as another type, was impossible in Ukraine. However, he admitted that individual incidents happened.
“Wood is not a pack of cigarettes, not a smartphone that one can carry in a pocket. Wood can cross the border only by a certain procedure,” Bondar said. “If customs rules on log exports are violated, competent authorities have to control such cases.”
Earthsight’s Lawson will face off with Lyubov Polyakova, head of the international department of the State Forestry Agency, on Nov. 9 during a panel on Ukrainian illegal logging at a global forum on forest governance held at London’s Chatham House international think tank.
EU pressure to lift ban
At a roundtable discussion in the Ukrainian parliament on Oct. 5, Austrian ambassador Hermine Poppeller gave a statement, since Earthsight particularly pointed finger at a few Austrian firms that allegedly import illegal wood from Ukraine.
“All accusations against Austrian companies without specific evidence are unjustified and unprofessional,” the ambassador said.
She added that by imposing a moratorium on round log exports the Ukrainian leadership deprived the state of an important source of revenues.
The EU has been demanding to lift the ban since it doesn’t comply with rules of the World Trade Organization and, most importantly, contradicts the EU-Ukraine Association Agreement on free trade.
In July, Poroshenko vetoed an amendment to extend the ban on fuelwood but the ban on round logs and pine wood is still in place.
Lawson of Earthsight said the log exports ban was a distraction from the real issues in Ukraine’s forestry.
“I think it’s unfortunate that the EU is focusing its interest and influence on the ban rather than on wrapping up its efforts on improving forest governance and implementing EU timber regulations in Ukraine,” he told the Kyiv Post.
Editor’s note: This story has been amended to add a response from the Ukraine’s Prime Minister Volodymyr Groysman after the Earthsight’s report was released in July.
