21 March 2022
It’s been ten years since a World Bank report declared that, across the globe, an area of forest the size of a football field is cut down by illegal loggers every two seconds. Sadly - particularly since 21 March is the International Day of Forests - the scale of unlawful deforestation today is still startling, despite efforts of enforcement agencies worldwide in the intervening decade.
INTERPOL has stated that “living forests are vital to human health”, estimating that deforestation and degradation contribute between 6% and 17% of global carbon emissions. The organisation has launched a number of projects and operations targeting illegal logging across South and Central America and West Africa but it has its work cut out; the practice is both prevalent and lucrative, with criminals reaping an estimated value of between USD 30 billion and USD 100 billion annually - between a 10% and 30% share of the global timber trade.
Through illegal logging, criminals exacerbate climate change, destroy biodiversity - particularly exploiting high-value endangered wood species, such as rosewood and mahogany - and rob the world of much-needed carbon sinks and sequesters. Indeed, as much as 50-90% of timber from some tropical countries is thought to derive from illegal sources or logged illegally, according to a joint report by INTERPOL and the United Nations Environment Programme (UNEP).
However, illegal logging has just as much of a social impact as an environmental one, threatening the livelihoods of those who are reliant on forests for legitimate sources of income or resources like medicine, fuel and sustenance, including indigenous tribes or traditional landowners, who may also be displaced. Illicit and unfettered land clearing also increases the impact of and vulnerability to severe weather and natural disasters, causing landslides and removing buffer zones which protect coastal communities from cyclones and flooding (Mozambique, for example, is thought to have suffered greater hurricane damage as a result of land clearing in the region).
Deforestation removes habitats for many animal species, who may be killed in the land-clearing process or driven out beyond the confines of their natural environment, where they are more likely to clash with humans (for example, in India, where starving tigers venturing out of illegally cleared mangrove swamps are increasingly forced to attack children for food).
Illegal logging also places a significant drain on national and global economies, robbing governments of tax revenue, eroding the quality of and access to public services for many and hampering wider development efforts (Cameroon, for example, is thought to lose around USD 60 million annually through illegal timber exploitation).
It is in such regions, like West Africa, that terrorist groups like Boko Haram, Islamist extremists, and Nigerian and Cameroonian separatist movements also benefit from illegal logging - alongside al-Shabaab on the other side of the continent in Somalia, which relies on illegal charcoal, burned from unlawfully-logged timber, as a primary source of finance. Displacement of traditional landowners by illegal deforestation may also, in turn, facilitate the recruitment of vulnerable members to such terrorist organisations. Mafia groups and organised crime rings in South and Central America, Romania and India are also known to benefit from illegal logging activities, which are commonly accompanied by violence, coercion and extortion.
Furthermore, human trafficking, modern slavery and child labour are widely utilised to undertake the dangerous manual work involved in illegal logging, and forced sex work is frequently found in forest camps. There is also a strong overlap between illegal logging and other organised criminal operations like illegal mining (for which land clearing is a prerequisite) and drug trafficking, as cartels recognise the high potential gains of the industry and the ability to utilise the same smuggling routes.
Illegal logging commingles with the illegal wildlife trade (IWT), too, with EUROPOL confirming that “the concealment methods developed for drug trafficking are now used to traffic endangered species'', and well-documented instances of drugs and weapons concealed within hollowed out timber and smuggled together along the same routes. The overlap of the illegal wildlife, timber and drugs trades has been observed in myriad ways, including: combining products in shared shipments; camouflaging them by means of a mix of legal and illegal products in the same shipment; the running of multiple trade lines by different groups or businesses; sharing smuggling routes and transportation methods on the same pathways; through barter trade, via the exchange of timber for wildlife or drugs; and in the laundering of funds derived from the trafficking of narcotics or wildlife. In Colombia, for instance, there is confirmed use of cocaine transported inside illegal timber for which permits can be obtained on reaching Panama, making it easier for the narcotics to be smuggled onwards under the guise of legitimate paperwork and through which the illegal timber is effectively laundered. We have explored the intersection between illegal logging and the illegal wildlife trade further as part of the IWT research report and toolkit that we recently released together with the UK Government’s Serious and Organised Crime Network, and in collaboration with WWF and TRAFFIC.
Bribery, corruption and fraud also take place at each and every stage of the process and supply chain, from the acquisition of falsified or extorted permits or paid royalties in return for logging beyond concessions, to transfer pricing at artificially low prices, fictitious invoicing and hedging contracts, and the use of fictitious and shell companies to evade authorities and tax. Money laundering inevitably takes place to clean the proceeds of illegal logging activities and there have even been reports of cyber attackers and hackers procuring ill-gotten permits for loggers from government websites.
The answer to what you can do to help prevent illegal logging is, in theory, relatively simple: do your research - be that as a consumer (checking for certification of sustainable production on purchased products) or as a company (executing effective due diligence). For companies worried about links to illegal logging activities, supply chain due diligence, with a particular focus on ESG issues, is paramount. This should sit alongside effective customer due diligence (CDD) checks and enhanced due diligence (EDD) where required - based on a comprehensive understanding of the financial crime and logging risks inherent in the countries that are operated in or with. Robust identification of ultimate beneficial owners and intermediaries will also help, and a strong anti-financial crime governance, framework and culture is also vital.
Themis can help with our Themis Search screening and investigative tools for CDD, our specialist team of investigators ready to tackle your wide ranging EDD needs, and our suite of Country Risk Reports and best practice guides, podcasts and briefing notes on this topic and much more.
Author: Olivia Dakeyne, Themis Think Tank