Mining Minister Byron Chan has reacted angrily to revelations on this blog about illegal logging operations in the Konoagil District of New Ireland. He is demanding action to stop the logging and police investigation of those responsible.
But is the Minister REALLY SERIOUS or is this just pre-election posturing? Will Minister Chan really ensure proper investigations are carried out and effective action is taken against those responsible for the theft of forest resources and destruction of the environment?
BY JEFFREY ELAPA, Post Courier, January 03, 2017
MINISTER for Mining and Member for Namatanai Byron Chan has called on authorities to investigate two foreign companies [Millionplus Corporation and Islands Forest Resources] involved in logging activities in his district.
Mr Chan is also calling on the authorities to investigate how Government authorities had allowed the companies to conduct business in the country and wants their Malaysian principals [Kie Yii LING, Ting Ping LAU and Tiing Siu HAH] deported.
He said he is outraged over their being issued environment and logging licences.
“I’m totally disgusted and immediately call for a full investigation into the illegal activities occurring at Forest Department and the Department of Environment and Conservation.
“I further call on the two Ministers Douglas Tomoresia (Forest) and John Pundari (Environment) to institute an investigation into the conduct of the two companies.
“I also call on the police fraud and anti-corruption unit to investigate the activities of these foreigners cheating my people. How can authorities allow foreign companies to conduct illegal businesses in the country.
“I also call on the Minister for Forest to cease the operation of the company and Immigrations to immediately deport the two foreigners and blacklist them as they have misled and abused the trust of my people and my district. We do not need people involved in illegal activities they also pose threats to the sovereignty of the nation.
“This is the kind of business conduct by foreigners under the guise of doing business and involved in local politics are not welcomed to stay in this country.
“My people are innocent like most rural Papua New Guineans. There have been a lot of false promises and false hopes given to my people and I’m really disgusted by the action of such foreign companies conducting business in my district and the country,” he said.
Mr Chan also called on local elites not to mislead the people for whatever motives they had.
“As a concerned national leader and leader of my people I’m calling for an immediate investigate by the authorities,” he said.
Thirty years on from the Barnett Commission of Inquiry that exposed widespread corruption in the logging industry, the people of New Ireland are still falling victim to illegal logging operations set up without the informed consent of ordinary people.
From New Hanover in the north right down to Lak in the south, New Ireland is awash with illegal logging operations, the latest being the so-called Konoagil Oil Palm Project, set up by Walter Schnaubelt, the intending National Alliance candidate for Namatanai.
According to the media reports on the project launch in April, the logging will cover an area of 120,000 hectares and will involve the establishment of 35,000 hectares of oil palm and an “international hospital and school, nurse training centre and banking facilities for the local people”.
However, ever since the project launch landowners have been raising their objections – even presenting a petition to the Forest Minister. The local people say there has been no proper awareness and consultation over the occupation of their land and destruction of their forests.
In July, Schnaubelt was on-hand as CEO of Konoagil Agri Development Ltd, one of the companies he has set up to orchestrate the project, to try and reassure locals and the media all proper processes have been followed – but the truth is the project has been bulldozed through every stage of the legal process by Schnaubelt and his lackeys.
It was Schnaubelt who was behind the incorporation of land groups in highly suspicious circumstances. Local people say some were even forced to complete and sign the registrations while clan boundaries were done in haste and no genealogy studies were ever completed. Proper verification of ILG formation process and issuing of certificates was never done by the Department of Lands.
Schnaubelt then used the ILG certificates to induce two Malaysian owned logging companies, Millionplus Corporation and Islands Forest to move into the area and start logging.
Landowners say they have never been given proper information on project impacts and benefits – including the terms and conditions on which KADL claims to hold 20% of the equity in the business on behalf of the landowners. The landowners say no documentation has ever been shared with them.
Tomorrow we will present the evidence of how Walter Schnaubelt has set up a string of companies to try and hide his involvement as the orchestrator of the whole logging scam. We will also present documentary evidence of how Schnaubelt bulldozed the project through the PNG Forest Authority without the consent of local landholders – and scandalous details on the finances of the Malaysian logging companies involved.
The audacity, bare faced cheek and hypocrisy from Forest Minister Douglas Tomuriesa is just jaw dropping!
This is a man who for three years has vehemently denied any suggestion of illegal logging in PNG, and has wholly heartedly endorsed the destructive logging operations in SABL lease areas that have seen timber worth more then US$400 million stolen from customary landowners and exported to China.
That logging in SABL areas is still continuing today, with Tomuriesa’s seal of approval, yet he tells Parliament:
- ‘The government decision to cancel the leases is commendable’
- ‘The leases should ‘never have happened’
- ‘Due diligence must be done before any approval can be granted’
- ‘Our people’s rights and our children’s future must be protected’
Most staggering of all, Tomuriesa says:
“The land belongs to our people. It must remain with our people, the forest belongs to our people and it must not be taken away from them”
So Minister, please tell us why you have allowed over 4 million cubic meters of logs to be stolen from SABL lease areas without the informed consent of local people but under the guise of approvals granted by you and your Department.
Why are you STILL allowing the logging to continue when you say our people’s rights must be protected!
By HELEN TARAWA, The National (owned by Rimbunan Hijau), November 11, 2016
The Special Agriculture Business Lease (SABL) was designed to fail and the Government’s decision to cancel it is commendable, Forest Minister Douglas Tomuriesa said.
Tomuriesa told Parliament last week that SABL was designed for disaster and the Government had taken a corrective measure, with land going back to the people.
“The investors can now go back and renegotiate proper deals with our people,” he said.
“We should not allow this to happen again, such practice that is approved by this Parliament or by bureaucrats should never have happened.
“I want to commend the prime minister and his Cabinet for looking at the Commission of Inquiry report and eventually cancelling the SABL.
“Due diligence must be done before any approval can be granted; as leaders we allowed this to happen.
“We have to look at any similar controversial acts like the SABL that have been approved in the past and we must stop them now.
“Our people’s rights and our children’s future must be protected by this parliament and not allow foreigners come and dictate to us.
“The land belongs to our people. It must remain with our people, the forest belongs to our people and it must not be taken away from them.
“Our people were given rubbish, today they have the power in their hands to sit back and negotiate.
“I would like to acknowledge all parliament members for your support in making sure that we fix this issue once and for all.
“This SABL must not happen again.
“It there are other initiatives like this, we must stop. We must not sell the birthrights of our people to foreigners.”
By Frederic Mousseau*, IPS news
James Sze Yuan Lau and Ivan Su Chiu Lu must be extremely busy men. Together, they are listed as directors of some 30 companies involved in various activities and services related to logging or agribusiness in Papua New Guinea (PNG). The former is the managing director of Rimbunan Hijau (RH) PNG and son-in-law of RH’s founder Tiong Hiew King; the latter is executive director of RH PNG Ltd.. All but two of these 30 companies have the same registered address at 479 Kennedy Road, in the national capital, Port Moresby–the headquarter of the RH group in the country.
How the group – the largest logging operator in PNG – manages to operate at a loss for so many years, and yet still remains in business? If it were unprofitable to log and export timber from PNG, why would these companies continue their operations? These are some of the critical questions raised in a report released in February 2016, The Great Timber Heist: The Logging Industry in Papua New Guinea, by the Oakland Institute. The report exposed massive tax evasion and financial misreporting by foreign logging companies, allegedly resulting in non-payment of hundreds of millions of dollars in taxes.
Their ability to magically fit into a relatively small office space on Kennedy Road is not the only puzzling fact about the subsidiaries of the Malaysian group, Rimbunan Hijau. Out of the 30 above mentioned companies, 16 subsidiaries that are directly involved in logging or agribusiness have one other thing in common. According to their financial records , they don’t make a profit. Most of them have been working at a loss for over a decade. During the 12 years for which financial records were available to the Oakland Institute’s researchers, all together, the subsidiaries declared an average loss of about US$ 9 million every year.
Recovering tax revenue would be certainly welcomed by PNG given the acute budget crisis the country has been facing in recent months. Yet, it is unclear whether the government of PNG will decide to take action following these revelations. After all, despite the promises made by the Prime Minister, still no action has been taken two and a half years after the damning report on recent land leases, produced by the Commission of Inquiry (CoI), which identified all sorts of malpractices and irregularities and concluded that most leases were illegal.
A first step for any government would be to start monitoring the declared sale prices of exported timber. PNG prices are much lower than those of other exporters of tropical timber (nearly 50% cheaper in 2014), which suggests that logging companies undervalue their exports and therefore their profits. But the recent statements by the Forest Minister in denial of the findings of the report, and given the well-documented deficiencies of the PNG Forest Authority, there is little hope of decisive action by this agency.
Another level of action is the enforcement of tax compliance by the Internal Revenue Commission (IRC), the government agency in charge of tax collection. However, although many RH companies are conveniently located at the same address, it may prove difficult for tax auditors to ascertain the extent of their wrongdoings. The Group has been built as a complex and opaque financial structure: almost all RH holding companies–the parent companies of those operating in PNG–are located in tax havens, primarily the British Virgin Islands, known for facilitating illicit financial flows.
Moreover, the use of multiple subsidiaries in logging operations makes auditing even more complex to conduct. For instance, in one single project in West Pomio, Gilford Ltd.’s records indicate financial transactions with 16 other RH subsidiary companies. This interrelation facilitates transfer pricing as companies of the same group can charge each other an artificially high price for goods, equipment, and services, thereby increasing the sister company’s operational expenses, and artificially reducing their profits. This interrelation would require investigators to not just focus on individual logging companies but to extend their audits to the larger RH Group. But who would they go after?
RH is controlled by Tiong Hiew King, one of Malaysia’s richest men. Although logging is the core business of the group – ‘Rimbunan Hijau’ ironically means ‘forever green’ in Malay, his empire covers a multitude of sectors, and all continents from fisheries in New Zealand, timber in Siberia, to Chinese speaking newspapers in California. RH’s grip over PNG goes far beyond the forests, as it is present across all sectors of the economy. The company’s most recent investment in the capital Port Moresby is a project known as Vision City, which contains the largest shopping mall in the Pacific Islands region and is expected to be expanded to include an office tower block, service apartments, a hotel and convention centre. It also owns the National, the largest of the two daily newspapers in PNG, an airline, Tropicair, as well as shipping and logistics companies.
Whereas the group appears as PNG’s superpower, citizens are left powerless. As documented in 2013 Oakland Institute’s report and film, logging in PNG hides a multilayered tragedy of daylight robbery, whereby local communities are being deprived of their resources and their rights, with the complicity of their own government. RH has often been accused in the past of connections within the political elite in the country and of involvement in corruption and violence in relation to its logging operations. In a number of occasions, local police forces have been used to intimidate and arrest local landowners opposed to logging and land grabbing by RH subsidiaries.
A single corporate group, RH, thus materializes the betrayal of the unique constitutional protections that PNG citizens are supposed to enjoy. The 1975 Constitution guaranteed people’s land rights and upheld national sovereignty, self-reliance, and the preservation of natural resources as key principles for the country. It called on the State “to control major enterprises engaged in the exploitation of natural resources.” Ironically, today a major enterprise has turned the statement around and appears to be controlling the state and the country’s natural resources. Will Papua New Guineans eventually decide to put the things back in place?
*Frederic Mousseau, Policy Director of the Oakland Institute, coordinated the research for the Institute’s agroeocology project.
By ACT NOW!
The Forest Minister has taken out full page adverts in the media this month [see below] trying to refute allegations of illegal logging and financial misreporting by the logging industry. But his lengthy explanations fail to answer the central allegations and many of his admissions actually add weight to the arguments he is trying to dispute!
The Minister complains that ‘despite the assurances of the PNGFA that all logging is conducted within the law, various interest groups continue to use the issue of illegal logging for their own purposes’. What he fails to mention is that those ‘interest groups’ include bodies like the International Tropical Timber Organisation and the World Bank who were invited to do their studies by the PNG government and concluded the logging was unsustainabe and illegal. What possible motive could such organisations have for publishing false analysis?
The Minister claims ‘since 1994 the Government has engaged SGS to monitor the export of logs to prevent under-valuing and transfer-pricing’, which is completely untrue. SGS counts the logs and checks the export duty paid, it does not check or authenticate the declared log prices – as the Minister later implicitly admits!
The Minister says ‘SGS also confirms all the logs are sourced from legally approved and valid timber concessions‘ – which is completely misleading. SGS merely checks there is a logging permit or licence, it carries out no checks to see if that permit or licence was validly issued or is legal.
The Minister claims Oakland Institute ‘have deliberately used the ITTO composite price for tropical logs to distort the facts’ but then he admits PNGFA does not have any direct comparison figures to challenge the OI analysis, accepts such figures “would indeed be very useful” and then tries to rely on international export prices for plantation teak logs to disprove the OI analysis when such log exports “from PNG are of very insignificant volumes” and “constitutes a very minuscule proportion of PNG’s total log export volume”. The Minister says the OI log price comparison is ‘rather simplistic’ but admits the PNGFA does not have any data to allow it to do a better job!
The Minister further claims the OI report “is inept and inaccurate” but:
- Admits, since 2014 PNG is the biggest exporter of unprocessed tropical logs in the world
- Admits, the Forest Authority has approved logging in 785,000 hectares of land acquired under SABL
- Admits, cumulatively, some 11 million hectares of land have been industrially logged and a further 5 million hectares of forest is currently under active logging.
- Does not deny almost all logging operations and all log exports are driven by foreign owned companies.
- Does not deny the logging industry declares no profits year after and year and does not pay any corporate taxes.
- Does not deny the total land area leased under SABL is over 5 million hectares.
- Does not deny PNG Forest Products (a plantation based timber company) is the only forestry company paying corporate taxes
- Does not deny PNGFA struggles to monitor and verify log export prices and, admits, if given more resources, it would more closely monitor international prices.
- Implicitly admits transfer pricing is going on and says the log export tax was specifically imposed to counter transfer pricing!
Forest Minister Douglas Tomuriesa has a big problem with the truth. He refuses to admit the evidence from numerous independent studies that almost all logging in PNG is illegal. He refuses to admit the SABL leases are unlawful and the logging operations illegal. He even tries to pretend that logging companies are not foreign owned…
He also clearly fails to understand that as a government Minister he is supposed to be fighting for and protecting the rights and interests of Papua New Guinean people – not fighting for and defending the criminal actions of foreign logging companies!
Forest Minister Douglas Tomuriesa has splashed himself all over the media in the last few days trying to refute a report, The Great Timber Heist, that highlights the fact logging companies don’t pay any corporate taxes and deprive PNG of hundreds of millions of Kina in much needed revenues.
Unfortunately for the Minister, all he has done is show off his own ignorance – and invite legitimate questions about why he is so keen to try and defend foreign owned logging companies rather than fight for the rights of his own people…
Below you can read and watch some of the press coverage; but here are some of the startling highlights of what the Minister gets so very wrong:
- The Minister says the report claims 5 million cubic metres of logs are exported every year. NOT TRUE, the report says 3.8 million – a figure the Minister actually says is correct!
- The Minister says the report is wrong to claim tax evasion by logging companies as they pay log export duties, but this is a completely different tax to the one referred to in the report! The report says the companies are avoiding paying hundreds of millions of kina in CORPORATE taxes.
- The Minister says the fact logging companies pay some tax proves there is no tax evasion. This is clearly ludicrous and absurd. As the report lays out in great detail, the logging companies pay some log tax but avoid paying as much as they should through financial misreporting and they completely evade paying some other taxes.
- The Minister claims the report findings are “mere assumptions’ but the report is based on a meticulous examination of numerous logging companies financial records and IPA declarations. If the Minister actually bothered to read the report he would see clear proof the logging companies declare losses year after year thus avoiding corporate taxes but still stay in business – which defies logic and common sense
- The Minister says the report authors did not contact the PNG Forest Authority for comments. NOT TRUE, in fact they spent two-days inside the PNGFA talking to senior managers and make mention of those discussions in the report!
- The Minister makes much of the fact that SGS counts how many logs are exported every year but IGNORES the point made in the report that neither SGS or the PNGFA checks the value of the logs declared by the logging companies – and those values are significantly lower than world market prices, allowing the companies to under pay log taxes and avoid corporate taxes.
- The Minister claims 96% of logging licences are held by landowner companies but IGNORES the fact almost 100% of timber exports are by foreign owned companies.
The Minister says he is very worried about the public image of the logging industry and the forestry sector in PNG – perhaps he should reflect on the damage his own stupidity and half baked comments are doing to our international reputation!
Png Gov’t Describes Reports On Logging As ‘Half Baked’ And Not True
Papua New Guinea Government has described a recent report on logging in the country as ‘half baked’ and not true.
The report by the US-based think tank, the Oakland Institute titled The Great Timber Heist: The Logging Industry in Papua New Guinea highlighted massive tax evasion and financial misreporting by foreign logging companies, allegedly resulting in nonpayment of hundreds of millions of Kina in taxes.
Forest Minister, Douglas Tomuriesa, said the report paints a bad picture about the good work done by the Forest Authority.
“One of the branding factors that they put as, we have five million cubic metres of logs been exported out of country and that is never true.You know the highest was back in 2014 was 3 point 8 million cubic metres of log.2014 was 3 point 4 million cubic metres So we have reduced by point 4 million cubic metres.400 thousand cubic metres we’ve reduced by then.This year it could be even further down”.
The Forest Authority in addressing the issue of PNG’s logging industry engaging in tax evasions, said that the Log Export Tax is in place to ensure operators pay tax irrespective of whether they make profit or not.
Minister slams report
Source: The National [owned by Rimbunan Hijau]
By HELEN TARAWA
A REPORT released on the PNG forest industry is painting a negative picture despite the good things that the National Forest Authority has done, Forest Minister Douglas Tomuriesa says.
Responding to the report by Oakland Institute titled The Great Timber Heist, Tomuriesa described it as a really damning report and not good for the country.
“This report colours a bad picture about the good things that we are doing in forests and so I’d like to clear the air on some of the issues that were raised by this report,” he said.
“There must be a response to this report and I feel that today is the right time for us to respond to the report that has been tabled by the Oakland Institute.
“Our people must know that we at this level, Forestry Minister’s Office and the MD’s Office, we are taking full charge to make certain that the goals and vision that we have for forest today and forward must be realised.
“I’ d like to make it clear to Papua New Guinea that what’s been reported here is half-baked.
“Our resource owners, who must be respected, the LLGs, the provincial governments and the Government must be respected,” Tomuriesa said.
He said that significant changes were made in the last two years to make certain that the forest industry was more transparent.
Such reports tarnish the international reputation of PNG as a sovereign nation and need to be put into proper perspective, he said.
The PNG forest industry has been very focused in its work in the industry, the minister said. “Many leaders in our country have got negative thoughts and perceptions about this authority.
“When we first moved in here almost two years ago, we made certain that there were measures put in place.
“So far, 96 per cent of operational licences have been returned to the landowners. Logging licences are held by landowner companies.
“It is the landowner company that invites the operator to work closely with the forest industry to make sure that the resources are harvested for the purpose of round log exports and downstream processing,” Tomuriesa said.
Minister refutes logging report
BY LEONNIE WAYANG, Post Courier
FOREST Minister Douglas Tomuriesa has refuted statements made in a report by a think-tank in the United States and described it as “mere assumptions”.
The report from the Oakland Institute is titled “The Great Timber Heist: The Logging Industry in Papua New Guinea”.
Mr Tomuriesa said the report has potential to tarnish the country’s international reputation.
Especially for PNG as a sovereign nation, which is why the report needs to be put into proper perspective.
He said that no one from the institute had contacted the ministry or Papua New Guinea Forest Authority to get comments before writing the report.
“There is so much misunderstanding in the area of logging in this country.
“We have received reports, especially from Oakland Institute, and this report here says the ‘Great Timber Heist.
“It is really a damning report. It is a report that colours a bad picture about the good things that we are doing in forest.
“I’d like to clear the air on some of the issues that were being raised by this report,” Mr Tomuriesa said.
“One of the damning reports they put is that we had five million cubic metres of logs being exported out of the country and that is not true.
“The highest was back in 2014 was 3.8 million cubic metres of logs.”
He said the projected log export volume in 2015 was 3.4 million cubic metres, 400,000 less than the 2014 export volume.
“This year, it will be further down, we’ll go under three (million cubic metres) so I don’t know where they’ve come up with this report from.
Mr Tomuriesa was very disappointed with the report.
“One of the things they mentioned in the report was that most or all of our licenses are with foreigners.
“Ninety-six per cent of licences are with landowner companies.
“We’ve already given everything back to the landowner companies.” he said.
Forestry contributes K300m in taxes
Source: The National [owned by Rimbunan Hijau]
THE forest industry makes more than K300 million in taxes through log export development levies (LEDL) each year, Forest Minister Douglas Tomuriesa says.
Responding to claims by Oakland Institute’s report, The Great Timber Heist, that massive tax invasion and financial misreporting by foreign logging companies resulted in non-payment of taxes, he said every year PNG Forest Authority (PNGFA) contributed more than K300 million to taxes to the internal revenue of the nation.
“I have big questions in this report because they are talking about millions of dollars being lost by logging companies not paying their tax, and yet every year, PNGFA contributed more than K300 million to taxes to the internal revenue of this nation,” Tomuriesa said.
“The companies that operate in this country pay log export development levies to the tune of K50 million to K100 million for obligations for us to get those monies down to the districts so that the classrooms, roads, hospitals and other infrastructure are built.
“Last year alone, we paid out just under K50 million of export development levies to the districts. That was never done in the last 20 years of the operation of LEDL.
“The trustees and I made certain that we pay out the first lot of LEDL funds to the districts.”
Tomuriesa said that according to the report, millions of kina in tax weren’t being paid by logging companies. “If they are not paying, we wouldn’t be raising the K350 million to K370 million in terms of tax going to the country.
“Landowners also receive up to more than K100 million in terms of royalties from our operators, the investors in the logging industry, so I don’t’ know where this report is coming from. “The report raised questions about 500 million cubic metres of log leaving PNG shores every year, this report is not true.
“SGS reports give how much logs exported are every year and how much tax is collected. The SGS report is very clear on what the output of the logging industry in the country.”
SGS is one of the biggest and most reputable surveillance organisations involved in inspection, verification, testing and certification in the world to monitor exports of logs from PNG since 1994.
In 2014, 2.8 million cubic metres of logs were harvested and last year 2.4 million, which is 400,000 cubic metres less and this year it will be lesser,Tomuriesa said.
NFA is a the Government’s statutory agency mandated under the Forest Act 1991 and accompanying Forestry Regulations to be responsible for the sustainable management of PNG Forest resources and the regulations of the forest industry in PNG.
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