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Kanoagil: The anatomy of an illegal logging operation

January 5, 2017 1 comment
Walter Schnaubelt

Public documents tell the story of how Walter Schnaubelt has pushed through his logging plans without first obtaining the informed consent of customary landowners

Two Malaysian owned logging companies are currently destroying the forests of southern New Ireland. Local MP and Minister for Mining, Byron Chan, says the authorities should investigate and the illegal logging operations should be shut down, but how was it possible for the logging to start in the first place and what are the chances those officials complicit in authorising the operations will now take action?

From a detailed study of the very limited public documentation on the organisations involved we are able to start to answer these questions; and those answers provide a unique and fascinating window into the anatomy of an illegal logging operation.

The documents expose how one person, in this case businessman and aspiring politician, William Schnaubelt, conspired with a small elite of local leaders to take illegal control over large areas of community owned forests. Deception, fraud and misinformation were all used to exploit the hopes, dreams and ignorance of local people while the willing connivance of public servants and politicians was used to secure the permits and authorities for the multi-million dollar logging operation.

Central to the whole Konoagil logging operation are four organisations, two companies and two associations, all set up by the central ringleader, William Schnaubelt.

Konoagil Agri Development, Laka Forest Development Limited, Kandas Landowners Association and Lak Landowners Association are all presented as ‘landowner’ organisations as if they are owned by the local communities and represent their views and interests. But all four organisations were set up without the knowledge and consent of customary landholders, all four are privately owned by a small group of individuals, all four make decisions affecting landowners assets in secret and local communities have no financial or beneficial interests.

Informed consent

Informed consent is supposed to be at the heart of any decisions affecting customary land in Papua New Guinea. Local people must give their informed consent before any changes are made in the use or management of their land. This is a fundamental right that is protected in the Constitution and in all laws affecting land and forests.

As the Supreme Court recently explained:

“These provisions are designed to ensure that customary landowners whose title is, after all, usually collective, rather than individual, are protected from the loss of their interest in the land whether it be a result of the actions of exploitative outsiders or fraudulent or self-interested co- owners”.

Unfortunately these legal protections mean little for people living in rural communities, without access to lawyers or the courts, and it is all too easy for people like businessman Walter Schnaubelt, working with a small group of unelected leaders and in concert with lazy or corrupt public servants and foreign businessman, to trample all over constitutional rights and legal protections.

The two foreign logging companies illegally destroying the forests of southern New Ireland are Millionplus Corporation and Islands Forest Limited. The companies have been given approval for their operations by the PNG Forest Authority despite the fact the people of Konoagil have not given their informed consent to the logging, indeed the people have been intentionally kept in the dark, fed lies and half truths and have been denied any opportunity to participate in key decision making.

Registering the organisations

To set up the whole illegal logging operation Schnaubelt started by registering the two phoney ‘landowner companies’, Konaoagil Agri Development Limited [registered on 21 February 2014] and Laka Forest Development Limited [registered on 19 December 2013], and the two phoney ‘landowner associations’ Lak Landowners Association and Kandas Landowners Association [Notice of Intention to Registered filed 5 March 2014]. All these organisations were registered without any consultation with the customary landholders or their Incorporated Land Groups (ILGs) and with no attempt to obtain their informed consent.

One of the so called ‘landowner’ companies, KADL, is owned by the other so called ‘landowner’ company, LFDL, and LFDL is in turn owned by three organisations, WA Holdings, LLA and KLA. The landowners have no direct or indirect financial or legal interest, no legal rights and no representation in any of these organisations.

Appointing the directors

Having organised the registration of the companies and associations, Schnaubelt then handpicked the 18 local men, one from each Konoagil Local Level Government ward, he would use to push through his logging plans. Schnaubelt took the 18 men all the way to the Kokopo Beach Village Resort, in East New Britain, so they could meet in complete secrecy over the course of two days, March 30 and April 1, 2014.

lla-kla-meeting-minutes

There, as the meeting minutes reveal, the 18, on the direction of Schnaubelt, as meeting Chairman, elected themselves as the directors of the two Landowner Associations.

appointment

Having appointed themselves as the decision making committees, the 18 then endorsed, with no prior disclosure and no consultation with the customary landholders back in New Ireland or the landowners ILG committees or even the ILG chairmen, Walter Schnaubelt’s scheme to set up the logging operation. This first involved appointing LFDL as the ‘landowner company’, agreeing that 50% of the shares would be held by the two ‘landowner’ associations and agreeing that the other 50% would be handed to a third party, WA Holdings (owned by Malaysian businessman Leslie Woo).

Seizing control of the land

This small handpicked group of men, who had no rights to make any decisions regarding customary land, had no delegated authority from the people themselves or from their ILGs, then, completely unlawfully, agreed to Schnaubelt’s plan that all the communities’ ILG certificates would be used to provide a 60 year lease over the whole of the Konoagil district to some unnamed and yet to be identified ‘developer’ who would log the forests, establish 35,000 hectares of oil palm and bring ‘development’.

resolution-lease

Not only was this a decision the meeting could not make as they had no rights to make decisions regarding the use of the ILG certificates much less the customary land itself, it also had no basis in law. Walter Schnaubelt completely misled the meeting by telling the directors the ILG certificates are land titles and giving those certificates to the ‘landowner’ company gave the company “the right to market our [sic] land on our behalf’. This is completely false, ILG certificates are NOT land titles.

To be clear, all this was done without any consultation with the landowners or their ILG committees and with no attempt to obtain their informed consent. Indeed, as the meeting minutes clearly show, at that stage, not all the ILGs had been formed.

Revealingly, the minutes of the landowner association meeting show that when Schnaubelt told the newly appointed directors it was now their job to go back to their LLG wards and tell the ILG committees that they had to endorse their appointment and explain they had already given away the land “all the ward directors raised concern”!

According to the meeting minutes, after listening to all their concerns for “about 25 minutes”, Walter Schnaubelt advised them to only speak to those in their communities who they knew had always supported them and to “leave the others to him”.

awareness

Endorsement from government officials

Disturbingly, even at this early stage, Walter Schnaubelt was already able to assure the 18 hand picked and self appointed ‘directors’ that his plans for logging had the full support of the Managing Director of the Forest Authority and the new Forest Minister, Douglas Tomuriesa.

nfa-minister

Indeed, according to Schnaubelt, the National Forest Board had already approved LFDL to “commence its project submission” officials would be visiting the area in six-weeks time to conduct the Forest Clearance Authority approval process!

fca-process

Thus the people and institutions who are supposed to protect the interests of landholders and ensure the full and vigorous application of the law had already been brought on board to facilitate the illegal logging. These are the same people, PNGFA Managing Director, Forest Minister and National Forest Board, Byron Chan is now calling on to investigate the permits given to the logging companies – what a joke!

Conclusion

The whole Konoagil illegal logging operation and the process used to obtain the logging permits makes a complete mockery of the words of our judges:

“Decisions about the transfer of interests in customary land must be made carefully and thoughtfully and in strict accordance with procedures prescribed by law” this must include “a thorough identification and investigation of the land and the customary landowners and their agreement to what is proposed. In PNG land is a critical natural resource required by National Goal Number 4 to be conserved and used for the benefit of the present generation and for the benefit of future generations.”

It seems futile to believe that the poor people of Konoagil will be able to successfully mount a legal challenge through the courts, against the might of the logging companies, government officials and their own corrupt leaders, to protect and defend their land and forests.

The fact is, legal protections and constitutional rights have no meaning when only one side has access to financial resources and the institutions of government supposed to uphold the law are already compromised!

A short timeline

2014
July 24  Notice of issue of shares in LFDL filed with the IPA
July 24  Notice of transfer of shares in LFDL filed with the IPA

May 2  LLA registered
May 2  KLA registered

Apr 25  Application for incorporation of LLA filed with the IPA
Apr 25  Application for incorporation of KLA filed with the IPA
Apr 1  Notice of issue of shares in LFDL prepared and signed
Apr 1  Notice of transfer of shares in LFDL prepared and signed

Mar 30  First meeting of the ‘Directors’ of the Landowner Associations
Mar 30  Shares in LFDL issued to WA Holdings Limited
Mar 30  Shares in LFDL transferred to Lak and Kandas Landowner Associations
Mar 5  Notice of intention to register Lak Landowners Association (LLA) filed with the IPA
Mar 5  Notice of intention to register Kandas Landowners Association (KLA) filed with the IPA

Feb 21  KADL registered

2013
Dec 19  LFDL registered as a company
Dec 18  Application for registration of LFDL filed with the IPA
Dec 12  Application for registration of KADL filed with the IPA

Nov 13  Application for registration of Konoagil Agri Development Limited (KADL) prepared and signed
Nov 13  Application for registration Laka Forest Development Limited (LFDL) prepared and signed

Minister Chan demands action on illegal Konoagil logging

January 3, 2017 4 comments
Mining Minister Byron Chan has reacted angrily to illegal loggi

Mining Minister Byron Chan is demanding action on illegal logging in his electorate

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.

Konoagil logging companies bankrupt

December 30, 2016 4 comments

bankruptThe two companies engaged by New Ireland businessman Walter Schnaubelt to log the Konoagil district of New Ireland were effectively bankrupt at the end of 2015 when they negotiated their logging contracts. Together the two companies were almost K3 million in the red. This is revealed in financial documents filed with the Investment Promotion Authority in Port Moresby.

The two Malaysian owned companies, Millionplus Corporation and Islands Forest Limited are owned by Tiing Siu HAH and Kie Yii LING. In total they have been granted permits and licences to log up to 135,000 hectares of forest in southern New Ireland. The logging operations are illegal because of a lack of informed consent from local people, a flawed landowner identification process and the false promises and inducements used to get some people to accept the logging.

Schnaubelt has promised local forest owners the companies will establish 35,000 hectares of oil palm and build an international standard hospital, nursing school, bridges, schools and main roads in the district, but according to IPA records, both companies were bankrupt at the end of 2015 and could not meet the ‘Solvency Test’.

millionplus-insolvent

islands-forest-insolvent

The Konoagil logging operations have been clouded in controversy, with local people stating they have not given their informed consent, that landowner identification processes were rushed and incomplete and they were forced to sign documents that were never fully explained. Now they must face the fact their forests are being destroyed by two companies that were heavily in debt when they were engaged.

According to its annual return, at the end of 2015, Millionplus Limited was over K2.5 million in the red with liabilities of K3,814,616 and assets of just K1,215,122:

millionplus-debts

Islands Forests’ position was marginally better – it was only K293,668 in the red, with assets of K3,137,907 and liabilities of K3,431,575:

islands-debts

The PNG Forest Authority and National Forest Board need to answer for how such companies can be given licences and permits for logging operations and Walter Schnaubelt needs to explain to the people of New Ireland why their forests have been handed over to two bankrupt companies and who will fund all the expensive infrastructure he has promised.

SABL Case Study No.3: Tutuman and the Danfu Extension

November 28, 2013 2 comments

SABL Commission of Inquiry Report 2: Pages 359-384

“The C.O.I recommends that SABL Portion 817C be revoked on the basis that the integrity of the Lands Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified” [p382]

“There was evidence of non-compliance with Immigration laws… We are concerned that Immigration and Tutuman officials have collaborated to short circuit the immigration work permit process.” [p368]

Much of the population… were totally surprised to hear that their land was subject of the SABL [and] Agriculture Sublesae agreement to TDL for 40 years” [p369/70]

“The SABL project has not yielded any significant progress and changes to the people of the Danfu SABL project area…” [p371]

“Tutuman Development Ltd funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process” [p382]

“The funding and time spent on the Land investigation is a testament of the continuing ignorance of DLPP Management and its field officers in safeguarding the interests of the landowners…” [p372]

No files have been furnished by the Lands Department. This is one of the many that the system has either lost or simply cannot locate because of the chaotic and disastrous system it maintains.” [p373]

This case study covers the Special Agriculture and Business Lease over Portion 871C in the Namatanai District of New Ireland Province. 

SABL CoI report 2The SABL covers an area of 29,581 hectares and the lease was granted to Rakubana Development Ltd (RDL) in October 2007. The lease is for a period of 99-years.

RDL subsequently subleased to Tutuman Development Ltd (TDL) for a period of 40 years.

There are seven villages located within the lease area, which is located within the expired Danfu TRP logging concession area. RDL is a nationally owned company formed by villagers within the expired TRP concession area. It has 22 shareholder and the same number of directors.

On a site visit the Commission team saw no evidence of current logging operations but observed a log pond and makeshift harbor and jetty, an overgrow and neglected nursery for cocoa trees, cocoa trees planted along the roadside which were not yielding because of the wrong soil type. There were five Asian nationals on site who were engaged as store keeper, mechanic and in other general duties “normally work reserved for PNG Nationals”. [p367]

Tutuman Development Ltd was originally engaged by RDL to undertake logging under an agreement signed in 2005. In the SABL sublease Tutuman was to enter into an agriculture project to grow cocoa, coconut and oil palm.

The CoI heard complaints that logging roads and soil have been washed into rivers and polluted drinking water.

The Provincial Administrator in 2011 requested the SABL be extinguished ‘due to lack of due consideration and consultation’ by DLPP.

“His concern resulted from the constant complaints flooding his office…”

There was a lack of coordination between DLPP and the Provincial Office for the land investigation which evidence suggests was funded by TDL. The Lands Officer “was paid between K1-2,000 in allowances, accommodation and incidentals”. [p374]

There are no official records of the application for the Land Investigation and the CoI did not sight any Lease/Lease Back agreement.

“In view of the land form and mouton after the coastal strip, there was grave doubts as to any potential for cocoa or agriculture development”. [p374]

“DLPP never really took ownership and custody of what was supposed to be an independent investigation. This general trend continued in place of normal process and justifies nullification”. [p375/6]

There was no Certificate of Alienability issued to allow for the registration and issuance of the SABL.

The Agricuture Development plan has only 5 pages – the other 20 are missing. But DAL did approve the application by TDL for a Forest Clearance Authority (FCA).

TDL “did not develop a detail agriculture plan for growing of cocoa, coconut and oil palm after felling of the remaining stand of forest as required” [p377] TDL did not even prepare a detailed agriculture development plan.

“The sublease granted to TDL for investment in large-scale agriculture and land use development is flawed… ” [p378]

A FCA was granted to Tutuman in August 2010 by the PNG Forest Authority. The Regional NFS office raised ongoing concerns about Tutuman’s lack of compliance with the Forestry Act. In a very rare positive comment the CoI noted “The NFS of PNG based in the New Guinea islands seem to have been vigilant, diligent in the implementation or administration of the tasks it is supposed to do” [p381]

DEC accepted the EIS submitted by Tutuman and issued an Environmental Permit but did so BEFORE any sublease to TDL was executed.

“The Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void” [p383]