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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.

Walter Schnaubelt set up the whole illegal Konoagil logging operation

December 29, 2016 4 comments
Walter Schnaubelt

Walter Schnaubelt controls the illegal Konoagil logging operation through a web of companies he set up

New Ireland businessman Walter Schnaubelt is the mastermind behind the illegal Konoagil logging operation – which has swung into full operation despite a complete lack of informed consent from local forest owners.

Schnaubelt has carefully tried to keep his name off the official documentation but his fingerprints are all over the companies used to front the operations and obtain the leases and forestry permits.

Konoagil Agri Development Limited (KADL) is the central corporate vehicle for the whole operation and its name has featured prominently in the media where it is incorrectly described as a ‘landowner company’.

KAHL was registered in February 2014. Schnaubelt does not appear as a director or shareholder of the company – but the devil, as they say, is in the detail. The application to register KADL, see image below, was submitted to the Investment Promotion Authority by a company called Walan Limited.

konoagil-agric-dev-application-for-registration

Walan Limited is wholly owned by Walter Schnaubelt. He is also the sole director. So, KADL, the central vehicle for the Konoagil logging operation, was set up by Walter Schnaubelt.

KADL has two directors, Benson Malaibe of Semalu village in New Ireland and Philip Tuanusi of Maliom village, and is 100% owned by another company, Laka Forest Development Limited (LFDL).

LFDL was registered in December 2013. Again, the application to register the company, see image below, was submitted to the Investment Promotion Authority by Walan Limited, the company wholly owned by Walter Schnaubelt.

laka-forest-development-application-for-registration

So, not only did Walter Schnaubelt set up KADL, the central vehicle for the Konoagil logging operation, he also set up LFDL, the company that owns KADL.

Laka Forest Development Limited is, in turn, 50% owned by a Leslie Woo of Kokopo through his company WA Holdings. The other 50% of KAHL is owned jointly by the Lak and Kandas Landowners Associations – who obtained their shares, in March 2014, from Benson Malaibe and Philip Tuanusi (the original shareholders). Benson Malaibe and Philip Tuanusi are both directors of LFDL.

Lak Landowners Association (LLA) was registered on 2 May 2014 by Philip Tuanuasi [sic] and Kandas Landowners Association (KLA), on the same day, by Benson Malaibe (remember Philip and Benson are directors of both KAHL and LFDL, two companies set up by Walter Schnaubelt). The applicant for registration of both the landowner associations was Alfred Kurabi of Konos village (Chairman of LLA). Benson Malaibe is the Chairman for KLA.

So Walter Schnaubelt set up Konoagil Agri Development Limited and he set up Laka Forest Development Limited which owns Konoagil Agri Development Limited. He installs Benson Malaibe and Philip Tuanusi as directors of the two companies and they then register the Lak and Kandas Landowner Associations which own 50% of Laka Forest Development Limited!

Not content with just spinning the corporate web, Walter Schnoubelt also controls the Lak and Kandas Landowner Associations, as revealed in their meeting minutes which show Schnoubelt as the main speaker, directing the meetings and telling the committees what they need to do.

lla-kla-meeting-minutes

It should also be noted that although LLA, KLA and WA Holdings (Leslie Woo) all acquired their shares in Laka Forest Development in March 2014, at that time, none of the three shareholders legally existed. WA Holdings was not registered as a company until May 2014, the same month that LLA and KLA were registered.

Laka Forest Development Limited itself is the sole shareholder in two other companies that form part of the Schnaubelt web, Konoagil Health Services Limited and Konoagil Retail and Wholesale Limited. Both companies were registered in May 2016, with Malaibe and Tuanusi as the Directors.

There is fourth Konoagil company – Konoagil Finance Limited – registered in August 2015 by Walter Schnaubel [sic]. This company does have Schnaubelt up front on the documentation, and with some interesting company!

Konoagil Finance Limited (KFL) has three directors, Walter Schnaubelt, John Numa and Wari Iamo (former National Forest Board member and Secretary of the Department of Environment implicated in various corruption scandals). KFL is jointly owned by SOS Security and Walan Limited. Both SOS and Walan are solely owned by Walter Schnaubelt and have combined assets of over K12 million.

Konoagil Oil Palm Project just another illegal logging scam

December 28, 2016 4 comments
Walter Schnaubelt listens as local people talk about their greviances

Walter Schnaubelt is the man behind the illegal logging of southern New Ireland

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.

Konoagil district, New Ireland

Konoagil district, New Ireland

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.

Forest Minister, Douglas Tomuriesa, has failed to investigate claims the logging permits were bulldozed through his department

Forest Minister, Douglas Tomuriesa, has failed to investigate landholders claims the logging permits were bulldozed through his department

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.