Liberia’s forestry credibility 'at point of collapse'

Credibility of Liberia’s forestry reform programme at point of collapse, warns Global Witness

The credibility of Liberia’s forestry reform programme (1), one of the most comprehensive ever undertaken in the tropics, has been brought to the point of collapse with the Inter-Ministerial Concession Commission’s (IMCC) (2) approval of the latest round of Forest Management Contracts (FMCs) (3). The IMCC’s decision ignores bidders’ breaches of Liberian laws, shaky financing arrangements and the entry by stealth of notorious Malaysian loggers Samling (4). Global Witness (5) is urging the Liberian President Ellen Johnson Sirleaf not to sign these FMCs.

“Liberia’s restructured forest management system is crumbling at its first test. The well crafted system of checks and balances put in place are being routinely by-passed,” said Global Witness Director Patrick Alley. “What was the point of spending five years and US$20 million in much needed aid money on developing laws and regulations if the government won’t enforce them?”

There is strong evidence that one of the IMCC-approved companies, Atlantic Resources, has colluded with another bidder, Southeast Resources. At the bid opening ceremony on 19 February 2009, Global Witness and others present observed that Atlantic Resources’ technical proposal was entered for bidding in an envelope labelled Southeast Resources. Liberia’s Public Procurement and Concessions Law calls for companies found to be colluding to be banned from participating in public procurement for up to six years.

Both Atlantic Resources and Southeast Resources are linked, via ownership and financing, to Samling (6), a highly predatory firm renowned for illegal logging and conflicts with communities in countries such as Cambodia, Guyana, Malaysia and Papua New Guinea

A third Samling affiliate, Alpha Logging, which was awarded an FMC earlier this year, breached Forest Development Authority Regulation 103-07 by changing its ownership structure between prequalification and bidding. This should have resulted in its bid being thrown out. The same regulation has also been violated again by International Consultants Capital, another firm recommended for approval by the IMCC. International Consultants Capital transferred ownership of 92.5% of its shares on 18 February 2009, the day before bid opening. The Liberian authorities have taken no action to hold to account any of the companies that have broken the law.

The international consultancy firm Ernst & Young, hired by the Liberian government to carry out due diligence on all the bidding companies in the current round, found that three of the four winning companies do not have the capital necessary to carry out the intended logging operations. These companies are dependent on foreign financial backers, but have not presented legally binding agreements guaranteeing that these funds actually exist or will be available in practice.

If approved by the President, Liberia will be locked into 25 year contracts with the winning companies.

“The IMCC’s incomprehensible decision is yet another nail in the coffin of Liberia’s forestry reform process,” said Patrick Alley. “The timing is sadly ironic given the multi-stakeholder Liberia Forest Initiative’s meeting next Tuesday to assess the state of forestry in Liberia. It is now down to the President to prevent the handover of one of the country’s most precious resources to companies that range from the unqualified to the internationally infamous.”

(1) The Liberian Forestry Initiative is a partnership of government, international and non-governmental organisations to: support the rehabilitation and reform of Liberia's forestry sector and enhance cooperation and coordination of activities in Liberia for the promotion of sustainable forest management.

(2) A new Inter-Ministerial Concession Commission (IMCC) is convened for each concession agreement the Government negotiates. The IMCC is always headed by the National Investment Commission Chairperson and other members are the Minister of Justice, Minister of Finance, Minister of Economic Affairs, the sector head Minister and two other Ministers appointed by the President that represent the sectors of the economy affected by the concession.

(3) FMC approvals were: FMC F – Euro Liberia Logging Company, FMC I – Geblo Logging Corporation, FMC K - International Consultants Capital, FMC P - Atlantic Resources Ltd.

(4) Information on Samlings operations in other countries can be found in the background briefing, Background investigations into companies bidding for Liberian forest management contracts, which is available at www.globalwitness.org

· In 1997, Global Witness revealed that Samling was illegally sourcing timber from a Cambodian wildlife sanctuary.

· In 1997 a letter from the Cambodian government complained that Samling were guilty of:

o Starting to cut before receiving a permit

o Cutting outside permitted areas

o Cutting undersized logs

o Continued logging after imposition of 31st December 1996 logging ban.

· A Concession Review by the Asian Development Bank in 2000 said that the Cambodian logging concession management regime was a ‘total system failure’ and that all concessionaires – of which Samling was the largest – were violating their contracts with the government.

· Samling is one of the companies logging the last remaining areas of primary forest in the Malaysian province of Sarawak. It is at the centre of a bitter conflict with the Penan minority, who claim that the firm is abusing their rights and destroying their livelihoods.

· In January 2007, Barama, a Samling subsidiary, had its Forest Stewardship Council certification suspended in Guyana after an independent auditor uncovered a range of violations including logging in Amerindian lands without the free and informed consent of local populations and failure to conduct appropriate environmental impact assessments.

· On 7 October 2007, a statement from the Government of Guyana reported that “the President speaking briefly on the recent alleged breaches of forestry procedures, said there appears to collusion between Barama Company Limited [Samling subsidiary] and some concessionaires and staffers at the Guyana Forestry Commission (GFC) to defraud the government of revenue. The President warned that there will be consequences for all the parties involved based upon preliminary investigations. “There are some concessionaires who have a joint arrangement with Barama to harvest on their concessions to defraud the government of revenue… They will face consequences… it seems to be a system among these three parties to defraud the government of revenue,” President Jagdeo said.”

· There is substantial evidence that Concord Pacific, controlled by Samling, also violated laws in Papua New Guinea, using a road construction project as the cover for a massive logging operation.

(5) Global Witness exposes the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses. Global Witness was co-nominated for the 2003 Nobel Peace Prize for its leading work on ‘conflict diamonds' and awarded the Gleitsman Foundation prize for international activism in 2005. For more information on Global Witness work in Liberia, see other Global Witness reports and briefing documents, available at www.globalwitness.org.

(6) For details of the connections between Atlantic Resources, Southeast Resources, Alpha Logging and Samling, please see the Global Witness background briefing, Background investigations into companies bidding for Liberian forest management contracts, available at www.globalwitness.org