A secretive timber kingpin who died last year has been unmasked as the shadowy figure at the centre of a vast network that illegally sources teak, deliberately misgrades it to alter the price, and keeps stockpiles that eventually end up in Europe and the U.S.
In findings published last month, the U.K.-based Environmental Investigation Agency (EIA) released information that points to a Chinese national named Cheng Pui Chee, who also had a Thai alias, Chetta Apipatana. Dubbed the “shadow president” of Myanmar’s teak industry, before his death in April 2018 Cheng was paying “tens of millions of dollars” into the personal offshore bank accounts of top government officials.
In return, the EIA says, he secured access to some of the country’s prime teak — bought for low-grade prices and then sold for top dollar to international buyers.
It was through a meeting with Taiwanese teak trader Zheng Kun Fu, owner of the Kui Jay Corporation, that Cheng’s role began to come into focus.
Zheng, also known as A-Fu, told undercover EIA investigators that his supplier was able to build his empire “through the systematic under-declaration of the grades of teak logs harvested by his operations or those of other subcontractors he purchased from,” the report notes.
He ran a Hong Kong company called Cheung Hing, as well as a Thai company called Thai Sawat Import Export.
“Thai Sawat was one of 35 Thai logging firms awarded 47 logging concessions in Myanmar” in 1988, the report said, and by 1993 was one of only five Thai firms left with such access in Shan state.
The EIA was able to confirm Cheng’s ownership of Thai Sawat and Cheung Hing, as well as co-conspirators that fan out in a web across Southeast Asia and Europe and have been able to uphold Cheng’s legacy, even after his death. The EIA said Cheng’s son, Thanit Apipatana, is “said to be managing his father’s teak business after his death.”
In Singapore, an associate called Gary Koh and his father, Koh Seow Bean, are directors of at least four wood companies that have associations in Malaysia and continue to act as agents for at least one Italian client.
Burmese connections
In Myanmar, A-fu said, Cheng’s associations were at “the top level of government,” insinuating that he had connections to military general Than Shwe, who headed Myanmar until 2011.
The EIA was able to confirm that Cheng’s right-hand man in Myanmar, Han Zaw Lin, was the general manager of Cheng’s companies, and has continued to associate with the Koh family.
The state-owned Myanmar Timber Enterprise (MTE) oversees the country’s timber industry and timber-sharing agreements, through which most of the highest grades of harvested wood are supposed to be handed over by subcontractors and sold at MTE auctions.
But A-fu and Gary Koh, in a 2013 interview, said Cheng exploited this restriction by paying off senior government and forestry ministry officials, generals and members of the MTE. They also said that while Cheng technically paid MTE for the wood, “he should have paid substantially more at auction than the low prices offered under timber-sharing agreements for lower grade wood,” investigators said in the report.
“After he gave [bribes] then they said to him, the timber from here and here and here … the mountains … that’s all for you!” A-Fu told investigators, adding that “things that are sold for 3,000, he gave them 600 [dollars].”
A-fu said Cheng’s logs could be “containerized right away or loosely loaded onto the vessel … without having to be moved first to the log yards.” Critically, these logs “were marked at Grades Five or Six but the actual quality were Grades One or Two,” A-fu alleged.
By paying massive bribes amounting to tens of millions of dollars, as well as paying the private school fees of the children of corrupt generals and officials, Cheng was able to hoard top-grade timber, as well as the best-quality sawgrade wood, for which there is high demand in the yacht- and deck-building industries.
In doing so, he also curried favor with the next generation that will potentially rule in Myanmar, further cementing his access to the country’s best teak. The report also comes more than three years after the EIA exposed the corrupt overland timber trade between Myanmar and China.
Misgrading
At a livestreamed press conference in Bangkok for the launch of the report, the EIA’s lead forest campaigner, Faith Doherty, said this deliberately misgraded and stockpiled teak “is ready to be launched onto the international markets.”
“None of that wood is able to comply with any of the regulations that are in place, particularly in the EU and United States,” she said. “It is impossible for MTE to provide any information to show where this wood came from, and it is so important that markets realize they are unable to comply with regulations. Traders need to know if you start importing this teak from Myanmar, you are not complying with the laws in both the [EU and U.S.].”
Doherty said the stockpiles represented some of “the worst excesses of overharvesting” the EIA had seen in Myanmar — and it’s through these that Cheng’s legacy continues to thrive. The EIA, which spent two years on this particular investigation, estimates that between 100,000 and 200,000 tons of Cheng’s teak, for which he paid bribes, are currently being processed ahead of export.
The EU has a Forest Law Enforcement Governance & Trade (FLEGT) Action Plan and EU Timber Regulation (EUTR) policy in place to prevent first placement of wood in the EU. But these are unable to prevent the flow of illegal timber completely.
The EIA report states: “During investigations in Taiwan in 2017, teak traders described how EUTR enforcement in Italy and other southern European member states was weaker than in northern Europe, with Italy said to be a route in.”
Bribes
In the wake of the report, German MP Steffi Lemke alleged that a German navy vessel contained illegal parts sourced from Myanmar; a move she described as “scandalous.”
“The federal government must step up its action against the illegal timber trade in order to protect forests in Myanmar and around the world,” Lemke said on her website. “There needs to be clear labeling of wood species and origin, stricter controls and inclusion of other products in the EUTR Directive.”
In addition, the report cited the 2008 amendments to the U.S. Lacey Act, which prohibit the import of wood products that fall foul of both foreign and domestic wood protection regulations; it added that “up to 25 percent of the imports of the US’s biggest teak importer — East Teak Fine Hardwoods — is wood traded by Cheng Pui Chee.”
The EIA said it hoped more scrutiny would be placed on timber products likely originating from Myanmar, but that the law had failed to find violations with Myanmar wood so far.
“[I]f 90 per cent of a harvest is deemed illegal, one has to prove that the US importer’s shipment is from that 90 per cent,” the EIA said. “In Myanmar’s case, for example, the detailed evidence of forestry crimes such as systemic overharvesting and the corruption underwriting it are often in the Myanmar Government’s hands alone.”
The MTE, FLEGT and U.S. Fish and Wildlife Service did not respond to requests for comment.
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