Green Carbon, Black Trade

One common laundering scheme is to mix illegally logged logs with legal logs during the forestry operation.

much larger share of illegal wood elsewhere, and sell it as part of their legal plantation production. This also allows for full inspection of the on-site plantation operation. Selling illegal timber as part of legal land clear- ing operations for palm oil or soy plantations or ranching establishments is a common laundering scheme. #19

Cutting beyond legal areas or volumes, or using this as a cover for logging operations provides profit from both clearing the land and later range production of beef.

Cutting wide corridors along new roadways, thus mixing the illegally logged corridors with legally

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permitted cuts for road establishment.

Bribes to obtain logging permits, evade tax or launder illegal logging

real volumes, suggesting 90–97 per cent was imported il- legally or 3–33 times greater volumes than official records.

The use of bribes and corruption is a primary challenge in combating illegal logging (Amacher et al . 2012). In the Bulungan, Malinau and Nunukan districts of Northeast Kalimantan, Indonesia, an investigation revealed that il- legal loggers paid up to three bribes of US$ 25,000 each in 2000–01 to obtain a logging permit for areas of ap- proximately 1766 hectares (Smith et al ., 2007). In some years loggers paid only one bribe, but had to pay similar amounts for new permits, and sometimes additional pay- ments for former permits. Furthermore, companies paid an average of only 28 per cent (a range of 0–88 per cent) of the real tax owed. An additional “royalty” of three dollars per cubic metre was paid to villagers. However, as tim- ber contractors can specify the volumes themselves, they could easily evade some of this tax. By paying fixed bribes for set areas and permits, royalties to village heads, and bribes to police and military in a set scheme, illegal loggers exported to mills in Sabah, Malaysia. Official imports in Sabah were 3.5 greater than the official exports to Sabah. However, the official Indonesian exports to Sabah from Kalimantan and the subsequent official Malay- sian imports were only 3–10 per cent of the total estimated

Indeed, the bribes paid were more costly than the possible offi- cial revenues from the logging. Hence, illegal loggers involved in a broad scheme of corruption could obtain illegal permits, bribe police, forestry officials and the military for transport, and bribe customs officials and finally under-report total volumes logged by up to 90 per cent to conduct tax fraud, illegal log- ging, smuggling and bribery – with little risk of getting caught. In many instances, illegal logging syndicates can also use a comptoir or middleman, who has an official export permit. They will then pay export fees on the timber – combining both legal and illegal – but pay very little tax from the actual logging through initial under-reporting. The comptoir may then pay full export tax and tax on revenues, but have secured large amounts of illegally logged cheap timber, thus making a profit while laundering the timber for “clean” export to the EU, China, Japan and the US. Profits are made along the entire chain. With little risk, in a decentralized system, police and military have little opportu- nity or incentive (because of bribes) to intervene.

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