"Western firms certified as socially responsible trade in Myanmar teak linked to the military regime", 2. March 2023

Records show how environmental certification firms and middlemen legitimize deals that start with Myanmar’s brutal junta and end as yacht decks.

[...] The teak shipment was one of at least two that took place in 2021 and 2022, after both the United States and the European Union had imposed sanctions on Myanmar’s monopoly teak producer in response to a military coup that toppled a democratically elected government.

While Win Enterprise was not under sanctions, it was listed at the time on the state monopoly’s website as a unit of the Forest Products Joint  Venture Corp. Ltd. (FPJV), a timber firm majority-owned by the state monopoly and a state agency. Win Enterprise, which shared a director with FPJV, says the listing was a mistake. [...]

It’s also a vital revenue source for Myanmar’s regime. Local news organizations have reported that military forces have seized illegally logged timber and auctioned it off to finance their operations, including widely condemned human rights abuses and environmental crimes.

Deforestation Inc., a cross-border investigation led by the International Consortium of Investigative Journalists (ICIJ), shines a light on the roles of intermediaries like Win Enterprise and certification organizations such as FSC in the widely condemned trade in Myanmar teak. The investigation  also exposes broader flaws in the global system meant to prevent deforestation and combat climate change. Conducted with 39 media partners, the probe shows how environmental auditors and so-called certification firms have given their seal of approval to products linked to deforestation, logging activities in conflict zones and other abuses to enter markets all over the world.

The inquiry into Myanmar’s continued teak trade is based on leaked files from Myanmar’s tax agency, publicly available trade data and interviews with teak traders in 11 countries. The confidential files ー most from 2021 and 2022 ー were shared with ICIJ by Justice for Myanmar, a human rights group, U.K.-based news outlet Finance Uncovered and Distributed Denial of Secrets, a data transparency group.

ICIJ’s investigation found at least 10 teak traders and retailers besides J. Gibson McIlvain holding green certifications while buying from Myanmar suppliers. These certification displays continued after some European authorities began restricting the import of Myanmar wood in 2017 and after the EU and the U.S. imposed sanctions in 2021; the sanctions prompted certification companies to stop allowing the use of their logos on Myanmar wood or by the country’s forest programs. [...]

In response to ICIJ’s queries, FSC said it is investigating teak supply chains bearing its certificates.

ICIJ also found that some EU member states simply don’t enforce the EU’s trade restrictions, put in place in response to concerns about illegal logging. An Italian firm has continued to supply Myanmar teak by the ton to shipbuilders in other member states even after EU experts declared invalid any certifications of Myanmar teak because of unreliable record-keeping in the junta-controlled business, ICIJ found.

The upshot: a brutal military regime raises cash through dealings with Myanmar teak traders, and Western firms continue to market themselves as “sustainable” while selling high-end furniture and yachts made with Myanmar teak. [...]

The forest certification movement, including such organizations as PEFC and FSC, emerged in the 1990s and was designed to ensure that consumer products are sourced according to strict, yet voluntary, environmental and human rights standards. Certification organizations don’t vet products themselves. They accredit dozens of third-party auditing firms to check timber companies’ forestry practices and follow the wood’s chain of custody from forest to store shelves or boat showrooms.

Critics have long alleged that the voluntary, fee-based model of forestry regulation was riddled with conflicts of interest, too industry-friendly and ineffective. Defenders say voluntary certification is better than the alternative – relying on governments like those in Brazil and Indonesia, where forest protection is notoriously weak. [...]

While FSC and PEFC ceased endorsements of Myanmar teak after the 2021 coup, one company has not: Double Helix Tracking Technologies Pte Ltd., a self-styled “verification firm” based in Singapore that helps clients establish that the teak they buy was logged according to Myanmar law. [...]

But experts say conditions in Myanmar are so chaotic that verifying forestry practices is not possible – and that the timber trade, in any event, benefits the junta. [...]

In 2020, following a series of European court rulings, an expert panel of European officials concluded after extensive study that information provided by Myanmar’s authorities “could not be verified,” making Double Helix’s attestations unreliable. The panel, known as the Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests, found that Double Helix’s methods couldn’t “reliably exclude that the timber tested was harvested from within or outside specific forest harvesting or conflict areas.” [...]

Double Helix CEO Thomas stands by his firm’s methodology and conclusions.

The EU authorities’ “position is that it is impossible to conduct due diligence in Myanmar, and it’s impossible because the entire system is corrupt. So it doesn’t matter what piece of documentation you have, you cannot trust it,” Thomas said. “I completely disagree with that.”

He added that pulling out of Myanmar would hurt ordinary forestry and mill workers. “I have no interest or support for the current Myanmar military government, but do support the Myanmar people who have to put up with the current crisis with no international support,” he said. “I see no point in attacking or removing another source of economic income for private enterprise and factory workers who are already struggling to survive.” [...]

A trade hub in Europe

Despite EU authorities’ findings that Myanmar teak’s origins can’t reliably be traced, industry insiders and experts say those findings aren’t binding on individual member states. Some still allow Myanmar timber imports and accept some forms of documentation that purport to show the imported teak was harvested before the 2021 sanctions were put in place.

Italy has emerged as a hub of the teak trade in Europe. Italian yacht-deck manufacturers and timber traders import teak products from Myanmar via  intermediaries and then export them to clients in other European countries.

Leaked files from Myanmar’s tax agency show that Comilegno Srl., an Italian wood-product manufacturer, in the last two years bought more than 80 tons of teak scantling and boards from Win Enterprise, the Yangon-based trader that also supplied Maryland’s J. Gibson McIlvain.

Despite those purchases, Comilegno, based in the northeastern Italian town of Teor, obtained FSC certification for some teak products based on the findings of an Italian auditor. The audit firm, CSQA, had identified Comilegno’s products as made from “tectona grandis,” the scientific term for “teak” and in March 2022, certified the company’s products as compliant with FSC standards for responsible forestry.

FSC data includes certification of Comilegno’s products, but doesn’t say where the teak was harvested. The company’s chief executive, Fabrizia Comisso, said the origin of the certified teak products is not Myanmar, but “other countries.” CSQA did not respond to questions from ICIJ.

The FSC spokesperson said that the organization “has not yet received any concrete evidence that Comilegno Srl. imports teak from Myanmar.”

Records obtained by ICIJ’s Dutch partner, NRC, show that in April 2022 Comilegno received another shipment from Win Enterprise: a container of  teak scantling and board. Shortly afterwards, the Italian firm sold some of the teak to a Dutch company that also supplies wood to the yacht-building industry.

A Win Enterprise representative told ICIJ that the company has “sold teak to Europe in compliance with the EU Timber regulation.”

Comilegno’s Comisso told ICIJ that the company no longer buys Myanmar teak and previously had bought only teak harvested before sanctions were imposed.

Comisso said her company has “already clarified with the appropriate forums” that Win Enterprise is a private entity with no connections to the government.

She also said Comilegno has carried out due diligence on the teak that was “very long and complex,” including “third-party verification.” [...]

The EU’s expert panel’s conclusion invalidating certifications of Myanmar teak is not binding on member states, he said. As a result, Italy allows the import of pre-sanctions teak that has been documented as legally harvested – even if the documentation is contested by the EU panel.

“The conclusions by the EU are only recommendations,” he said.

Teak is important for the country’s boating industry, which is why the country’s approach is “less punitive,” Marrucci said.

Among the records obtained by ICIJ’s Dutch reporting partner is an invoice for the April shipment issued by Comilegno. The document says the company had “adopted a due diligence system containing the necessary procedures.” The invoice is part of a compliance dossier that includes a “traceability docket” that says the teak was logged in northern Myanmar by MTE or a subcontractor and was “legally transported, purchased, processed and exported.”

The traceability docket was issued by Double Helix.