Author: Global Witness

Date: January 2001

Title: Briefing to the UN Security Council by Global Witness:  The role of Liberia's logging indistry on national and regional insecurity

Original language: English

Concerning: The role of Liberia's logging indistry on national and regional insecurity, espcially in Sierra Leone and Guinea.

Source: Global Witness

The UN Security Council should:

Immediately impose a total embargo on the exportation and transport of Liberian timber, and its importation into other countries. Such an embargo should remain in place until it can be demonstrated that the trade does not contribute to the Revolutionary United Front (RUF) in Sierra Leone, and is carried out in a transparent manner (as referred to in para 49 of the Report of the Panel of Experts appointed Pursuant to UN Security Council Resolution 1306 (2000), Paragraph 19 in Relation to Sierra Leone.

In addition it is recommended that a detailed investigation is carried out into the Liberian timber industry, particularly of the Oriental Timber Company (OTC), to enable the UNSC and other members of the international community to gain a comprehensive understanding of the role of this industry in Charles Taylor's presidency and the conflict in Sierra Leone.

 

The Sierra Leone Expert Panel Report draws attention to Liberia's role in the trade of diamonds and weapons with Sierra Leone's Revolutionary United Front (RUF). It also refers to the important role timber revenue plays in the fortunes of President Charles Taylor and his rule in Liberia. However, according to sources, it is likely that the timber trade is more financially valuable to him and his security forces than is the trade in diamonds and that a significant portion of this revenue is also used by President Charles Taylor to train, arm and supply the RUF. This illicit trade is virtually monopolised by one company, the Oriental Timber Company (OTC), that also holds a virtual monopoly on all shipping entering Liberia and much of the country's internal transportation which enables the transhipment of arms. As The Sierra Leone Expert Panel Report has already noted, the chairman of OTC "Gus Van Kouwenhoven is responsible for the logistical aspects of many of the arms deals. Through his interests in a Malaysian timber project in Liberia, he organises the transfer of weaponry from Monrovia into Sierra Leone. Roads built and maintained for timber extraction are also conveniently used for weapons movement within Liberia, and for the onward shipment of weapons to Sierra Leone."

OTC has been implicated in transporting weapons to the RUF in Sierra Leone, managing the whole process from disembarkation at Buchanan port to the use of its own trucks along the logging roads it has constructed. According to sources, OTC's massive and unsustainable logging operations fund weapons purchases for the RUF and President Charles Taylor's personal security forces, while enriching himself.

Furthermore the scale of this completely unsustainable timber trade is such that Liberia's forests are likely to be commercially logged out in as little as thirteen years. One Lebanese company told Global Witness that they expected to operate in the country for another 20 years before they had removed all merchantable timber , but OTC's operations are escalating this timescale. What is sure is that there is virtually no forest management and no known cases of replanting. The social, economic and ecological impacts of this trade have severe long term implications for the future of Liberia and its people.

Global Witness believes that it is essential that the UN Security Council imposes an embargo on the exportation and transport of Liberian timber, and its importation into other countries. Such an embargo should remain in place until it can be demonstrated to the UN that the trade does not contribute to regional conflict, and is carried out with transparency. Paragraph 49 of the Report of the Panel of Experts appointed Pursuant to UN Security Council Resolution 1306 (2000), Paragraph 19 in Relation to Sierra Leone provides the opportunity to take this necessary step .

Currently there is no reliable data or estimate as to the amount of revenue that President Charles Taylor is gaining as a result of the Liberian timber industry because to date very limited research has been carried out on the subject. For this reason it is not possible to give figures and it is clear that there is an urgent need for reliable research to be carried out. However, a wide number of observers have noted that the forestry sector provides the bulk of President Charles Taylor's funds. According to sources, he uses this income to provide the RUF with funding, arms, training and logistical support. He utilises extra-budgetary payments from logging companies who in turn receive special on and off-record privileges while aiding President Charles Taylor with illicit smuggling of arms to Sierra Leone. Such activity ensures the continuation of Sierra Leone's conflict and undermines UN and other efforts to bring peace to the country.

Revenue from this industry is also the main source of funds for President Charles Taylor's security forces; some of which have reportedly been helping the RUF in Sierra Leone and in Guinea.

Further involvement of President Charles Taylor's military support to the RUF was provided by the UK's UN Ambassador Jeremy Greenstock on 1 August 2000 at the UN Sierra Leone arms/diamonds hearing in which he stated that President Charles Taylor "is giving direct military support encouraging attacks against UNAMSIL and Sierra Leone government forces, providing strategic direction, influencing decisions on leadership and on command and on control."

President Charles Taylor's has a number of security forces which include:

Liberia National Police (LNP): has primary responsibility for internal security

Antiterrorist Unit (ATU): an elite presidential guard

Special Security Service (SSS): strongly armed, executive protective force

Sam Bockarie, a former RUF field commander, openly stated that RUF troops were also being trained in Liberia by forces closely linked with the Anti-Terrorist Unit (ATU) . The above mentioned forces have also been involved in: extra-judicial killings; torture; intimidation; random arrest and detention; abuse and humiliation of population; harassment of human rights observers.
Timber revenue, as well as prolonging the conflict in Sierra Leone, is also helping to fund the above abuses. This situation is unlikely to change until an effective timber embargo is put in place.

President Charles Taylor is seeking to formalize control of revenue from natural resources by designating them "strategic resources" as defined by the Strategic Commodities Act (see ANNEX I - Strategic Commodities Act) which has yet to be passed into Liberian law. The Act states "The President of the Republic of Liberia is hereby granted the sole power to execute, negotiate and conclude all commercial contracts or agreements with any foreign or domestic investor for the exploitation of the strategic commodities of the Republic of Liberia." The commodities listed, including diamonds and timber, make up nearly 100% of Liberia's exports. This will undoubtedly provide President Charles Taylor with more income with which to provide the RUF with support.

Because President Charles Taylor uses the revenue from the timber industry to maintain and develop the RUF and local security forces, long term solutions to Sierra Leone's violent conflict must clearly address this misappropriation and misuse of state revenue.

There is a limited amount of data available on Liberian timber export figures which shows that connection between the logging industry and President Charles Taylor makes it almost impossible to access records that reflect actual logging activity and revenue despite the existence of a Liberian regulatory body.

According to the Liberian Forestry Development Authority (FDA), which is a government body assigned to monitor and document forest practices and exports, the export value in 1999 was valued at USD 21 million. This is unlikely to be the genuine export figure. In contrast the known import value for Liberian timber gives an approximate value of USD 29 million - a difference of some USD 8 million. However this differential can be partially accounted for in the costs of transportation and is therefore not an indicator of missing revenue.

The following estimates of the OTC's actual production and revenue have been calculated comparing Global Witness research and FDA figures for 1999. They reflect the possibilities that other concessionaires may be producing and exporting more than stated in the FDA report:

In the 12 weeks that the OTC operated in 1999,(October to December) they managed to log over 100,000 m3 of forest more than the amount reported by the FDA, tax and port authorities.

Aside from this unreported logging, it is fair to assume that OTC is now avoiding tax of USD 15-20 million and making profits between USD 50-70 million split between itself, the parent company and President Charles Taylor.

It is highly likely that the OTC, and therefore President Charles Taylor, received significantly more revenue from the timber industry in 2000. According to sources, export of timber in 2000 was twice that used in the calculations in ANNEX I providing far greater opportunity for illegal profits.

There are four ports in Liberia: Monrovia, Buchanan, Greenville and Cape Palmas also commonly known as Harper port. These are used to export timber and other commodities. According to several sources, extensive illegal activity is conducted from these ports, particularly Buchanan port. However, a source in the Liberian timber industry has also stated that a new method of loading cargo from beaches exists without the need for port facilities.

In their 1999 report, the FDA listed 35 logging companies operating in Liberia. According to sources , several of these companies are operating illegally under current Liberian law and the terms of their contract. Research indicates that the UN should focus on the following companies: OTC (see Oriental Timber Company (OTC) Case Study - page 5) Forum Liberia and Exotic Tropical Timber Enterprise (ETTE).

ETTE is run by Ukrainian businessman Leonid Minin who is trading diamonds and arms to both President Charles Taylor and the RUF through his timber company, using a number of countries to tranship the arms. This is documented in detail in The Sierra Leone Expert Panel Report.

The Sierra Leone Expert Panel Report also notes, in paragraph 216, that "roads built and maintained for timber extraction are also conveniently used for weapons movement within Liberia, and for the onward shipment of weapons to Sierra Leone." This is also confirmed by Global Witness research.

In an apparent attempt to address growing concerns of the international community over timber revenue President Charles Taylor in October 2000 announced the possibility of banning timber exports in 2001. However, it seems highly unlikely that he will voluntarily lose a key source of income and his statements may have more to do with contract negotiations with timber companies rather than concern over the misuse of the state revenue. In fact, according to Global Witness research, President Charles Taylor is seeking to develop larger timber concessions with a smaller number of companies.
Oriental Timber Company (OTC) Case Study

In 1998-1999 Gus van Kouwenhoven acquired the concessions that made up most of the south-eastern Liberian forest. He subsequently acquired concessions just north of Buchanan port stretching to the River Cess county and the Sinoe county. Maps of his concession allocation are extremely difficult to obtain. Sources estimate that the land area under his control is between 2,500,000 and 4,000,000 m2.

In 1999 OTC (that presents itself as a Malaysian company but is in fact owned by Indonesian company Djan Djanti) made a deal between Mr. Kouwenhoven, and President Charles Taylor. As part of this deal, Mr. Kouwenhoven became OTC Chairman. OTC would conduct field extraction, control of the port of Buchanan and the construction of roads of benefit to the Liberian people. According to sources OTC paid President Charles Taylor USD 5 million up-front, it is likely that this was in exchange for tax-exemption and exclusion from controls and regulations.

Operations:
An indication of the scale of OTC's operational capability is reflected in that they operate seven days a week with 140 or more machines and 74 trucks that make two trips to Buchanan port every day.

According to the FDA, OTC exported 20,972 m3 with a value of USD 1,917,835. This was 9% of the total logs shipped by any company operating during 1999 even though OTC was only operating for 12 weeks.

Global Witness research revealed that OTC has committed serious infringements of contract and law:

Clear-felling, extracting all species, and leaving little or nothing behind. This renders forest renewal practically impossible and is in most cases illegal. The practice of clear-felling has nevertheless been confirmed by OTC's Public Relations Consultant, G Backus Mathews .

Sources say that between 50-80% of logs going to Buchanan port are undersized.

OTC is not fulfilling any reporting requirements as prescribed in the contract.

FDA regulations state that a concessionaire is not permitted to log more than 4% of their concession area. Sources found that OTC is logging far over this limit.

Part of OTC's responsibility was to build roads that would benefit the people of Liberia. The roads built by OTC are of very low standard and only of use as logging roads. Global Witness research found that OTC bulldozes through villages, homes and plantations with little warning and no compensation.

OTC has bulldozed areas of forest that are of religious importance to local communities.

Commitments to invest in a plywood factory and reforestation have not been realised.

OTC has planned to replace some forest areas with plantations - these include areas designated as protected forest. None of these plans have so far been enacted.

The OTC concession map is not publicly available in Liberia. However Global Witness has managed to obtain a photograph of the map. A comparison between this and a map of Liberia show the vast scale of the concession awarded to the OTC (see ANNEX II: Map1 - Liberia page 11 and ANNEX III: Map2 - OTC Forest Concession page 12).

According to the FDA, The total timber export for 1999 was 189,939.959 m3. However as previously stated, these figures cannot be relied upon and are likely to be an underestimate. Of direct importers of Liberian timber, the five largest ones (see appendix etc for list of other countries) were:

France at 37.07% of total export

Italy at 19.17% of total export

Turkey at 15.07% of total export

China at 7.77% of total export

Indonesia at 6.31% of total export

According to the FDA, 17,532 m3 of round logs with a value of US$1, 973,219 were transhipped through the Ivory Coast - this amount is not included in official figures. The Ivory Coast is reportedly looking to the Liberian timber industry because it is itself facing a timber shortage .
Despite the instability of the region, 2000 saw a significant increase in timber imported from Liberia. France increased imports of Liberian timber by 11% in the first six months of 2000.

According to Greenpeace International, there has been a sharp increase in timber imports into Europe over the past two years - this could be due to increased trade and / or production. This would confirm other reports of the escalation of logging in Liberia, particularly by the OTC.

In West Africa, Liberia is the only country that has a considerable amount of its original rainforest cover . It harbours large amounts of endemic flora and fauna such as the Pygmy Hippopotamus and houses some 2000 flowering plants, 125 mammals, 590 birds, 74 reptiles and amphibians and over 1000 insect species. Yet these numbers are based on a limited amount of observation and examination.

The Upper Guinea Rain Forest includes forested areas in Sierra Leone, Guinea, Liberia, Ghana, Togo and the Ivory Coast. Greenpeace have noted that Liberia's rainforest are the most seriously threatened in the region; with already 50% destroyed. This has had, and will continue to have, negative implications for the region as a whole.

In early April, 2000, Liberia's Minister of Agriculture, Roland Massaquoi, stated that "it is evident that most of the country's natural rainforests has been depleted without reforestation…if Liberians are not careful about the effective utilization of the forest reserves, the nation would face drought in the next 15 years," and criticised the way in which logging companies were operating.

According to sources, there are plans for two new major concession areas of enormous proportions to be granted to two companies: North-West Liberian Timber Company and Liberian Eastern Timber Company. Together with OTC, they will cover two thirds or more of Liberia's forests. It is highly likely that, in order for President Charles Taylor to continue to finance the RUF and Liberian security forces, he will concentrate his efforts on the logging industry in order to ensure income. Deforestation would increase to a level that could mean that Liberia's forests would be commercially logged out in 10-20 years.

It is undeniable that the timber industry in Liberia has funded and continues to fund regional and national insecurity. For the peace agreement in Sierra Leone to have a realistic chance of succeeding, the international efforts currently under way to deny the RUF military supplies and logistical support need to be comprehensive. As is the case with Liberia's diamond trade there is increasing information to suggest that President Charles Taylor draws a considerable amount of revenue from the sale and export of timber which he is utilises to support the RUF. Therefore, Global Witness recommends a comprehensive embargo on Liberian timber and timber products and that further research on the connection between the Liberian timber trade and regional insecurity.

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