19 June 2014

Mozambique: Anti-Corruption Office Confirms Illegal Timber Exports

Maputo — Mozambique's Central Office for the Fight Against Corruption (GCCC) has confirmed serious allegations of illegal exports of wood and evasion of taxes by two companies owned by Chinese citizens in the northern province of Cabo Delgado.

The GCCC was alerted to these crimes by a British-based NGO, the Environmental Investigation Agency (EIA), which looked at the figures from both the Mozambican and Chinese ends of the timber trade and spotted enormous discrepancies. The imports of Mozambican timber declared in China massively exceed the exports declared in Mozambique.

According to the EIA report, in 2012 China recorded imports of wood (logs and sawn wood) of 450,000 cubic metres. Yet for the same year Mozambique recorded exports of wood of 260,385 cubic metres, not merely to China but to the entire world.

When the Chinese figures are broken down, 323,000 cubic metres of the wood imports from Mozambique are logs. The total exports of logs in the Mozambican records are just 41,543 cubic metres.

Discrepancies on this scale cannot be dismissed as mathematical or accounting mistakes. They indicate that hundreds of thousands of cubic metres of wood were exported illegally to China in 2012, mostly in the form of unprocessed logs.

A press release from the GCCC said that prosecutors investigated the allegations against the companies Mozambique First International Development Ltd (Mofid) and Senlian International Investment Corporation in Mozambique Ltd, and found strong evidence that both were involved in smuggling precious hardwoods.

One of the companies (the GCCC does not specify which) exported almost 6,400 cubic metres of wood, in the form of logs, planks and boards in 2011 and 2012 without possessing the necessary authorisations from the Mozambican authorities.

The second company, between 2007 and 2009, exported over 3,800 cubic metres of blackwood (pau preto) logs without paying the taxes owing. Furthermore, first class hardwoods should never be exported as logs, but only after processing.

Under the Mozambican definition, these acts do not constitute crimes of corruption. But they do fall under the category of administrative infractions and tax offences. The GCCC has thus informed the Cabo Delgado Provincial Directorate of Agriculture and the Mozambique Tax Authority (AT) so that the cases “may be dealt with appropriately”. The GCCC promises that the Public Prosecutor's Office will follow these cases.

But the GCCC could find no evidence that the Mozambican citizens named in the EIA report had any holdings in the two companies. Delicately, the release declines to mention who these citizens are - but anyone who bothers to look up the EIA report will find that the Mozambicans named as supposedly involved in timber smuggling are Agriculture Minister Jose Pacheco and the former governor of Tete province, Tomas Mandlate.

The allegations against Pacheco were always very flimsy, amounting to no more than boasts by one of the owners of MOFID, Liu Chaoying, that he had close relations with the minister.

EIA investigators, posing as clients, talked to Liu, who told them that he could export large quantities of hardwoods Liu claimed close connections with Pacheco, claiming “me and him are like brothers”, describing him as “a friend”, and alleging that when the Minister “needs money, he has come looking for me”.

Such claims of close ties with Pacheco may only be the idle boast of a crooked businessman trying to impress someone he believes to be a client. Pacheco roundly denied the allegations.

As for Mandlate, EIA investigators say they met him at the home of a man named Xu in Pemba in September 2012. Xu is a senior official in the second company, Senlian. Mandlate was staying at Xu's house during the Frelimo Tenth Congress held in Pemba during that month. According to the report, Mandlate claimed that his role is “to help the company solve some problems”.

Xu supposedly said that Mandlate “takes care of the liaison work, such as export quotas, and forest concession permits”, for which the Chinese company paid him a salary and gave him a share of the company.

But Senlian ran into trouble in April 2012, when 34 of its containers full of illegal logs were seized, resulting in large fines and forcing Senlian to suspend log exports for the rest of the year. Nonetheless, Xu hoped that Mandlate would smooth the way to resuming illegal exports. “He will sort it out for me next year”, he claimed.

Mandlate strongly denied any involvement with Xu in the illegal timber trade. And if he was indeed given a share in Senlian, it was not registered

But the question of whether Mozambican officials held shares in Mofid or Senlian is irrelevant. The main accusation against Pacheco and Mandlate in the EIA report is not that they were shareholders, but that they facilitated illegal exports. The GCCC release does not tackle this allegation.

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