"One Cannot Survive Going By the Rules": How Colossal Overharvesting and Money Laundering Became the Standard in the Forests of Gabon

24 May 2019

EIA Raw Intelligence Series - #2 WCTS

Their peers in the Gabonese timber industry call them one of the most lawless companies operating in the country. In this second installment of EIA's Raw Intelligence series, we introduce you to the company Wan Chuan Timber Sarl (WCTS) – perhaps the worst offender of crimes committed against the forests and the people of Gabon.

In order to present the truth and bring more evidence to the public eye, EIA recently launched a video series called Raw Intelligence. Through minimally-edited undercover videos capturing timber sector management speaking in their own words, EIA will demonstrate how the crimes documented in our report Toxic Trade – money laundering, tax evasion and other rampant rule-breaking – are pervasive, structural and indisputable.

WCTS is a timber company operating out of Gabon that manages over 150,000 hectares of forest, with customers across Asia, Europe and in the United States; its reputation among public and private enterprises is as one the most brazen forest offenders in the Congo Basin. The Deputy Director General of WCTS, who talked on multiple occasions to EIA undercover investigators, was arrested by Gabonese authorities in 2017 during an investigation into the company's illegal logging practices. Soon after the arrest, civil society organization Conservation Justice filed a civil complaint against the company over illegal logging and the millions of dollars in taxes the company evaded through illicit practices. Almost two years later, the case against the company has stalled and WCTS operates with impunity.

In our previously unreleased video, WCTS' Deputy Director makes it clear to EIA undercover investigators that his company has no desire to contribute to local development. The plan is clear: to plunder and profit from Gabon's natural resources, and then just leave the forest decimated, the country and its people destitute. He explained to EIA investigators that despite a management plan dictating that his forest concession should be progressively harvested over a 20-year span, the company will have exhausted it in seven-to-ten years maximum.

And WCTS doesn't just unabashedly and unapologetically overharvest. Its representatives explained to investigators the mechanism they use to conceal massive illegal logging operations outside of the authorized concession area.

To leave no trace of their crime and to coverup their profit, company managers have developed a complex, not to mention illegal, scheme. "It may sound bad, but in reality we are laundering the money," explains the same deputy director to EIA undercover investigators as he describes how WCTS uses offshore entities to hide profits. He then elaborates upon the method of owning smaller companies registered in Gabon, selling timber to those small companies, and having the small companies export the timber. Why does transferring assets from one WCTS-owned company to another matter? Because this process ensures, as he clarified it, they can hide the overharvested timber and make export data look misleadingly smaller, which means they owe less taxes to Gabon.

How does WCTS get away with all of this? They rely on paying off officials who then turn a blind eye to the crimes. The WCTS deputy director states in the video, "troubles can go away by paying a fee." In the event that they are fined by Gabonese authorities, they counter offer, normally "half the price" of the original fee.

WCTS's scheme also depends on clients who do not exercise due diligence on the wood they purchase in order to determine its legal origin; most of the company's clients are located in China, where no laws oblige them to do so. Several of them, however, operate in the European Union (EU), and thus have a legal obligation to guarantee "negligible risk" of the timber imported being of illegal origin. The European buyers, several of which are located in Belgium, appear to have a fundamentally flawed due diligence system. WTCS states in the video that external auditors from EU clients only check timber measurement and quality during site visits and do not verify or even enquire about the legal origin of the timber.

As Gabonese authorities rightfully stopped the Dejia Group affiliates in Gabon, it is urgent for them to investigate WCTS's operations. European authorities have the responsibility to support the process by investigating flawed due diligence systems set in place by their importers, and acting decisively upon their findings.

As the deputy director of WCTS told EIA undercover investigators "one cannot survive going by the rules." What he and other company officials fail to recognize or admit is that the forest and the people of Gabon who rely upon it can neither survive this dirty and destructive game.

Read and watch the other parts of the series:
Raw Intelligence: Dejia Group

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