Big Money, Big Cheating: Keeping Profits High and Hidden in the Gabonese Logging Industry

RESOURCE: Raw Intelligence: TBNI
13 June 2019
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Environmental Investigation Agency (Washington, DC)

Raw Intelligence Series - #3 TBNI

The managers of the company Transport Bois Négoce International (TBNI) know how to make big money off logging the Congo Basin forest while keeping their profit hidden from Gabonese authorities. Yet their methods remain a secret no more, as company officials described in detail to EIA investigators the tricks of their trade.

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.

TBNI allegedly manages over one million hectares of forest in Gabon, owning one of the largest forest areas in the country. Their access to vast tracts of exploitable forests, along with their modus operandi focused on quick profit and logging activities that do not respect the law, allow them to make astronomical profit. TBNI managers told EIA that their annual profit can be as high as 30 to 40 percent. For comparison, the average private US company nets a profit margin of 8.9 percent, with the most profitable industries in the US – like accounting, real estate leasing, and legal firms – not exceeding 20 percent.

TBNI profits are also optimized through the practice of hiding earnings. A TBNI manager told investigators that most timber companies, including their own, "mitigate" the risk of paying too much tax via a variety of strategies. One of the most common strategies is the creation of offshore companies located in a place with low tax, the so-called "tax heavens", such as Hong Kong. This scheme allows the company to practice "transfer pricing," in which the Gabonese-registered company sells timber to its sister company in Hong Kong, which then resells to the final client. In reality, the Gabonese company sells the timber to their offshore sister company at lower than market price, while the sister company then resells to the final buyer at the real market price. This scheme concentrates and masks the profit within the offshore company, and thus obscures actual profits from the true country of harvest and operation.

Another key component of TBNI's profit-maximizing strategy is to bribe authorities. The TBNI manager explained to EIA investigators that they bargain with officials whenever asked to pay a fee. He emphasized that when an issue occurs, it is essential to pay officials as soon as possible so that the issue is not reported and escalated to higher, more expensive levels. "The less people know, the less you have to pay," he explained. He concluded by saying that every Chinese company is always doing something not 100 percent according to the law, so they have to pay bribes and fines constantly.

To present a nice façade to importers in Europe, where a law prohibits the entry of illegal timber, TBNI managers created a dedicated subsidiary called Mont Pelé Bois, for which everything is arranged on the book to look good. TBNI uses this subsidiary to sell their timber to a wide range of countries in the EU, including France, Belgium, Germany, the United Kingdom, and the Netherlands, according to the TBNI manager.

This previously unreleased video provides more concrete evidence of how corruption in the Gabonese forest sector enables companies to steal both wood and money from the country. In his recent national allocution, the President of Gabon Mr. Ali Bongo Odimba mentioned his intention to rid his country of corrupt officials who undermine the rule of law. Building upon actions that Gabon took against the Société de Sciage de la Moanda (SSMO) – a local affiliate of the Dejia Group, the sack of the Vice President and Forest Minister for their role in the "kevazingogate", and following the recent government reshuffling, it is urgent for authorities to address the crimes committed by TBNI and put a final stop to the timber mafia that has plagued the country for years.

Read every part of the series:
Raw Intelligence: Dejia Group
Raw Intelligence: WCTS
Raw Intelligence: TBNI

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