Forest Club model projects and sites

Issue 8-9, Nov. 1998

The international tender for a logging concession in Khabarovsk Krai at the territory specifically intended for the creation of the Verkhnesukpaiskiy Zapovednik has been won by the Malaysian Rimbunan Hijau Company. The tropical logging company Rimbunan Hijau that left a "desert" after it in Papua New Guinea has received rights on logging in the taiga.

The world is rapidly changing... It becomes more united. Now globalization of the economy touched the Russian Far East. The tremendous development of the Pacific-Asian region somewhat "spoiled" by the crisis of 1997-1998 could not pass by Khabarovsk Krai.

The first large-scale international tender for logging in the Sukpai Watershed conducted according to all necessary requirements brought on the banks of the Sukpai River an exotic Malaysian guest — Rimbunan Hijau Company. Unfortunately, the Khabarovsk authorities has failed to escape the traditional for Russian authorities rule “wanted to make it as best as possible but made it as usual”.

Surprisingly, the leased territory practically coincided with the area of the projected Verkhnesukpaiskiy Zapovednik. This protected area is in the list of planning zapovedniks and national parks approved by the Government of the Russian Federation. This fact has been admitted by the Federal Forest Service of the Russian Federation. The letter signed by the Deputy Director of the Federal Forest Service Kuzmichev says: “According to the information given by the Khabarovsk Forest Agency, an international tender for a lease of 305,000 hectares of the forest area was held in the Sukpaiskiy Leskhoz. The annual harvesting level is 550,000 cbm. The winner of the tender is a Malaysian enterprise. The territory leased to Rimbunan Hijau International Ltd. has been projected as the Verkhnesukpaiskiy Zapovednik. However, for purposes of development of the regional economy and in connection with construction of the Sukpai-Nelma road, it was decided to start industrial development of this territory. This decision was made on the regional level with participation of scientists and specialists. The creation of the zapovednik is possible within the Katen Watershed. The decision was preceded by an assessment made by specialists from the Institute for Water and Ecological Problems, Russian Academy of Sciences, Far-Eastern Branch, and from the Regional Committee for Nature Conservation”.

The prosecutor's office in Khabarovsk Krai responded to a request of nature conservation organizations in the following way: “The environmental safety of the proposed project was taken into consideration when summing up the results of the tender (Article 64 of Krai Law no. 20 as of May 28 1997). The commission has considered the conclusion of the environmental impact assessment no. 04/1150 as of July 17 1997 “On justification of timber extraction on the area of the Sikhote-Alin forest reserve proposed for lease”. However, this document did not contain any conclusions whether economic or natural activities subject to the official procedure of environmental impact assessment are allowed or not allowed at this area.

In order to eliminate this violation of the Law of the Russian Federation on Environmental Impact Assessment, the Khabarovsk interdistrict Prosecutor for Nature Protection sent an official request to the Chairman of the Regional Committee for Nature Protection in February 5 1998. This information was also directed to the Chairman of Regional Commission on Forest Use as of March 10 1998…”

This activity of the Khabarovsk authorities did not demonstrated anything new. A similar case has happened in the early 1990s when American Weyerhaeuser Company had been going to log on the territory of the Botchinskiy Zapovednik. Nothing has changed since that time, even after millions of US dollars from American, Canadian and European colleagues had been spent to make the forest sector in the region more environmentally friendly. Existing model forests remained unachievable models.

Since Russian authorities already accomplished their business, the further course of events will depend on the Malaysian company, which has permission to log on the area intended for the creation of Verkhnesukpaiskiy Zapovednik.

But, may it be that the company was absolutely unaware in what an adventure it is being involved? Perhaps, when become familiarized with the real situation, it will rejects with anger the very possibility of participation in this environmental vandalism?

In a case with Rimbunan Hijau, we will probably first time in the world participate in an experiment when a typical tropical company is going to harvest wood in the taiga.

To understand what they should expect, Russian environmental organizations should sink in the world, which until now was quite far away from the typical circle of their interests. Meanwhile let us go to the tropics.

The materials presented below are exposition of information given in reviews prepared by our colleagues from World Rainforest Movement and Forest Monitor High Stakes. The Need to Control Transnational Logging Companies: a Malaysia Case Study, 1998 as well as of Rainforest Action Network Southeast Asia Rainforest: A Resource Guide and Directory, 1993.

The Malaysian Federation and its forest sector

The Malaysian Federation is subdivided geographically in two parts: continental (peninsular) and the northern part of the island of Borneo. Before becoming a British colony in 1786, it was a group of independent sultanates. In 1957, they have gained the independence again, and the sultanates formed the federation. Sarawak and Sabah joined it in 1963.

The country's population is 19 million, 70% live in the continental part. Half of the population is Malays dominating in the political life, 33% are Chinese controlling the economy and 10% are Indians imported to work on rubber and palm plantations.

Throughout the country, forest-dwelling aborigines make up 7% in total. However, in weakly populated Sarawak, 20 local tribes consociating themselves under the name of Dayaks make half of population. Another small in number group (about 10 thousand people) is the tribe Penan engaged in nomadic gathering and hunting.

The total area of Malaysia is 33 million hectares, of which 30 million hectares were earlier covered by forest. The forest area was 21 million hectares as of 1981 and 16-19 million hectares as of 1992. By the beginning of the 1990s, annually forest cut was around 250,000-500,000 ha. Presently, Malaysians finish “development” of natural forests in this country.

Malaysian forests are one of the richest in sense of their biodiversity. In the continental part were found 7900 species of flowering plants, 207 species of mammals, 637 species of birds and 250 species of coarse fishes.

Tropical rainforests of Sarawak and Sabah according to the opinion of scientists are the most ancient terrestrial ecosystems in the world. They are home for 2000 species of flowering plants, 2500 species of butterflies and 180 species of mammals.

Malaysia is the largest harvester of tropic wood. Wood is partially processed on site but also is exported as roundwood. The country also takes the first place in export of unprocessed roundwood. 40 million cbm wood logged in Malaysia in 1992 gave 8.5 cbm million sawn materials and 1.5 million cbm plywood. As a whole, the forest sector provides 4% of country's export revenues.

Major exporters of tropical roundwood as of 1995, in million cbm, were Malaysia, 7.9; Papua New Guinea, 1.5; Gabon, 1.1; Cameroon, 1.1; and Myanmar (Burma), 1.0. Major importers of tropical roundwood as of 1995, in million cbm, were Japan, 6.8; China and Taiwan, 2.9; Republic of Korea, 1.7; Thailand, 1.3; and the Philippines, 0.5.

The wide scale cutting in Malaysia has started in the end of the 19th century, when British began to create Hevea plantations (Malaysia is still the major producer of natural rubber). Two million hectares of forests were cleared for creation of Hevea plantations. Another one million hectares were converted into plantations for production of palm oil, cacao etc. Commercial logging has begun in the 1960s. In the mid-1970s, 350,000 to 400,000 hectares were annually cut in the continental part. The wood was mostly exported as unprocessed roundwood. However, already in 1985 it has become clear that the end was close, and the export of roundwood from continental Malaysia has been prohibited. This promoted development of wood processing industry in these areas.

The activity of loggers and roundwood exporters has shifted to the island of Borneo, Sarawak and Sabah provinces. The annually harvested volumes have raised from 4.7 million to 19.5 million cbm in 1991. In 1996, 16 million cbm were harvested — two times as much as the level recommended by the International Tropical Timber Organization that has visited Sarawak in 1990. Already in 1990 Sarawak and Sabah provided 83% of the total Malaysian timber export equal to 23 million cbm.

According to the study by the World Bank, of the total area of forest concessions on Sarawak (9.2 million hectares, 76% of the state's territory), 7 million hectares were cut by the end of the 1980s. According to the Malaysian forest legislature, the next generation of forests will reach the age of maturity to be cut only in the middle of the next century.

Despite all this, forest harvesters continued to ignore rules of forest management and maximum speeded up forest logging seeking fast profits. At some concessions, logging continues the whole day using artificial illumination at night. It is typical when damaged and small-sized trees are left on the ground.

In tropical forests with their enormous amounts of rainfall, logging means intensive soil erosion and water pollution downstream and the damage of coral reefs in coastal marine waters. Microclimate also changes. Territories that earlier had constant conditions of humidity and temperature now start to suffer from droughts and, simultaneously, from floodings, which could have catastrophic consequences.

The biological diversity of the richest Malaysian forests is also negatively affected by commercial logging. In the continental part of the country, from 205 to 65% species already stopped tot exist. Research in the end of the 1980s showed that 61 species of mammals and 16 species of birds are close to extinction. They will unlikely survive because the area of protected territories is too small and logging takes place too fast.

Shocking results of the activity of Malaysian companies raised protests both inside the country and abroad. In the early 1990s, environmental organizations convinced in impossibility to reach serious changes in the policy of the Malaysian authorities and in the activity of logging companies and buyers of their products (mainly Japanese companies). Therefore they were forced to initiate a campaign on refusal to buy tropical wood harvested by so environmentally destructive ways.

In 1992, Austria made an attempt to introduce extra tariffs on imported tropical wood but refused from that under the threat of the return boycott of Austrian goods in Southeastern Asia.

Nonetheless, as a result of efforts of environmentalists, the authorities of some cities and states of America decided to refuse from use of tropical timber in any projects financed by their budgets. The similar process adopted at the municipal level began in Japan.

After discovering that protests of environmentalists had a real effect on the market, the Malaysian Government became involved in a violent struggle. In 1991, it has begun a campaign for defending Malaysian loggers. A special group was created to coordinate the work of leading world companies on public relations. All activities on the discredit of the protest campaign of environmentalists and on improvement of the image of Malaysian industry as ecologically sustainable and strictly controlled cost the Malaysian Government $4 million.

At the United Nations Conference on Environment and Development at Rio de Janeiro in 1992, the Malaysian Prime Minister Mahathir made a statement addressed to industrially developed countries unwilling to buy Malaysian wood: "If rich countries of the North do not want we cut our forests, let they compensate our losses of profits if we refuse from that."

It is interesting that this position of the Malaysian Prime Minister is literally coincides with proposals of the Karelian authorities on the issue of a forest belt along the Russian-Finnish border. They not only spoke up similar ideas ("If you do not want we destroy unique old growth forests, you should pay us at full cost of their wood") but also carefully said how much hundred millions of dollars they would like to receive for that. However, in both cases customers did not agree to the racket at the state level and simply refused to have affairs with sellers demonstrating such a manner of making business. Simultaneously, reserves of easy accessible and high qualitative Malaysian forest have rapidly decreased. Soon the time came when Malaysian logging companies had to seek other places for logging. To do that, they were forced to move their operations abroad where their behavior soon raised conflicts of the quite similar nature as those earlier existed in the known system: "rich countries of the North exploit poor countries of the South".

The Government of Malaysia on the political arena being one of the most active representatives of "poor exploited countries of the South" soon became concerned with a fast forming image of Malaysia as a new, quite "southern" colonizer of forest resources of its neighbors. The robbing by Malaysian loggers started to create serious problems on the international political arena. Generally, supporting the expansionist activity of its loggers, the government began to talk to them asking not to spoil the reputation of Malaysia and if possible did not create conditions for sound international scandals.

In the last half of the 1990s, top officials of the Malaysian Government, at least in words, have begun to declare that Malaysian investors had to follow the nature conservation legislature of countries, where they operate, to use sustainable methods for extraction of natural resources and to develop confidential relations. They also had to constantly remember about needs of the local population and to pay attention to environmental consequences of their activity, remembering the necessity to maintain the positive image of Malaysia.

Accompanied by such wishes, Malaysian logging companies actively rushed abroad. At the present time, Malaysian loggers dominate (control more than 50%) of harvesting operations in Papua New Guinea, Solomon Islands, Guyana and Vanuatu. Their presence is significant (control 20-50%) in Cambodia, Gabon and Surinam. Besides that they are present but there is no accurate data of size of their operations in the forest sector of Belize, Bolivia, Cameroon, Congo, Zaire, Equatorial Guinea, Indonesia, Laos, Myanmar (Burma) and the Russian Far East.

The Rimbunan Hijau Group

Datuk Tiong Hiew King

The head of Rimbunan Hijau Group is Datuk Tiong Hiew King, whose property before the Asian crisis, The Forbes estimates in $2.5 billion.

The group controls logging companies operating in Malaysia at the territory of Sarawak and in Papua New Guinea, Brasilia, Cameroon, Equatorial Guinea, Vanuatu, New Zealand and the Russian Far East. It also has a sawmill in Shanghai, a livestock raising farm in Australia and real estates in Singapore. The group is also involved in banking, mass media business and palm oil production.

Specific characteristics of the group are close business ties with the official authorities. Thus, one of the Tiong brothers is the member of the Malaysian Parliament, while the former prosecutor general is the director of one of the Group's companies.

The most fruitful collaboration of the Rimbunan Hijau Company with the authorities can be demonstrated by the example of Sarawak.

Forest business in Sarawak and activities of Rimbunan Hijau

In Sarawak, Rimbunan Hijau holds forest concessions of 800,000 ha in total. According to the Malaysian legislature, the general strategy of forestry is determined at the national level, while all practical forest management is under the competence of regional governments. The more important is that the local government receives payments for use of forest resources and wood export fees. Producing and, respectively, exporting nearly 15 million cbm wood, the state authorities should earn around $1.5 billion per year. The distribution of these significant revenues has strongly expressed local features.

Top political leaders of Sarawak already long give permissions for logging to themselves, their relatives and supporters.

Political leaders try to prevent leakage of information on this theme. Independent experts interested in this issue hardly could or sometimes could not visit Sarawak, because it requires a special permission of the authorities. The authorities often confiscate passports of local activists so restricting their visits to other countries, where they may speak about these problems.

However, during the prime ministerial elections in 1987, members of the united family of Sarawak rulers quarreled with each other. As a result some interesting details were revealed. Thus, the new Prime Minister Datuk Pattingi Abdul Taib Mahmud accused the former Prime Minister that the latter gave himself and his relatives logging licenses on 1.25 million hectares of forests with the cost of their timber estimated in $9 billion. In response, the former Prime Minister, by the word, the uncle of the present one, accused his nephew in providing his own relatives of similar licenses.

Another interesting information was discovered by results of research on relations between forestry companies and leading politicians of Sarawak and members of their families. For example, in Belaga district, all ministers of forestry that replaced each other since 1966 to 1992 had shares in logging companies that obtained licenses at this territory.

There is no risk for politicians in providing themselves and members of their families of logging licenses, since they do not invest anything in logging operations and do not pay for licenses. Some owners of licenses are simply middlemen. They simply resell logging rights to others, just taking certain percentage from company's profits. This percentage is directly given in agreements with loggers.

The decision to give the license is made solely by the Prime Minister. Furthermore, a special law was adopted according to that he had the right to solely recall the license without any explanation, while the decision could not be protested. This ensures the loyalty of the companies to the Prime Minister, otherwise they not only hardly receive new licenses but also could lose old ones.

Rimbunan Hijau, which works in such a difficult situation, has never experienced any problems with licenses. The brother of the present Sarawak's Prime Minister is a director of one of Rimbunan Hijau's companies, while his sister is also a business partner of Rimbunan Hijau.

Rimbunan Hijau has closer ties with the Ministry of Environment and Health Mr. Datuk James Wong. Rimbunan Hijau owns 40% shares of Limbang Trading Company, which has a forest concession of 310,000 ha until 2009. The rest 60% belongs to the Minister himself.

Nevertheless, the closest informal ties between the Sarawak's authorities and logging companies do not prevent the latter to steal wherever it is possible. According to relatively coinciding estimates, nearly third of the total timber export from Sarawak has serious problems with proving it legality. These problems can be due to incomplete or lacking legal documentation, somewhat modified species composition and wrong prices or volumes of timber (one may easily assume in what direction). Sometimes export fees are not paid at all.

Furthermore, by interesting coincidence, members of the Prime Minister's family Datuk and Abdul Taib Mahmud also control Archipelago Shipping Company — the main timber carrier. So, if the Prime Minister wishes, he will be capable to quite easy learn volumes and cost of timber exported from the territory under his authority.

Thus, at the official level, Rimbunan Hijau did not have and will not have any problems on Sarawak, although forests disappear too fast. However, this is not a problem as well. Malaysian loggers and their Japanese buyers — Marubeni, Ito and Mitsubishi after cutting off Sarawak — since the 1990s have been developing business in Papua New Guinea and South America.

Papua New Guinea and its forest sector

Before colonization, Papua New Guinea was inhabited by hundreds of independent tribes speaking 700 languages — 25% of all known in the world. In the last half of the 19th century, Germany and Great Britain fought for it, so in 1901 it became the colony of Australia. It is the independent democratic republic since 1975.

The population is 3.9 million and grows rapidly. Most of the population keeps subsistence farms.

Papua New Guinea is one of few countries where tribes have legal rights on the land. This means the absence of written documents and formal borders. All this opens to loggers great possibilities to get access to forest resources.

Papua New Guinea occupies half of the biggest tropical island of New Guinea. Before colonization, forests covered about 42 million ha. Knowledge of its forest cover is still very poor. According to some estimates, by the year 1992, the forest area shrank to 35 million hectares. Annually nearly 200 thousand hectares of forests are harvested and cleared for agricultural purposes.

Forests of Papua New Guinea are unique in terms of their biological diversity and high endemism. In these forests live more than 1200 species of trees, 9000 species of flowering plants, 650 species of birds, 170 species of lizards and 100 species of snakes.

Intensive commercial logging stared in Papua New Guinea during the World War II and continued to develop during the 1950s-1960s, when Australian companies operating there organized processing of almost all harvested timber. However, after acquiring of independence, wood processing has started to degrade and now is only 5% as it was before.

During the 1980s, in the forest sector of Papua New Guinea entered Japanese companies, which bought more than half of logging rights. Recently, they were replaced by Malaysian loggers, who earlier made their wealth by logging forests in their own country. Typically, this penetration was financially supported by Japanese companies. Of the total pre-crisis volume of roundwood export from Papua New Guinea in the amount of 1.9 to 1.2 million cbm, they bought 60%, while other 40% were taken by companies from the Republic of Korea.

According to the country's constitution, its natural resources and the environment should be preserved and used in interests of the whole population as well as of future generations. However, in practice, interests of the whole population are very poorly considered, while those of governmental officials and politicians are quite well satisfied. In the 1980s, the scandal related to unprecedented corruption in the forest sector flamed up in Papua New Guinea. The Prime Minister has formed a commission under the chairmanship of the Judge Thomas Barnet, which presented results of its findings in a huge report. Its content was also scandal. According to the report, none of the companies investigated by the commission followed legal requirements. Basing on materials of the investigation, the whole sequence of ministers of forestry of Papua New Guinea after getting the independence was charged in corruption.

The most popular methods of violations were underestimated prices, falsification of species composition and volumes of harvested wood that allowed companies to avoid payments for forest use, stumpage fees and export fees. Forest companies and top governmental officials made millions of dollars, while budgets and local landowners obtained remains.

After publication of the Barnet's report, the government got excited by the possibility to reform and clear the country's forest sector at the cost of participation in Program of Actions on Tropical Forests proposed by the World Bank, Unites Nations Food and Agriculture Organization and United Nations Development Program.

However, good wishes to fight the corruption in the forest sector of Papua New Guinea have failed once again. The Minister of Forestry Charles Stak at a meeting in March 1990 held to discuss the Program announced a biannual moratorium on allocating new concessions. As it was found out later, six new permissions were registered literally before the very introduction of the moratorium. Nevertheless, even after it was announced other 21 exceptions were registered, thus making the moratorium practically useless. Since most of lands in Papua New Guinea belong to tribes living on them, their attitude towards logging is very important.

Many forest communities consider logging as a synonym of development. Very often the local community agrees to allow logging in its forests relying on loggers promises to construct roads to link their isolated forest settlements with the external world and thinking that logging itself will give them a possibility to earn money. In some cases, forest companies organize groups of local population supporting the idea of logging that say on behalf of the whole tribe, while having no rights to do. Most of tribes and communities recognize that they do not fully understand consequences of signing the contracts with logging and mining companies. These companies not even keep their promises but in most cases destroy natural resources much beyond the limits of the allocated areas. Besides that, many Papuans soon discovered that their traditional system of agriculture is being destroyed because of changing water regime, pollution due to commercial logging, road construction and penetration of migrant workers. As a result furious local people turned to violent actions. For example, in the province of Western New Britain, local landowners blocked the airport threatening to destroy equipment belonging to the Malaysian logging company Rimbunan Hijau.

The frequency and strength of these conflicts grew. Environmental organizations started a program on raising the awareness of Papuan landowners on real consequences of spread of heavy logging operations to their lands. They also organized visits of representatives of tribes that planned to allow logging to those where it has already happened.

There was active work on introduction of small-sized local units for wood processing. The campaign for full ban of commercial logging in Papua New Guinea was growing. Those 5-8% of revenues obtained due to wood export were overrun by the contribution to the country's economy of traditional forest use as well as of other variants of commercial forest use. However, it seems that the most serious contribution to realization of this idea could be made by the Asian economical crisis of 1997-1998.

The Effect of the Asian Economical Crisis of 1997-1998

By 1998, the Asian financial crisis sharply curtailed the demand for tropical roundwood in Japan, Southern Korea, Thailand and the Philippines. However, simultaneously, the demand from China, which yet escaped the financial crisis, has sharply grew. The new legislature adopted in 1997 significantly decreased the volumes of wood harvested within the country. As a result of this, China has imported nearly 4 million cbm tropical roundwood in 1997.

Of major exporters of tropical roundwood, Papua New Guinea has suffered most strongly. The largest logger operating on its territory — Malaysian Rimbunan Hijau typically harvesting 1.2 million cbm decreased it down to 5% from this value. As a result 300,000 cbm of logged but unsold timber has left on the ground in Papua New Guinea.

Transient depleting exploitation of forest resources controlled by foreign companies similarly to "banana republics" resulted in formation of "timber republics".

During the period of high prices, for example, in the beginning of the 1990s, huge profits were extracted from these countries, while local and central authorities lost enormous money because of understated prices for exported wood often with help of corrupted officials.

During the period of low prices, logging companies simply ceased their operations, while logged but unsold timber lost quality and price. Simultaneously, payments for use of forest resources and export fees decreased.

As a result of logging many local communities, which earlier maintained natural economy and basically independently provided themselves of all necessary shifted to buying goods, so becoming dependant on earnings. At dropping world prices and sharply decreasing logging, they have lost the only source of money for buying imported goods.

Perhaps, the Asian crisis and related decrease in logging and roundwood export will nevertheless promote development of local wood processing, so producing more valuable and more goods necessary to end consumers. Furthermore, this will require much less raw material, while wood extraction could be made by sustainable methods of logging.

The sharp drop of commercial logging will force local authorities to reconsider the role of local economy, to a significant degree capable to provide population of necessary products.

Rimbunan Hijau in Papua New Guinea

Rimbunan Hijau is the largest logging company operating in Papua New Guinea. According to different estimates, this group and associated companies control up to 50-80% of all harvesting in this country and continues to increase its share. Here Rimbunan Hijau owns 2 million hectares of forest concessions. In 1992, the total production of the Papua New Guinea's forest industry was $800 million, of which nearly $700 million were produced by enterprises associated with Rimbunan Hijau. These outstanding results were to a significant degree due to close and fruitful collaboration between Rimbunan Hijau and the authorities of Papua New Guinea.

At the 14th Forest Conference of the Commonwealth of Nations held in September 1993 in the capital of Malaysia Kuala Lumpur, the Deputy Director of the Forestry Department of Papua New Guinea Chawi Conable said that the activity of forest companies lead to massive destruction of the environment in his country.

Malaysian companies dominating in this sector manipulate politicians and landowners of Papua New Guinea to maximize their profits and preserve the access to huge concessions.

Chawi Conable openly blamed two Malaysian companies in giving bribes in cash to 109 members of the Parliament of Papua New Guinea to adopt a correction to the Forest Law that would permit companies to have more forest concessions. Mr. Conable considered this as the intervention into internal affairs of Papua New Guinea and as actions aimed to "buy" the national sovereignty. He blamed the companies in inviting top governmental officials and leading politicians to the Board of Directors as the responsive kindness for their readiness for cooperation. At the same conference, Yaati Ban, the executive director of the Southern Pacific Nations Foundation, who earlier worked in the Forest Department of Papua New Guinea, warned that as a result of the domination of foreign logging companies and their control over vast forest areas of Papua New Guinea, its natural resources will be exhausted in the nearest future. Logging companies make colossal profits, while owners of natural resources have almost nothing. The Government of Papua New Guinea and its population lose colossal money as taxes and payments for use of natural resources and on provision of employment, because of broad scale corruption accompanying issuing of logging permissions and still uncontrolled export operation.

In June 1994, that time the Minister of Forestry of Papua New Guinea Tim Neville said that timber of one of the richest and valuable tropical rainforests in the world is secretly exported from the country by logging companies, basically Malaysian ones, despite all attempts of the Government to control their activity. However, the control over what they are doing is practically impossible. Loggers are very well organized. Although recently some measures were undertaken, according to my estimates, every day, because of illegal export, disappears wood of $1 million worth". Thus, according to the minister, from $270 to $350 million per year, depending on whether Malaysian companies work on weekends or not. This is a very good result, since of $800 million (the annual production of the Papua New Guinea's forest sector), $700 million are provided by Rimbunan Hijau.

Seemingly, nothing principally changed since times of the investigation of the Judge Thomas Barnet. Everything is the same: "About some of these companies there are grounds to say that they penetrate inside the country and behave as occupants and robbers. They bribe politicians and leaders, create social disharmony and ignore the Law in their intention to eliminate and export the last remains of forests of the province. Companies mistreat landowners and use corruptive, sellable and thoughtless politicians. Permission of continuation of unprecedentedly predatory exploitation of natural resources of Papua New Guinea by foreign companies with destructive social and ecological consequences and at very small positive results of this activity, brings to nothing the status of Papua New Guinea as a sovereign state."

Attempts to strengthen the control over the forest industry encountered the harsh resistance of companies and their allies. The Minister of Forestry Tim Neville, as a result of his attempts to order it somehow, regularly received threats to his life. In 1994, a fire destroyed thousands of valuable documents in the archives of the Ministry of Forestry. In the opinion of the largest American newspaper The New York Times, this was certainly an arson.

Logging companies operating in Papua New Guinea very rare pay attention to environmental consequences of their work. Of 316 forestry projects, whose realization started after 1975, only 22 contained plans of nature conservation measures. However, the presence of these plans does not mean they will be steadily fulfilled.

For example, according to the official report of the Environmental Department of New Guinea Lumber Company — the member of the Rimbunan Hijau Group — the logging stuff in some case did not pay attention to company's obligations accepted at approval of this plan or simply did not have it. Thus, in fact, clear cutting was performed on slopes greater than 25 degrees that resulted in strong soil erosion. In some cases, logging places were strongly polluted by petroleum products, which were washed away in a nearby sea.

The sanitary inspection also made serious notes. During the repetitive visit of logging places of New Guinea Lumber in Ariah Wanu, the sanitary inspector reported that managers of this division of Rimbunan Hijau completely ignored the necessity to eliminate faults and fulfill prescriptions made during the previous inspection. This related to sanitary and social provision, water supply, overpopulation, low quality of places for living, nonobservance of safety measures etc. When visiting logging places of Pacific Logging Company in Wanapa also a part of Rimbunan Hijau, it was discovered that only 3 of 26 conditions of the environment protection plan proposed by that company are observed. In turn, the plan itself did not contain any condition, whose observance was necessary for approval of the plan by the authorities.

New Guinea Lumber a part of Rimbunan Hijau prepared crushed stone for road construction by destroying a living coral reef.

However, problems related to work of companies of the Rimbunan Hijau Group on the territory of Papua New Guinea are not restricted only by social and ecological sphere.

The same Pacific Logging was charged in illegal logging of forest around Port Moresby. New Guinea Lumber was penalized by $30 thousand for logging at the territory of the concession without registration of this activity. According to some estimates, the company meanwhile managed to log and export wood of $48 million worth.

In March 1997, the Governor of the Province Milne Bay Tim Neville, the former minister of forestry, confirmed that Mr. Saban contracted by Rimbunan Hijau was caught on export of rosewood logs, whose export as unprocessed timber from Papua New Guinea is prohibited. However, this was far not the first case. In March 1994, when the same Tim Neville still was the Minister of Forestry, he, in cooperation with Australian TV made a documentary film about activities of Rimbunan Hijau, demonstrated the film group facts of understating the timber quality at a warehouse of export wood.

As far as the fruitful cooperation with the authorities is concerned Rimbunan Hijau demonstrates the same style of work in the independent state of Papua New Guinea as in the home country, in Sarawak.

The company actively works to change the forest legislature. In order to do that, it organizes charter flights and pays for living of legislators in hotels. Using the newspaper published by the company it openly lobbies against the taxes increase, saying that if that happens, Rimbunan Hijau will start to move its operations to Africa and Latin America.

Early in 1997, Francis Tiong, the manager of Rimbunan Hijau' operations in Papua New Guinea and, simultaneously, the President of the Association of Forest Industries of this country became the council member of the National Forest Administration — the governmental structure that should control activities of forest industries. It seems that the experience of the cooperation of Rimbunan Hijau with the Ministry of Environment of Sarawak, together with whom it logs forests, was successful adapted to conditions of Papua New Guinea.

However, this already did not help. In June 1998 the National newspaper belonging to Rimbunan Hijau reported that the company sent logging and road equipment of $2.4 million worth from Papua New Guinea to Russia. This decision was explained by low prices on hard leaf tropical roundwood at the local regional market as well as the absence of support of forest industry by the Government of Papua New Guinea.

After left the unfriendly Papuans and being speed up by winds of the Asian economical crisis, ships with Rimbunan Hijau's logging equipment took a direction from Papua New Guinea to hospitable coasts of Khabarovsk Krai.

From the editorial board. We will continue to monitor the development of the situation in Khabarovsk Krai as well as in other regions where foreign loggers operate. We invite all willing to express their attitude "foreign presence" in Russian forests.