Brazil police bust $$million fraud to export precious Amazon wood to China

Dec 24, 2017 News

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– Chinese entrepreneurs, state officials among 31 charged

In a case that is bound to raise questions about the strength of Guyana’s systems of monitoring, it is now being reported that authorities in neighbouring Brazil have busted a major illegal wood exporting scheme to China.

Almost three dozen persons, including two Chinese entrepreneurs and government officials, have been arrested and charged.
According to a report on the www.theguardian.com, the scheme even involved the players moving to start gold mining in the logging areas.
The report said that two Chinese entrepreneurs paid millions of dollars to a Brazilian company that bribed environment officials of an Amazon state to illegally export precious hardwoods to China.
In a rare success against rising deforestation in the Amazon, Brazilian police and prosecutors were able to stop the scheme before exports started in earnest. They said they saved the state from US$30M worth of potential environmental damage.
More than a week ago, prosecutors presented details of two connected, year-long operations that have seen 31 people charged, including the two Chinese entrepreneurs, Brazilian businessmen, environment officials and the former head of the environmental licensing institute of the state of Amapá, on the eastern edge of the Brazilian Amazon.
The report said that two Chinese citizens, businessman Xiaoliang Xu and his associate, interpreter and fellow investor, Xie Ping, had paid Brazilian company Pangea Mineração (Pangea Mining) US$3M of US$15M agreed for 50,000 cubic metres of wood.
“There were Chinese investors who wanted to extract wood in large quantity from Brazil. They made contact with loggers,” said Everton Aguiar, a federal prosecutor in Amapá’s state capital, Macapá. “They were putting a scheme together and it was defeated.”
Police became interested in the company after an anonymous tip off. The police began monitoring it.
According to prosecutors, Pangea used another company, Ordena Brasil, to bribe officials from the Amapá Institute of the Environment and Territorial Planning (Imap, in its Portuguese acronym) to issue “forest replacement credits” that are distributed to farmers who sustainably harvest wood by replanting deforested areas.
In 2014, a Greenpeace investigation found a similar system being used to ‘launder’ illegally harvested wood in the neighbouring Amazon state of Pará so it could be exported with apparently legal documentation.
Prosecutors said fraudulent credits for nearly 84,000 sq metres were identified of which 20,000 square metres worth had been used. It is not clear how much, if any, of the wood was actually exported.
“We discovered that this company Pangea was acting as an intermediary for a group of Chinese [businessmen],” said João Bastos, a federal police officer from Macapá who worked on the investigations.
“They paid bribes to staff of a government environmental organ[so they would] grant licences for deforestation.”
One of the suspects, Xiaoliang Xu, was charged on December 10, with racketeering and financial crimes by federal prosecutors in Amapá; his whereabouts are unknown and he has been placed on an Interpol wanted list, police said.
Xie Ping was charged in October with unauthorised deforestation, corruption and racketeering. She is still in Brazil and has not been jailed.
The gang illegally deforested a six-kilometer strip of forest with plans to start mining gold illegally, Bastos said.
He added that Xie Ping even imported mining machinery from China. She has Brazilian residence and told police she believed all the investments planned were legal, he said.
In October, Luis Costa, the former chief of Imap, was charged with racketeering and inserting false data into public administration systems. He was arrested but has since been released.
Gilberto Rodrigues, Amapá’s state communications secretary, said Costa was “disconnected” from the environment agency in April this year. “The government always collaborated with the investigations from external control organs and stimulates internal control,” he said in a statement.
Rodrigues said that Amapá state had suffered from a lack of federal government investments in its inspection apparatus, but said that new control mechanisms and disciplinary procedures were being introduced at Imap.
Questions remain over the connections Xiaoliang Xu had been able to establish in Amapá. In February 2016, he was part of a group of Chinese businessmen who met state governor Waldez Góes to discuss investments in the state, communications secretary Rodrigues said.
“This gentleman was part of his committee,” said Rodrigues. “It is the responsibility of the chief of the state to receive innumerable visitors and investors with interests in developing in the state.”
This recent case in Brazil, who forest is part of the Amazon with Guyana, would trigger concerns here.
It has long been suspected, but not fully proven, that some forestry officials stationed at strategic check points in the hinterlands have been bought.
Insiders have pointed to schemes where tree tags, used for tracking lumber to its point of origin, are being recycled.
There have been other reports of logs being smuggled across the border.
The Guyana Forestry Commission and consecutive governments have been insisting that proper systems are in place.
In fact, Guyana has signed onto a Norway deal for US$250M to keep its forest intact via sustainable activities, which expired in 2015— the arrangement has been extended to ensure that Guyana comply with conditions.
This country has collected more than US$100M, it has been reported.
With regards to the logging sector, the Chinese have been moving in.
In the first two years in office, the Coalition Government confiscated the forest concessions of disgraced Chinese investor, BaiShanLin, one of the largest holders of forest property, which was accused of major wrongdoings including burning down a large swath in the Upper Berbice River area.
While BaiShanLin from all appearances has exited the forestry sector, another Chinese company has been growing in prominence— Rong-An Inc.
The Chinese has been aggressively moving into the Guyana market, taking a significant chunk of the commerce market.
It has become involved in state contracts and has been donating equipment, including police vehicles and bikes, to Government.
China’s donations would come at a time with disclosures that currently contractors from that country in the last few years have been granted almost US$300M in state projects.
These include the East Bank and East Coast Demerara roads, the Timehri airport project and projects to run new transmission power lines and install smart meters.

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