Devastated mountains in Romania's Sebes Valley. Photo: Magda Munteanu / BIRN (Balkan Investigative Reporting Network).
Austrian timber giant ransacking Romania's forests
21st October 2015
Austrian timber company Schweighofer is linked to large-scale illegal logging which accounts for half of Romania's timber production. An EIA investigation finds that almost all the illegal timber ends up in the company's mills.
Over 50% of logging in Romania is illegal - from national parks, clear-cutting, overharvesting, use of false permits, and logging on stolen land. In nearly every case the wood was on its way to, or ended up at, Schweighofer's mills.
The Austrian timber giant Schweighofer is processing large amounts of illegally harvested timber from Romanian forests into semi-finished wood products and biomass, according to the US Environmental Investigation Agency (EIA).
The accusation comes in a new report released today, which follows two years of investigations and details, for the first time, the extent of the destruction caused by the high volumes of illegal wood reaching Schweighofer's Romanian mills.
The illegal timber products, says the EIA's executive director Alexander von Bismarck, are being sold throughout the European Unio. "Schweighofer is one of the largest timber companies in Europe and unfortunately a major driver of illegal logging in Romania."
Romania still has an estimated 218,000 hectares of old growth forests. A recent Romanian government study estimated that 80 million cubic meters of timber have been cut illegally in the past 20 years, representing a loss to the Romanian economy of over €5 billion.
Also today, WWF filed a complaint at the Federal Forest Office in Vienna for violations of the European Union Timber Regulation (EUTR) and calls for a full investigation of the allegations against Schweighofer.
Half of Romania's timber is illegal - and most of it goes to Schweighofer
According to the report, over 50% of logging in Romania is illegal. This includes illegal cutting in national parks, clear-cutting, overharvesting, use of false permits, and logging on stolen land. According to the Romanian government itself, 20% of public forest land has been restituted illegally after the fall of Communism, instead of being returned to the rightful owners.
In its investigation, EIA identifies and documents actual cases of each type of illegal logging in the forest and found that in nearly every case the wood was on its way to, or ended up at, Schweighofer's mills. And Gabriel Paun, director of the Romanian NGO Agent Green, believes the trade is deeply penetratred by criminal organisations:
"In my opinion organized crime structures facilitate the flow of illegal wood from Romania to the European and global markets. So until now the EU and national legislation was not able to stop illegal activities, therefore remains a high risk to buy wood products from many Romanian regions.
"Europe's last intact forest landscape is at stake, and two thirds of its virgin forests that are home to the largest populations of brown bears, grey wolves and lynx living in the wild."
Earlier this year, two videos showing Schweighofer purchasing managers accepting illegal wood were released. A logging truck from a Romanian national park was filmed with a hidden camera as it transported undocumented logs to Schweighofer, despite the company's claim that it rejects timber from national parks.
Over the past year, Agent Green has investigated and exposed a series of cases of illegal or unsustainable logging in national parks and other protected areas. In the spring of 2015, EIA released an undercover video, in which two of Schweighofer's senior managers agreed to purchase illegally cut wood and offered boni for it.
Economic loss for Romania
EIA's report also finds that Schweighofer has caused massive damage to the furniture industry in Romania by pushing up prices and buying out timber stocks. According to former Romanian Minister of Environment, Doina Pana, this practice has cost the Romanian economy 50,000 jobs since Schweighofer settled in the country.
Schweighofer extracts the profits from its Romanian businesses through a complex network of companies. At the head of this structure sits an Austrian-registered private foundation, Schweighofer Privatstiftung, through which the company enjoys significant tax benefits.
Magor Csibi from WWF Romania added that it should be economic common sense to further process wood in Romania in order to create jobs, economic growth for the local communities and more relevant income for the state budget:
"Unfortunately, the market became dominated by major actors who took advantage of the legislative gaps and created an economic model which concentrates only on the maximisation of profits, ignoring the sustainability of the forest ecosystems."
In order to protect their business model, Schweighofer actively tried to prevent a new forest law in Romania that limits the share one single company can have in the national timber market. In a letter to the Romanian Prime Minister, CEO Gerald Schweighofer threatened to sue Romania in international courts and to lay off all of the company's Romanian employees should the new law not be retracted.
Romania's forests need EU protection
WWF has, based on available report and information, now filed a complaint according to the EUTR in Austria. WWF has made continuous efforts to save the last remaining virgin forests in the Carpathian region and managed to create legislation proposing 25,000 hectares of virgin forest to become a UNESCO World Heritage Site.
"Today we are calling for a full investigation of all allegations raised in the report", said WWF CEO Andrea Johanides. "If this fails, then the last Southeast European virgin forests will be turned into wood pellets and burning stoves for the benefit of multinational companies."
The complaint is addressed to the Federal Forest Office (Bundesamt für Wald) which is the responsible EUTR authority in Austria. The EUTR came into force in 2013 and prohibits putting illegally logged timber and timber products onto the EU market.
A study by WWF revealed that, unfortunately, this regulation has not been adequately translated in national laws throughout the EU and it furthermore still contains loopholes and exemptions and found penalties for violations too weak to serve as deterrent, in countries such as Austria.
Schweighofer has been active in Romania since 2002, where the company now owns three sawmills and two factories. The company's main export products are sawn lumber and biomass, in addition to other semi-finished products.
Sixty percent of Schweighofer's exports within the European Union are biomass in the form of pellets, briquettes, and wood chips. Within 13 years, the company became one of the largest wood processors in Europe, with an annual turnover of €465 million.
The report: 'Stealing the last forest' is published today by EIA.
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