Investigation exposes European firms taking advantage of loophole to import Myanmar teak

  • A new investigation has uncovered a scheme exploiting a loophole in the European Union Timber Regulation (EUTR) that campaigners allege allows European companies to buy Myanmar teak without conducting due diligence.
  • The scheme was run out of Croatia and allowed companies in other European countries to purchase teak from Myanmar via Croatian firm Viator Pula.
  • Under the EUTR, only the initial recipient of the timber, Viator Pula, was responsible for monitoring the chain of custody from initial felling to import.

Investigators have uncovered a scheme by European timber traders to evade E.U. laws by supplying Myanmar teak to the continent’s marine sector, including for decking on superyachts.

The investigation by the Environmental Investigation Agency (EIA) was based on documents obtained from the Croatian agriculture ministry. The documents detailed 10 shipments of Myanmar teak via Croatian company Viator Pula, which EIA described as a focal point for the scheme designed to circumvent an E.U. regulation banning the sale of illegally harvested timber.

“Effectively, companies throughout Europe were paying Viator to break the law in order to continue trading in Myanmar teak,” the EIA said in the report.

Since 2015, several European companies have been taken to court over their Myanmar teak imports and lack of due diligence. In December, Dutch police carried out a series of raids on teak traders in the country, uncovering a network of teak suppliers operating via the Czech Republic, but did not name the companies involved.

Myanmar lost more than 13,000 square miles of tree cover between 2001 and 2018, according to data from Global Forest Watch, with almost all of the logging in the past five years taking place in natural forests. These forests are home to some of the most valuable teak on earth, which is highly prized by the luxury yacht industry.

Teak (Tectona grandis) is a tropical hardwood species native to South and Southeast Asia, with India, Indonesia and Myanmar supplying the majority of the wood to international markets. Along with decking for yachts, it is also used widely in high-end furniture production. Growing global demand for timber products, poor law enforcement, and ongoing conflicts in Myanmar have driven illegal logging and overharvesting in teak-rich natural forests, according to campaigners.

All of the country’s forests are managed by the state, with the Myanmar Timber Enterprise (MTE), a state-run company, holding a monopoly over the trade. While the government sets logging quotas aimed at promoting sustainability, MTE has historically not abided by them, according to the EIA, suggesting the entire trade may be tainted by illegality.

The documents obtained by the EIA show at least 144 tons of teak arrived at the Rijeka port in Croatia between 2017 and 2019 with an estimated value of $1 million, though the EIA estimates the market value of the timber to be “substantially higher” when sold to the yacht industry.

In nine of the 10 shipments the documents identified the final recipients of the wood. Companies buying from Viator Pula included two Belgium entities, Crown Holdings and Vandecasteele Houtimport, German firm WOB Timber, Houthandel Boogaerdt, based in the Netherlands, Italy’s HF Italy and Slovenia’s ABC Net.

EIA identified three of the firms – Crown Holdings, Vandecasteele Houtimport and Houthandel Boogaerdt – as having previously been found trading Myanmar teak in contravention of the European Union Timber Regulation (EUTR).

Under the EUTR, only the initial recipient of the timber, Viator Pula, was responsible for monitoring the chain of custody from initial felling to import, according to the EIA, which added that there has until now been no instance of Myanmar teak being imported to the E.U. without breaching the EUTR rules.

An E.U. environment spokesperson did not respond to questions by the time of publication.

Posing as potential buyers, EIA investigators spoke to Viator Pula director Igor Popovič, who said under the EUTR there was “quite [an] advantage of importing through Croatia.”

Alec Dawson, EIA forests campaigner, said the importer “evidently saw Croatia as a weak link and thought to exploit it, with Viator [Pula] taking all the risks.

“But Croatia hasn’t turned out to be the soft touch some thought it would be. When the Croatian Ministry of Agriculture checked on those 10 shipments and examined Viator’s paperwork, they found documents were missing, some were incomplete or hard to read and there was a mixing of paperwork between shipments.”

He added that there also appeared to be discrepancies in the stated value of shipments presented to Myanmar and those presented to Croatian customs officials.

“Although this inspection by the Ministry of Agriculture is welcome, roughly 1,000 tonnes of Myanmar timber landed in Croatia in 2018 and 2019. This leaves large amounts of potentially illegal imports of timber unaccounted for,” Dawson said.

Faith Doherty, EIA forests campaign leader, added: “To support Myanmar’s efforts to reform its forestry sector, these traders should abide by the laws in place here, in the EU. What we want to see is full compliance, proper disincentives with effective penalties and changes in the legislation to take action against those inciting, aiding or conspiring to circumvent the law.”

This article was first published by on 28 May 2020.