(Appeared in Japan International Journal, Tokyo Japan, 1993.)

Samurais, Sawdust & Shame

An Investigation of Japanese Zaibatsu (multinational corporations) & the Plunder and Human Rights Violations of the Timber Trade

keith harmon snow

“They say members of government and trading companies from Japan bribe the officials…”

“Corruption?” he asked me.

“They say it still happens a lot in Malaysia and Indonesia…”

“Yes. Malaysia, Indonesia,” he laughed. “Korea, the Philippines, these are very popular.”

Fumio Fukasawa,

Former Manager, General Merchandise Division

(Forest Products) Mitsubishi Corporation

Interviewed in Tokyo, Japan, 1993.

This time it’s War.

As this issue goes to press, freighters "Dooyang Coral" and "Shiney River" sit in Japanese harbors loaded with logs illegally exported from Cambodia by Mitsui & Company in direct violation of the November 1992 ban on timber exports imposed by the U.N. Transitional Authority in Cambodia.

Japan Inc. -- much to the embarrassment of Japan Inc. -- has been caught once again. Furthering the 'shame' while these violations were occurring, Japan held the post of Chairman of the U.N. Security Council. While diplomats and officials in Phnom Pehn have said that "Japanese companies should take moral responsibility for these violations," when viewed alongside other recent and historical Japanese government and zaibatsu activities (see Cambodia pesticides sidebar) it is clear that 'morality', 'responsibility' and 'ethics' are as foreign as concepts of 'sustainability' and 'environmental impact'. So much for the infamous Japanese creed of the respectful and honorable samurai.

With Cambodia, peace is not coming easy. While the uncooperative Khmer Rouge was the first to flag-red as an environmental greenie-meany, all four warring factions have taken advantage of the insatiable foreign hunger for natural resources, even cooperating at times, to sell at any cost under the white flag of truce. Blowing holes in the environmental cease-fire declared by the UN, in the face of timber exports five times higher than sustainable levels, Japanese companies have been 'buying back' the Cambodian war.

THE INTERNATIONAL TROPICAL TIMBER ORGANIZATION (ITTO) sponsored by Japan consists of 43 member countries designated with international trade monitoring and controls responsibilities. The ITTO has been widely criticized as a puppet tool for the logging industry where member delegates convene and no consensus in policy can be reached. According to "Incentives and Sustainability - Where is the ITTO Going?" a WWF (World Wildlife Fund) publication, historically, member delegates have lost their way in a forest of issues, effectively wielding the saw rather than shielding it.

Although it was a surprise to most -- and a shock to Japan -- that the ITTO Mission to Sarawak (1990) recommended an immediate reduction in logging rates, a moratorium in areas where land disputes with indigenous people exist, and forestry management practices be subject to complete review, logging rates actually increased, reaching unprecedented levels in 1992. The ITTO recommendations were blatantly ignored. The logging has continued (See: keith harmon snow: The Disappearance of Bruno Manser.)

JAPAN IS CERTAINLY NOT ALONE.

It takes two to trade in a tropical tree tango.

One of the most powerful and destructive factors is the over-issuing of timber licenses in producer countries. Corruption in business and politics is harvesting fortunes in short-term profits, liquidating forests today, leaving logged-out liabilities for tomorrow.

In the Indonesian forestry sector, for example, some 3,840,700 hectares (ha) of timber concessions are reported to be in ‘protection’ forests and 710,000 ha in ‘conservation’ forests. One man alone -- timber tycoon Bob Hasan -- privately controls more than 2 million ha of Indonesian forest concessions.

In the 1987 elections in Sarawak the rival political parties each 'leaked' their opponents' huge concession holdings to the press. The Chief Minister froze the holdings of the opposition, which were valued (1990) at around US$1-2 billion. Political largess has left over 60% of the remaining forests designated as private concessions, ignoring traditional rights of the indigenous people.

When the Aquino Government took power in 1986 after the corrupt Marcos regime, the Philippine Forestry Agency instituted a moratorium on log exports. Although the moratorium continues, so do illegal logging and export.

In 1991, a Philippine priest was murdered for his crusade against corruption in Palawan (a measure of the sanctity of sawdust) and even today soldiers reportedly ride shotgun on logging trucks. That shipments go to Japan, directly, or via Malaysia, is no longer up for debate: it is the law of the jungle.

TIMBERFROMTHESOUTH SEAS: An analysis of Japan's Tropical Timber Trade and its Environmental Impact is a comprehensive study of Japanese involvement in the tropical timber trade. This WWF report (1989) 'outlines the history of trade, exposes the effects of logging activities on tropical forest environments, details the Japanese companies involved and examines the uses of timber in Japan itself.'

For about 20 years Japan has been the world's major tropical timber importer, importing 15.7 million cubic meters (m3) of tropical hardwood products in 1986, 20.6 million cubic meters in 1987, worth about US$2 billion, representing 29% of the world trade, equal to the amount imported by the EEC as a whole and exceeding that imported by the USA. In 1987, 96% of imports came only from Sarawak and Sabah (Malaysia) and Papua New Guinea. The Philippines and Indonesia were Japan's major suppliers in the 1960s and 1970s.

There are four key reasons why Japan has been the world's major importer for so long: (1) the excessive timber and paper requirements of the booming Japanese economy; (2) the high cost of domestically grown timber; (3) the availability of cheap, high quality timber from Southeast Asia; (4) imports are organized by the principal general trading houses, or sogo shosha (zaibatsu).

"JAPANESE BIG BUSINESS AND TRADING COMPANIES are part of the complete cycle of tropical timber trade and exploitation.' says Yoichi Kuroda, driving force behind the Japan Tropical Forest Action Network (JATAN) and co-author of 'Timber From The South Seas'. "They have long time relations: personally, financially, technically. They provide market access, and financial and technical support, including instruction on such things as logging extremely hilly terrain."

"Do they avoid critically sensitive watershed areas? Or the habitat of endangered species like the orangutan?" I asked him.

'No. They never have such sensitivity. They log only for efficiency and cost-effectiveness. There are Japanese camp managers, timber graders and measurers in Sarawak, even though the logging company may be owned by Sarawakian businessmen themselves," says Kuroda. "Many technical specialists are imported from the Philippines, where the forest is already gone: engineers for road construction, camp managers who know the Japanese market very well and can guarantee the quality of timber. Japan demand is very special. They need detailed information on resources in every particular forest."

"You mean what is coming next or what still exists, or both?"

"Both. Everything."

THIRD WORLD COUNTRIES HAVE LOST

BILLIONS OF DOLLARS…

…in foreign exchange monies, uncollected forestry-related charges and resource exploitation over the last decade, according to a report by the TRAFFIC Network of WWF and the International Union for the Conservation of Nature. “Hundreds of thousands of hectares of forest, containing millions of cubic meters of timber, have been logged each year either illegally or to supply the illegal trade ... activities are often interactive and often facilitated by fraudulent practices in documentation and the collusion of corrupt officials and powerful politicians."

Illegal logging activities include logging of endangered or protected species; logging outside concession area boundaries and in protected areas; the removal of under-sized trees; or extraction volumes or rates exceeding allowable harvests.

One of the most blatant cases of abuse involved Bintuni Utama Murni Wood Industries, principally owned by Marubeni (see Bruno Manser), where endangered mangroves were illegally logged in Bintuni Bay, Irian Jaya (Indonesia). Bintuni's logging license was suspended (1990) and they were fined US$631,246 for neglecting the mandatory environmental impact assessment. Such fees are miniscule in comparison to profits however, and, more generally, companies are not caught, never fined.

Timber smuggling is best exemplified by the Philippines, where the Aquino government in 1987 formally requested Japan's assistance in curbing 'illegal trade' between the two nations. Japan indicated that the problem was purely an internal matter of the Philippines: request denied.

Japan's complicity becomes obvious however, upon examination of trade statistics. In 1986 alone, 199,600 m3 of logs were exported from the Philippines, while Japanese import statistics show 284,400 cubic meters: a discrepancy of 84,800 cubic meters. In 1987, the discrepancy -- timber showing up in Japan -- was 35,100 cubic meters.

Some estimates of losses in Philippine forestry related incomes are as high as US $l billion annually (1991); others are higher. With no reciprocal trade restrictions on imports of Philippine timber to Japan, Philippine forests continue to fall, economic losses continue to rise, and the Philippine people (domestic corruption notwithstanding) suffer rapacious plunder primarily facilitated by Taiwan, Korea and Japan.

On 26 November 1991, then Senator Al Gore introduced a resolution into the US Senate on a range of issues regarding deforestation in the Philippines, including the recommendation that "the US Senate encourage the Japanese government to look at its role importing illegally traded timber." (Of course, Gore’s actions are driven by financial interests, not environmental ethics.)

According to a Kyodo New Service report (November 1992), the Philippine Government has unofficially indicated that Japan's help in curbing timber smuggling will again be sought in 1993.

Transfer pricing is one of the most widely practiced, invisible forms of corruption in Southeast Asia (evidently wide-spread in many industries). This is simple cheating on taxes, intentionally avoiding import/export duties, or substantially modifying, altering, or misrepresenting actual trade circumstances to maximize profits.

The ITTO Mission to Sarawak (1990) determined that "the system cannot control transfer pricing... in both Sarawak and Sabah, with transfer of funds to Hong Kong banks." Profits, or 'economic rents' which might otherwise be staving off the destruction of indigenous people's lands, are primarily ending up in Japan.

Transfer pricing was widely documented in Papua New Guinea, where, according to TRAFFIC, "more detailed estimates are available for losses incurred through malpractice... than for any other tropical timber producing country." Estimated losses from 1982 to 1987, from transfer pricing alone, range from US$100 to $270 million.

In 1987, Paias Wingti, then Prime Minister of Papua New Guinea, initiated the Commission of Inquiry into Aspects of the Timber Industry in Papua New Guinea, chaired by Supreme Court justice Thomas Barnett. The inquiry's report was written from a legislative (rather than environmental) point of view, mainly to investigate property rights, tax law, responsibility in public office, and administrative structures.

The Barnett Report (1990) – as it came to be known -- is a highly regarded and remarkable piece of research into actual operations in Papua New Guinea. The findings of the report fit very closely with what is known of the timber industry in Malaysia and Indonesia, applicable to these and other countries in the Asia-Pacific region.

"It would be fair to say of some of the companies, reads an interim report, 'that they are now roaming the countryside with the self-assurance of robber barons; bribing politicians and leaders, creating social disharmony and ignoring laws in order to gain access to, rip out and export the last remnants of the province's valuable timber."

The inquiry found transfer pricing by the following Japanese companies at the scales given: GAISHO -- greater than US$6,976,744; Santa Investments -- around .US$1,285,120 in 1986 through HUNDAI TIMBERS; SHIN ASAHIGAWA -- US$6,833,713 from 1981-1987; Stettin Bay Lumber -- more than US$3,000,000 from 1985 -1987 to NISSHO IWAI; UNITED TIMBERS -- US$1,500,000 in less than two years to MITSUBISHI.

Besides transfer pricing, GAISHO ignored environmental clauses in their permit and were eventually asked to leave Papua New Guinea. JANT CO. operated for many years without showing a profit under an exclusive sales arrangement with parent company HONSI PAPER (affiliated with Mitsui). JANT also continued to cut after their contract expired (I991), clearly violating environmental restrictions.

Open Bay Timbers (Sohbu Co.) breached the terms and conditions of the Project Agreement resulting in a recommendation for termination. Under significant diplomatic pressure from Japan however, Papua New Guinea authorities suggested that a new agreement be negotiated.

Sumitomo, on a regular basis, deliberately and systematically falsified shipment documentation. United Timbers and Mitsubishi, involved in under-measuring and false declaration of species -- other profit based fraudulent practices -- were also involved in systematic transfer pricing in Indonesia.

The report had little positive impact. Barnett comments (1990): “Even after the publicity given to forestry malpractice … the same practices are occurring, and often the same companies and individuals are involved ..."

Thomas Barnett was stabbed outside his

Port Moresby home after publication of the report.

Complete suppression has left no part of the report accessible to the people in Papua New Guinea. "Of course Barnett almost died but finally survived after a long period of hospitalization," says Yoichi Kuroda. "It is widely believed that the powerful timber industry or ministries sent someone to kill him."

CENSORSHIP AND MANIPULATION of the media in Japan have furthered the injustices done to the developing countries of Southeast Asia by withholding the truth from the Japanese people. Huge PR campaigns by industry concerns and government bodies have successfully misinformed the public. As human rights activist Bruno Manser points out, "I believe most of the Japanese people do not know the truth."

In 1990, the Ministry of Education distributed a Mitsubishi funded comic book to high school students at about 5,000 Japanese schools, where information was selectively misconstrued to portray Mitsubishi as a sort of southeast Asian tropical forestry hero. According to the Sarawak Campaign Committee, "We don't know if these have been completely recalled. A poll of teachers in November (1992) suggested that they had not, even though the Ministry of education agreed to do so.”

Public relations ploys and Earth Summit speeches indicate that words and the empty promises are the only 'sustainable' elements in the issue. Corporate Environment & Ethics Departments have blossomed overnight, stealing the light from the forest and shining it brightly on PR campaigns, to shadow the destructive activities of corporate diversity.

Misinformation within the corporate ecosystems penetrates far deeper than the roots of the tropical trees that are so casually felled. Employees are showered with rainforest related literature attesting to 'corporate environmental concern' and 'conscientious forestry'; most have erroneously been led to believe that, as a bare minimum, huge replanting and regeneration schemes are undertaken. Meanwhile, as Marubeni's Environmental Affairs Department readily admits: "Environmental impact assessment is not our business." (keith harmon snow: personal interview, December 1992).

Stacks of glossy brochures, pamphlets and carefully designed 'position' papers, like Mitsubishi's "The Facts about the Tropical Rainforest Issue" or "Forever Green: Malaysia and Sustainable Forest Management", all mislead and misconstrue very precisely and successfully. In these, greater efficiency of operations and further utilization of wastes and residuals are pointed to as panaceas, seen as justification for self-promotion of 'Good Corporate Citizenry' and 'Environmental Friendliness'. While not to be derided -- on the contrary, greater efficiency is critical -- these modifications in business often simply enhance market access and control, further maximizing profits. It has nothing to do with environmental stewardship.

Marubeni, for example, "has begun producing Medium-Density fiberboard (MDF) from old rubber tree stock which was previously destroyed, producing great wastage. Our pace-setting experiment in recycling waste timber into high-quality MDF is attracting much favorable attention." Marubeni forgets its unspoken mandate of monoculturalization -- selective single species plantations for paper, rubber, pineapple, cinnamon, or palm oil -- and golf courses, shrimp farms, and huge irrigation projects intended to compensate for radical ecological change due to denudification and erosion. These have blossomed all over Southeast Asia, destroying aquatic and terrestrial ecosystems overnight.

'SUSTAINABILITY' is the key to securing the planet's future. If something is 'sustainable', for all practical purposes it can continue forever. 'Sustainable development' has been defined as 'development that meets the needs of the present with out compromising the ability of future generations to meet their own needs'. Currently, however, less than one-tenth of I% of total production of tropical timber can be confidently assessed as sustainable. It is all disappearing very quickly.

With the cry for cash from developing nations and demands for equality -- in standards of living and prosperity already achieved by industrialized nations -- it is difficult -- impossible -- to expect conservation of natural resources. But the rapacious and destructive timber industry -- at this moment – continues to rob producer countries of considerable incomes in a vicious cycle of want, power and greed. If the destruction meant food for impoverished children, at least, that would be OK -- call it 'forests for food'.

In reality, it's forests for famine. Add another to the list of issues with ‘trees' and 'the environment' and ‘human rights.’ It is now an issue of WAR. That, is the ultimate end.

End.

SIDEBAR: JAPAN’S FATAL CONTRIBUTION TO CAMBODIA

DIAZANON AND SUMICIDIN are two pest control substances with acute levels of carcinogens that were recently (1992) donated to Cambodia with a 500 million yen agricultural aid package orchestrated by the Japanese International Cooperation Agency (JICA), benefiting Mitsui, Sumitomo and others. There was no environmental impact assessment and no human health impact assessment.

This aid directly conflicts with the recent UN Conference on Environment and Development (UNCED) and Food and Agriculture Organization (FAO) policies. Japan sponsored the "Ministerial Conference on Rehabilitation and Reconstruction of Cambodia" in Tokyo (June). The FAO recommended cancellation of the project because evidence indicates that at present balance exists between pests and their natural enemies in Cambodia.

This is what the 'Handbook of Pesticides Regulated in the United States' says about one of these pesticides:

"Do not breathe spray, mist or dust. Do not get in eyes, on skin or on clothing. May be fatal if swallowed and is readily absorbed through the skin. Do not use on humans or allow people to enter the treated area until the spray has completely dried. Has resulted in the death of 23 species of birds. Keep out of streams, lakes, ponds, tidal marshes and estuaries. Do not use near or in water that will be used for any purposes by humans or livestock."

According to the over 10,000 member Japan Consumer's Union: "As in most overseas development assistance (ODA) projects, information has been withheld, feasibility studies inadequate ... this project ignores the realities in Cambodia and only exists to secure overseas markets for Japanese enterprises."