Aracruz, SmartWood, FSC and a conflict of interest

In 2003, Brazil’s Aracruz bought Klabin’s Riocell pulp operations in Rio Grande do Sul. The 400,000 tonnes a year pulp mill came with 40,000 hectares of FSC-certified plantations.

Aracruz is among the most controversial pulp companies in the world. It has an ongoing dispute with indigenous people and quilombolas in Espirito Santo province. The company is currently carrying out a racist campaign aiming to turn the population of Espirito Santo against the indigenous people. The working conditions in its plantations are terrible.

Yet the FSC certificate of part of Aracruz’s plantation operations remained in place for three years. In May 2006, two indigenous people from Espirito, Santo Paulo de Oliveira, a Tupinikim from Caieira Velha village, and Wera Kwaray, a Guarani from Boa Esperança village visited FSC’s International Secretariat in Bonn and met Heiko Liedeker, FSC’s Executive Director.

At the meeting, Hubert de Bonafos, FSC’s Accreditation Officer, said that FSC was concerned about the certification of Aracruz. In December 2004, FSC had carried out an annual audit of SmartWood by looking at the certification at Riocell. “As a result”, de Bonafos said, “FSC identified some shortcomings in a report to SmartWood.” FSC gave SmartWood a year to sort out the problems. But even when SmartWood failed to meet this generous deadline, FSC did not take any public action.

On 23 May 2006, shortly after the meeting in Bonn, Aracruz decided to voluntarily withdraw the FSC certificate. The certification of Aracruz illustrates one of the most serious problems with the FSC system. (The same fault appears in other certification systems, but this doesn’t mean that it isn’t a problem for FSC.) FSC’s certifiers face a conflict of interest every time they carry out an assessment. SmartWood was paid to carry out the assessment by Aracruz. If SmartWood was strict in its application of FSC’s principles and decided that Aracruz could not be certified, then SmartWood would lose business. If on the other hand, SmartWood agrees to issue the certificate based (for example) on improvements which are supposed to be made at some point in the future, then they continue to do business with Aracruz.

When FSC started asking questions about the certificate, Aracruz decided it no longer wanted to be certified. According to a statement by Aracruz, the decision to withdraw the certificate was “taken together with SmartWood.” A better illustration of SmartWood’s conflict of interest is difficult to imagine.

FSC meanwhile, has so far not taken any action against SmartWood, despite the fact that in its audit of December 2004, FSC found problems which SmartWood failed to deal with.

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