‘Legality’, SmartWood-style

In his long and thoughtful comment to an earlier FSC-Watch posting on ‘Legality Verification’, Jeff Hayward, Lead Auditor for SmartWood, concluded by saying “we look forward to further inputs. We believe in a transparent consultation process; this is healthy and constructive.” In that spirit, FSC-Watch is hereby providing further, transparent, input.

We believe that, first and foremost, Rainforest Alliance SmartWood should consider its previous track record before entering into the thorny area of legality verification. Here are a few things that might help jog SmartWood’s memory:

A precedent for Rainforest Alliance’s ‘less-than-incisive’ observation of legality was established with one of the early SmartWood certifications for FSC, the Costa Rican teak ‘plantation company’, Flor y Fauna. Despite protestations from Latin American forestry experts that the projected timber yields from the company were implausibly high, SmartWood insisted through 1994 and 1995 that their assessments of Flor y Fauna showed the company to be “well managed…an impressive combination of social responsibility and economic viability”. Under questioning, SmartWood claimed their certification audits had showed that “Based on interviews, field work and research data collected in Costa Rica, we did not find that Flor y Fauna’s projections on growth and yields were inaccurate”. Based on their own projections, ‘verified’ by SmartWood’s certification, the company was offered in the Netherlands as a ‘green investment’ scheme, and promoted by WWF, into which millions of dollars of private investors’ money was poured.

But by 1996, amidst media exposes, the scheme had collapsed in chaos. Contrary to SmartWood’s claims, Flor y Fauna had in fact been using banned pesticides in the Costa Rican plantations, there was no adequate management plan, and there had been non-compliance with Dutch regulations. Investigators for the Dutch TV station NOVA concluded that the project “May be considered as fraud”. In August 1996, the Appeals Commission of the Dutch Advertising Standards authority ruled that advertisements for the likely financial profits from the scheme, based on SmartWood’s assessments, had been “misleading” and that they should cease.

The entire Flor y Fauna scandal is the subject of the book “GREEN GOLD – On Variations of Truth in Plantation Forestry” by respected Dutch researcher and consultant, Dr Paul Romeijn, which is available for download here.

Another early, but more enduring, certification experience of SmartWood was with the Indonesian plantation company, Perhutani. This company had already been certified by SmartWood before the FSC was established in 1993, but it was subsequently converted into an FSC certificate – despite Perhutani being one of the most controversial companies in Indonesia.

Throughout the 1990s, Indonesian environmental and social justice campaigners had pointed out that Perhutani was mired in conflict with local communities, on whose lands the company had often established their industrial plantations. As a result of this, ‘theft’ of timber from the plantations was endemic, as was company complicity with corrupt local officials who were also engaged in organised criminal exploitation of the timber. It was virtually impossible to distinguish between timber that had been ‘legitimately produced’ (whatever that might mean in the Perhutani context), felled by dispossessed local people, or felled illegally by local officials working hand in hand with the company. Harassment, arrest, imprisonment, beatings, torture and occasional killings of local people either protesting about the loss of their land or alleged to be involved in ‘illegal logging’ were commonplace.

By 2001, after 10 years of certification, SmartWood finally accepted the inescapable: that Perhutani was uncertifiable, even in the limited areas which had been assessed to date. However, according to Indonesian researchers, in the last 4 years alone of SmartWood’s certification, Perhutani’s operations across Java had been associated with the shooting dead of 13 peasants and the wounding of 30 others.

One might have thought that SmartWood would have learned something from the Flor y Fauna experience, but evidently not: another more recent SmartWood venture into the murky world of plantation companies was with the company Prime Forestry, another teak plantation investment scheme, this time operating from Zürich, Switzerland, with plantations in Panama. Prime’s Panamanian operations were certified by SmartWood in early 2003. Emphasising their ‘diligence’ in maintaining the certificate, SmartWood noted in 2006 that “From February 2003 to September 2005, SmartWood carried out 5 on-site audits of Prime Forestry Panama. Through these audits PFP provided evidence that non-conformances were being addressed and demonstrated ongoing compliance with SmartWood and FSC certification requirements.”

However, once again, SmartWood appear to have missed a rather important fact: that the company was a ‘front’ for a major financial fraud. In late 2006, the Swiss banking regulators placed Prime Forestry under judicial supervision and started an investigation into its activities. The fraud squad of the Bermuda police warned citizens against Prime Forestry, calling them a “scam”, and investigators found the company had Mafia connections. SmartWood promptly ‘suspended’ the FSC certificate, though never explained why it had failed to identify any problems throughout the preceding 4 years.

As also reported earlier on FSC-Watch, SmartWood have evidently failed to spot that the 39,000 hectares of forestry in Savannahkhet province, Laos, which it certified in January 2006, included significant illegalities, including lack of marking of trees for felling and processing, and over-cutting.

Perhaps the most damning indictment of Rainforest Alliance, however, comes in the form of its association with the transnational banana company, Chiquita. This company, which has fruit plantations throughout Central America, was one of the first companies to benefit from the Alliance’s ‘Eco-OK banana’ scheme (later renamed the ‘Better Banana’ programme). The first certificate was issued for Chiquita’s Costa Rica operations in 1994. By 2000, it was claimed that all Chiquita-owned banana farms in Latin America had earned Rainforest Alliance certification. The Alliance claimed that it “monitors and verifies that Chiquita’s farms abide by strong environmental and social standards, which have positive impacts on rural communities and tropical landscapes.” (emphasis added)

The truth behind the Alliance’s claims to ‘strong environmental and social standards’ was exposed in a documentary for German-language ‘Nano TV’ but, once again, SmartWood appears to have ‘overlooked’ a more awful reality: Chiquita was involved in illegal deals with paramilitary and terrorist operations that had wrought havoc in some rural areas in Colombia, in order to ‘protect’ some of the banana plantations which had been certified. According toWikipedia“On March 14, 2007, Chiquita Brands was fined $25 million as part of a settlement with the United States Justice Department for having ties to Colombian paramilitary groups. According to court documents, between 1997 and 2004, high ranking corporate officers paid approximately $1.7 million to the United Self-Defense Forces of Colombia, the AUC, in exchange for employee protection in Colombia’s volatile banana harvesting zone. Similar payments were also made to the Revolutionary Armed Forces of Colombia or FARC, as well as the National Liberation Army, or ELN. All three of these groups are on the U.S. State Department’s list of Foreign Terrorist Organizations.

On March 19, 2007, Chiquita Brands admitted in federal court that the company paid Colombian terrorists to protect employees at its most profitable banana-growing operation. As part of a deal with prosecutors, the company pleaded guilty to one count of doing business with a terrorist organization. In exchange, the company will pay a $25-million fine and court documents will not reveal the identities of the several senior executives who approved the illegal protection payments.”

As of May 31st 2007 – even after it had been revealed that Chiquita had made illegal payments to terrorist organisations as late as February 2004 – the Rainforest Alliance was still claiming on its wesbite that “As corporate power grows, so does the importance of corporate responsibility and transparency. The Rainforest Alliance’s partnership with Chiquita is a stellar example of for-profit and non-profit organizations working together in good faith.”

So that’s just five reasons why FSC-Watch believes that, for the sake of the world’s forests and their inhabitants, SmartWood would be best not venturing into the ‘Legality Verification’ market. But we invite Rainforest Alliance to give us just one reason why we should trust that they can do a better job now than they have done to date?

We also ask the FSC Secretariat whether it feels that SmartWood’s record is appropriate for an FSC-accredited certifier?


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