First criminal case based on European timber regulation should deter others

It all started with a phone call. At the beginning of 2018, wood importer Roelof B. calls business friend Arthur van der V., who lives in the Czech Republic. There are problems with the Dutch Food and Consumer Product Safety Authority (NVWA), says B. The regulator has imposed a cease and desist order on him because he imports teak wood from Myanmar. According to the NVWA, this is not allowed under the European Timber Regulation. And now the inspectorate doesn’t want to listen to him anymore, he says. Soon after, the forest from Myanmar to the Netherlands suddenly takes a detour via the Czech Republic, via a new company, in the name of Van der V. “I know him and he always has everything under control”, Van der V. will later tell the court to explain. “No problem, I said. That’s how the adventure started.”

They never expected that the timber importers would end up in the suspect’s bench in a criminal case. They still find it painful that they have been assaulted, telephone conversations have been tapped, their house, phones and bills have been seized. And on sea containers full of teak wood. Importer B. says his “business has been destroyed by the Dutch government”. Van der V. thinks it’s “just ridiculous” and says that “the whole story” [van justitie, red.] stinks on all sides”.

In recent years, environmental legislation has become increasingly strict. And with stricter legislation comes enforcement. This week saw the start of the first ever criminal case based on the European Timber Regulation, which was introduced in 2013 to combat deforestation. The regulation states that imported wood must comply with a number of care obligations. The market parties must, for example, guarantee that the risk of deforestation in their wood is ‘negligible’.

Three Dutch people (two timber importers and one trader) jointly imported teak wood from Myanmar via the Czech Republic. According to the prosecution, this is a shortcut, a way to deliberately avoid the criminal law. Since the facts are years behind, the officer on Wednesday did not demand a prison sentence for all three suspects, but a community sentence of 240 hours. In addition, the officer is demanding fines of 100,000 euros (of which 50,000 are conditional) for two companies involved.

Teak wood is wood’s “triple A”, explains a wood dealer in the multi-room. Customers pay him 600 to 800 euros per square meter. The golden brown ‘natural product’ is intended for the deck of luxury superyachts. Not only is it stylish, it’s also incredibly strong and rich in natural oils. They make it weather and pest resistant. In addition, the chance of slipping on teak wood is small. “Such a yacht must be from the very hot Caribbean within a month at the North Pole, where it is -30 degrees,” says the trader. “Teak can do it.” Not other types of wood, asks the officer. “On a small deck, yes, but not on a big boat. Then it can tear apart, and you can get big claims.”

Also read: Is NVWA doing enough against importers of illegal timber?

Myanmar, the defendants say, is the land of the very best, the ‘original’ teak. But the country suffers from deforestation, the threat to animal species and floods. According to a report by the Environmental Investigation Agency (EIA), an area of ​​forest that is “larger . . . has now been cleared” [is] than Belgium”.

The court will not answer whether the tropical wood that the men imported is ‘wrong wood’. The men themselves see plenty of evidence that their tree was not wrong and that it came from ‘controlled felling’. The paperwork was in order (according to the Myanmar authorities) and they also paid a lot of money to a commercial agency in Singapore to investigate the origin of a batch of wood.

The question that arises is whether the imports comply with the European timber regulation. It is actually not possible with teak wood from Myanmar, an expert group from the EU concluded in 2017. Due to the extensive corruption in the country, wood from controlled logging is mixed with illegally harvested wood. This would make it impossible for these three entrepreneurs to guarantee that their wood is ‘clean’.

In 2017, NVWA imposed a fine on importer B. Not much later, B. started his trade with the timber importer Van der V. via the Czech Republic. They founded a new one: Fairwind BV. An order already placed through B’s company (Mercura) was placed in Fairwind’s name. But not B., but Van der V., on paper, became the owner of Fairwind. While B. took on some of the work, getting the login details from Fairwind’s bank account. A third person involved, the trader who inspected the teak, helped establish the business. The prosecution calls Fairwind “an empty shell, erected only for this construction”.

Did the trio try to circumvent the NVWA by importing via the Czech Republic? They deny that. B. says he had devised a good system to make sure his tree was safe. But NVWA no longer wanted to talk to him about a solution, says B., the supervisor no longer responded to anything. The competition was also gasping at his neck. “I had my back against the wall.” Then Fairwind was born out of frustration, as an exploration of other possibilities, he says.

The prosecution is convinced that the importers deliberately wanted to evade supervision by having the wood come via the Czech Republic. There, says the state attorney, the capacity for supervision is less. And the timber regulation is not anchored in the penal code. In addition, Fairwind appears to have been established before the Singapore investigation, which one of the judges said may indicate that the three had already devised the ‘short cut’ before. According to B., from the start there had been frustrations about the contact with the NVWA, which made him feel excluded and as an ‘entrepreneur in a living trade’ could no longer wait. “I also had financial obligations to sawmills.”

Teak trunks from Myanmar in Kolkata, India.
Photo Sanjit Das/Bloomberg

The Public Prosecution Service acknowledges that the suspects have put a lot of work into their own forest research, but does not consider the documents necessarily reliable due to the “high level of corruption in Myanmar”. “Despite all the good work and the intentions of the suspects,” the officer said at the hearing.

The Singapore investigation concerned a consignment of timber which is not part of the indictment. According to B., the research would show that he works according to a good system. It is impossible to have such an investigation carried out on all timber plots, the defence. And that raises the question for the public prosecution whether teak wood should be imported from Myanmar at all.

Prosecutors understand the men are shocked by their execution. “It is not traditional criminals who, for example, enter the drug trade. They feel like they’re just doing business, but it doesn’t always go the right way. I understand that it feels like you have to show up in front of the fence,’ says the state attorney NRC. He also says in court that the prosecution “fully realized” the consequences for their lives. Still, the prosecutor’s office considers the case to be of great importance: “Protection of the environment is becoming an increasingly important topic in the prosecutor’s office’s policy.”

Meanwhile, other teak importers also seem to be choosing other routes to get the hardwood to the Netherlands. The Dutch company Boogaerdt imports its wood via Croatia, where, like in the Czech Republic, controls are less strict than in the Netherlands. This was also apparent from the Environmental Investigation Agency’s (EIA) report. There are plenty of customers for teak: according to the news organization KRO Pointer, the superyacht sector in the Netherlands accounts for a turnover of 1.5 billion euros per year.

It will be interesting to see how the court will deal with the principle of a shortcut through another European country. According to the conservation organization WWF, it is a weakness that countries make very different decisions about how to enforce ‘wrong wood’ and whether to criminalize it. “We are afraid that the import via another European country could act as a shortcut,” says Gijs Breukink, wood expert at the nature conservation organization WWF. “According to the regulation, the place where the timber is cleared must assess whether it is legal. It appears that the suspects wanted to use a loophole.”

In the coming years, many more companies will be confronted with such legislation, as the EU is about to adopt a new regulation. Trees are felled not only for the sake of the wood, but also to create agricultural land. The rules against deforestation will soon apply to all kinds of products, such as soy, coffee and palm oil. “As the Netherlands, we import an awful lot of such products,” says the public prosecutor. “So we also need to look carefully at what we bring into our country and not leave it to countries that protect and value the environment less.”

The case is the first criminal case in Europe based on the timber regulation. That makes its importance all the greater, says the officer. He hopes that the punishment will deter entrepreneurs and that other countries will also start criminal proceedings.

In that sense, it is painful that the prosecution still comes up with a low sentence. Ignoring the European timber regulation is punishable by a maximum of 6 years in prison. The officer talks about “criminal conditions and therefore criminals”, but does take into account that the offenses would have been committed several years ago (in 2018 and 2019) with the relatively low penalty requirement. The investigation, including the questioning of suspects from the Czech Republic and Myanmar, took a lot of time, the public prosecutor’s office says.

The defense will send out submissions in the coming days. The verdict will follow on 12 December.

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