Russia's illegal lumber: Laundered through China, sold in the U.S.A.

The largest hardwood flooring retailer in the United States imports lumber illegally logged in Russia and laundered through China, fueling the destruction of virgin forest, according to a new report.

The Environmental Investigation Agency (EIA), a U.S.-based advocacy group, said its three-year investigation has revealed a network of corruption that allows illegal loggers linked to organised crime groups and operating in the temperate forest of Russia’s far east region to sell stolen old-growth lumber to Chinese manufacturers for export around the world.

As much as 80 percent of the lumber exported from the region is illegal. The destruction of the hardwood forests is harming the livelihoods of local people who rely on the forest, worsening climate change and endangering the habitat for the 450 remaining Siberian tigers, EIA said in its report “Liquidating the Forests: Hardwood Flooring, Organized Crime and the World’s Last Siberian Tigers” released on Wednesday.

Lumber Liquidators Holdings Inc is a strong example of how companies use indiscriminate sourcing practices that fuel rampant illegal logging in the world’s last region of temperate old-growth hardwood forest, while consumers, through demand for hardwood flooring, end up complicit in forest destruction, it said.

“This illegal logging is of an extraordinary scale,” Alexander von Bismarck, executive director of the non-profit group that works to expose environmental crimes, said at a news conference here on Wednesday.

“Importing cheap illegal wood from the Russian far east is a tragic crime of convenience that directly undercuts any business trying to play by the rules. The same types of wood are available around the world from legal and sustainable sources.”

U.S. investigators last month raided the offices of Lumber Liquidators after EIA showed them the allegations laid out in its report that the discount flooring company violated a 2008 U.S. law that prohibits dealing in illegally sourced lumber.

The Lacey Act requires companies to check their supply chain, and EIA said that that Lumber Liquidators’ Chinese manufacturer Xingjia made no secret of the fact that the bulk of its wood came from illegal loggers in Russia - a fact it says would have been easy for the U.S. company to find out.

Asked about the allegations, Lumber Liquidators said it has policies in place on sourcing and is reviewing the EIA report, which it said it believes has a number of inaccuracies and unsubstantiated claims.

“We support protection of the environment and responsible forest management, and if we find that any of the company’s suppliers are not adhering to our standards, we will discontinue sourcing from those suppliers,” company spokeswoman Leigh Parrish said.


EIA investigators combed through Russian, Chinese and U.S. trade data, interviewed Russian authorities and community members, and visited Russia and China posing as potential buyers of wood and wood products to track the supply chain for lumber from the Russian far east.

“A picture of systemic illegal logging and ‘legalization’ of illegal wood through falsified permits quickly emerged. This system is an open secret among industry members both in Russia and throughout northeastern China,” it said in the report.

Top executives at Xingjia, which supplies oak for Lumber Liquidators’ Virginia Mill Works oak floors brand, in 2011 and 2012 described their operations in detail, including harvesting lumber illegally and bribing Russian local officials, EIA said.

The forests in Russia’s far east rival the Amazon in size and importance as a carbon sink, and clear cutting has caused areas of permafrost in the region to become virtual deserts, releasing methane and contributing to greenhouse gas emissions, it said.

At the same time, the corrupt practices and illegal logging is threatening some 100,000 ethnic communities who depend on the forest for pine nuts and beekeeping for their livelihoods, it said.

The advocacy group urged importing countries to toughen their enforcement of laws on illegal timber and to work closely with authorities in China, which has similar prohibitions in place, toward clear accounting to track wood products through the Chinese manufacturing system.

Japan as the largest importer of manufactured wood products from China has a particular responsibility to enact mandatory laws against importing illegal lumber, it said.

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