From Trees to Tigers, Case Shows Cost of Illegal Logging

Lumber Liquidators’ ads are hard to miss. They’re bright yellow and boast of the hardwood floor retailer’s low prices in loud black letters. And last month, the public found out where at least some of that cheap wood comes from.

The company, which is based in Virginia, pleaded guilty in court to buying wood that had been illegally harvested in the forests of the Russian Far East, a huge forested tract that stretches from Lake Baikal to the Pacific Ocean. Illegal logging has disrupted life in the region and threatened the survival of the endangered Siberian tiger and the Amur leopard. (Russia’s President, Vladimir Putin, has made preserving the Siberian tiger something of a cause célèbre.)

Lumber Liquidators bought the wood from a Chinese supplier despite knowing of its illegal source, according to the United States Department of Justice. The company agreed to pay more than $13 million as part of a plea agreement.

That represents the largest fine ever issued under the 115-year-old Lacey Act, which bans trafficking in illegal wildlife. The law specifically prohibits the import of wood taken in violation of U.S. state or foreign law, a provision added in 2008. It’s the first time a U.S. company has been convicted of a felony related to timber under the Lacey Act.

“We are pleased to reach this agreement and resolve a legacy issue related to the Lacey Act,” said John Presley, chairman of the company’s board of directors, in a statement. “We will continue to focus on strengthening Lumber Liquidators across every area of the organization.”

Federal authorities investigated Lumber Liquidators for at least two years after the Environmental Investigation Agency, a nonprofit conservation organization based in Washington, D.C., released a report indicating that it had traced the wood from the Russian Far East to the American flooring retailer.

The illegal timber trade affects not only Russia—which accounts for one-quarter of the Earth’s trees—but also forests from Peru and Brazil to Gabon and Indonesia. The World Bank estimates that the illegal industry rakes in about $10 billion to $15 billion a year.

In recent years, concern over illegal logging in Russia has increased. At a meeting on timber management in 2013, Putin said that illegal logging had risen by nearly 70 percent during the previous five years. China’s increasingly strict limits on the logging of its own trees has contributed to swelling demand for the stolen goods from Russia, where Putin has acknowledged that timber thieves are aided by corrupt officials. The EIA and the World Wildlife Fund also have issued reports about the problem.

The full extent of illegal logging in the vast region is hard to gauge, but the EIA says that at least 50 percent of hardwoods cut there have illegal origins. Much of that wood flows across the border into China, where suppliers sell it to Western buyers, and it ends up in stores as furniture or hardwood flooring.

A Forest Rich in Diversity

The EIA says the plunder threatens “one of the most diverse assemblages of plant and animals species in temperate forests anywhere on the planet.” The forests in the southern portion of eastern Russia, also known as the Ussuri Taiga, hold some of the world’s most valuable hardwoods: Mongolian oak and Manchurian ash, both crucial for the forests’ ecosystems.

These species are being stripped away faster than nature replenishes them. “Dishonest companies are depleting the supply of valuable hardwoods at such a rate that a sustained harvest is not going to be possible,” says Brian Milakovsky, a consultant for WWF and former forest projects coordinator at the WWF branch in Amur, Russia. “It’s going to hit a real deficit at some point.”

The nonprofit organization spent about a decade comparing estimates of logged exports with the amount permitted by the Russian government, which owns almost all of the country’s forests. The group found that from 2004 to 2011, the illegal market sucked up two to four times more than the permitted amount of Mongolian oak.

When too many trees are chopped down in violation of the law, damaging ripple effects follow. Wild boar and deer feast on the oak’s acorns and the pine nuts that come from Korean pine trees, a softwood that’s also targeted by illegal loggers. If boar and deer populations fall because of food shortages, endangered Amur leopards and Amur tigers, commonly known as Siberian tigers, that prey on such animals also suffer losses.

Although conservation efforts have helped boost the world’s last remaining population of the tigers—up to about 500 from a perilous 30 in the 1940s—they’re still very vulnerable. Amur leopards are even closer to extinction in the wild, with only about 60 left (though their numbers have doubled since 2007).

It’s not only food that the trees provide. The endangered Blakiston’s fish-owl—the largest owl in the world, which can weigh up to 10 pounds—relies on the cavities of massive poplar, elm, and ash trees for nesting. And the world’s biggest species of salmon, the taimen, which grows to 200 pounds and has suffered population losses, needs trees too—they help stabilize rivers where taimen breed.

Illegal logging also affects people in the region. Thousands of indigenous people who live in remote villages, including the Udege and Nanai, rely on the forests for everything from traditional medicines to beekeeping and the harvesting of pine nuts. They also hunt forest animals such as elk and boar for food.

When trees are stolen from legitimate timber companies, prices fall. That undermines the legal forestry industry, which contributes as much as 10 percent of the region’s gross domestic product.

Oversight and Corruption in Russia

Russia has taken steps to protect its forests from illegal logging, mainly in reaction to concerns over the fate of the Siberian tiger.

In 2010, Russia banned logging of Korean pine. Last year, it successfully pushed a plan to prohibit international trade of Mongolian oak and Manchurian ash, unless anyone who wants to ship the wood across borders can show it was legally sourced.

Russian courts have stepped up enforcement. In December, senior executives at Beryozoviy, a Russian timber supplier, were convicted of illegal logging and organized crime—the first known conviction of illegal loggers under Russia’s anti-organized crime laws. The company exported high-value timber that eventually made its way to Lumber Liquidators’ shelves.

The added oversight is a huge step, Milakovsky says. But whether anything changes depends on the slowing of government corruption, which has helped to fuel the illegal logging boom. “There’s no getting around that it is, and always has been, a big problem,” he says. “I think time will show.”

Kate Horner, the EIA’s director of forest campaigns, says the region “truly functions like the Wild West, where forest governance is weak, and enforcement is severely lacking.”

Much of the illegally sourced wood has come from logging companies that hold valid permits. Sometimes, they’ll cut down more trees than they’re allowed. Or they’ll venture into “protective” forests—restricted areas that have the best hardwoods—and chop down those trees. One loophole involves “sanitary cutting,” in which companies receive a permit to cut damaged or diseased trees in protected areas but then take out the valuable ones instead.

The EIA investigation found that to launder illegal timber, some companies have fudged paperwork and bribed local officials to look the other way. Putin has blamed part of the problem on an understaffed Russian forestry service, which has been shorthanded since the collapse of the Soviet Union in 1991.

The EIA report said that once illegally harvested timber is shipped over the border, China “functions as a ‘black box’ ” for it, and that “the origins of illegally harvested timber are obscured as manufacturers mix it with legal sources.”

China has taken some measures to curb the problem, but it hasn’t enacted laws that prohibit the import of illegal timber. In 2011, it released a draft of a national timber legal verification system and last year came up with a draft of guidelines emphasizing that Chinese timber enterprises act responsibly. The EIA said both documents didn’t go far enough.

In the investigation that led to the Lumber Liquidators conviction, EIA members posed as potential buyers and spoke to Chinese companies that openly discussed their use of illegal logging. One business, Suifenhe Xingjia Economic and Trade Company, emerged as an egregious abuser. Its biggest customer happened to be the largest hardwood floor retailer in the U.S.

Horner thinks the plea deal signals that the U.S. won’t tolerate the trafficking of stolen goods: “It shows decisively to Chinese manufacturers that they need to clean up their own supply trade if they want to continue to have access to U.S. markets.”

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