9. Investigating trans-continental supply chains

The Environmental Investigation Agency carried out interviews with Russian authorities, non-profits and communities, and determined that systemic illegal logging in the Russian Far East (RFE), and the laundering of the timber using falsified permits, was something of an open secret. EIA analysed Russian, Chinese and US customs records to identify dozens of Chinese companies exporting hardwood flooring to the US, constructed using oak from these forests.

Subsequently, EIA investigators posed as importers to meet the Chinese exporters. Investigators were able to question more than 20 different sawmill operators and flooring manufacturers about the sourcing practices of their US buyers. One such company was Chinese-owned flooring company named Suifenhe Xingjia Economic and Trade Company (Xingjia). In covert meetings with EIA, Xingjia’s president and senior managers described an extensive system of illegal harvesting in Russia’s forests and bribery of Russian officials. Xingjia claimed to overharvest in its own concessions, and launder illegal timber cut outside its concessions using harvesting permits. Ninety percent of its raw materials were apparently sourced from other high-risk suppliers throughout the RFE. Further research by EIA revealed that these suppliers had been the subject of police investigations and even successful prosecutions, for their involvement in illegal logging.

Through trade data, supported by observations during covert meetings in the guise of potential buyers, EIA determined that Xingjia’s largest customer was a US-based company, Lumber Liquidators. Lumber Liquidators is, in turn, the largest specialist retailer of hardwood flooring in the US. The investigation led to a prosecution of Lumber Liquidators under the Lacey Act. In October 2015 the company agreed to plead guilty to several violations under the act. Lumber Liquidators agreed to pay a fine of $13.2 million and submit to a rigorous Environmental Compliance Plan for a period of five years.[1]

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[1] http://www.wri.org/blog/2015/10/13-million-fine-lumber-liquidators-shows-us-lacey-acts-clout