US firms bet big on risky Brazilian timber imports after a helping hand from Bolsonaro

02.02.2021

A new Earthsight report details how a Brazilian flooring giant let off the hook by authorities is now thriving across the US and EU

Earthsight's new report, Untamed Timber, February 2021. Credit: Earthsight

London, 2 February 2021 - Huge volumes of tropical wood linked to a vast seizure of Amazon timber are entering the US and EU in possible breaches of import regulations, after the Bolsonaro regime controversially lifted sanctions against a domestic flooring firm, new Earthsight research can reveal. 

The products, made from species such as Ipê and Cumaru often targeted by illegal loggers, are being shipped by Indusparquet – a company which in 2018 had timber worth millions of dollars seized by Brazil’s environment agency (Ibama) for various alleged illegal practices. 

Brazil’s largest wood floor and deck exporter, Indusparquet received fines totalling R$995,762 ($259,030) following the Ibama and Federal Police-led Operation Patio. The operation was hailed at the time as “the largest seizure of illegal Amazon timber in São Paulo’s history”.

However, only months after the Bolsonaro regime replaced the head of Ibama’s Sao Paulo operation in 2019, Indusparquet’s largest fine (R$482,300) was cancelled.

The new local Ibama chief, a former police officer with no environmental experience, apparently ignored the earlier Ibama findings and released 1600m³ of impounded Indusparquet timber. 

It is not the first time officials appointed under the Bolsonaro administration have seemingly undermined the work of law enforcement agents in suspicious circumstances. Several appointees have actively attempted to weaken timber rules, making it harder to detect illegal timber and punish perpetrators. 

Despite the revelations, which alleged Indusparquet possessed 10,700m³ in timber credits in Ibama’s electronic control system without having the corresponding physical stock - a major infraction under Brazilian law - the firm’s international trade has boomed. For these breaches Indusparquet was fined R$450,000 ($117,059) – a fine which remains in place.

Earthsight's report, Untamed Timberdocuments how Indusparquet has exported 55,000 tonnes of wood floor products since 2015. The research exposes how exports in the two and a half years following Operation Patio have surged with US buyers increasing import volumes by 15 per cent.

Such risky bets leave Indusparquet’s US clients exposed to possible probes under the Lacey Act, a law which bans imports of illegal timber.

Lumber Liquidators, a US retailer previously fined $13 million for importing illicit Russian timber, is now among Indusparquet’s largest buyers. This despite US authorities forcing the firm to implement supposedly strict controls on wood sourcing under a five-year probation as part of the Russia sanctions.

Between May 2018 and the end of Lumber Liquidator’s probation period on 6 October 2020, the firm – now named LL Flooring – purchased 6.3 million square metres of products from Indusparquet and its subsidiaries – flooring with a retail value in excess of $6 million. Multiple requests for comment went unanswered.  

Meanwhile, French, Italian and Belgian buyers continued to import into Europe following Operation Patio, while Denmark has since become a new destination. Together, these countries have bought over 1000 tonnes of Indusparquet goods in the last five years, analysis of customs data shows.

Similar to the Lacey Act, the European Union Timber Regulation (EUTR) forces importers to conduct due diligence to ensure the risk of buying illegal wood is negligible. Yet the continued Indusparquet imports raise serious questions over the law’s enforcement.

Earthsight has seen no evidence to show the specific wood floor products exported are illegal, yet evidence suggests the wood is at risk of being illegally sourced.

Indusparquet denies all allegations and told Earthsight that its floor products, which its website boasts have been used to fit out the Vatican and Taj Mahal, are of legal origin. The company, among Brazil’s 20 largest multinationals, said it has “suffered enough” from the scandal and via lawyers has attempted to silence media coverage of the investigation.

Late last year, its lawyers contacted Mongabay – an environmental news outlet that reported on Earthsight’s 2018 investigation into Operation Patio – requesting them to take down the article from its website or de-index it. Mongabay refused to do so.

At a time when Brazil’s environmental agencies are marginalised and experts silenced, Untamed Timber exposes the difficulties facing those challenging the suspect timber trade in Brazil and the need to for stronger oversight of international buyers.

Earthsight director Sam Lawson said: “Cases like this make a mockery of international claims to be getting on top of the rampant illegality threatening the world’s tropical forests. With the Bolsonaro regime undermining efforts to tackle the problem at source, it is more important than ever to bar suspect wood from markets overseas. Governments in the US and Europe must act urgently to better enforce their laws.”

Notes to editors:

  • Earthsight is a UK-based non-profit organisation that uses in-depth investigations to expose environmental and social crime, injustice and the links to global consumption.
  • The full research, Untamed Timber: The Brazilian flooring giant let off the hook by Bolsonaro’s government and now thriving across the US and EU, is released on 2 February 2021.
  • Company responses can be found in the report.
  • The EU Timber Regulation, which took effect in 2013, prohibits the import of wood sourced illegally overseas (including as a result of corruption), and requires firms to conduct ‘due diligence’ to ensure the risk of importing such wood is minimised. On leaving the EU, the UK has kept similar legislation in place.
  • Under the US Lacey Act, firms are banned from importing timber that was illegally sourced in another country. The severity of sanctions against guilty companies depends on the efforts made by them to avoid such scenarios.
  • A key tool used by Ibama to prevent illegal logging in Brazil is an electronic system called Sinaflor, designed to prevent stolen wood from being processed, transported or traded. Whenever the agency authorises timber extraction in a given area, Sinaflor allocates virtual timber credits to the concession holder detailing species and volumes to be cut. All timber sold by the concession holder must then be transferred to buyers via Sinaflor. For each transaction a document known as a DOF is generated to accompany the shipment – attesting to its origin and legality. Moving or holding timber without the corresponding DOF or Sinaflor credits is illegal.
  • For other examples of Bolsonaro appointees undermining timber regulations, see the full report.
  • US Dollar conversions are based on 2018 rates in place at time of the investigation.
For more information, please contact: press@earthsight.org.uk.

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