SGS's Statement, Unpacked

Based on the SGS statement, dated 2 March 2021, the inspection giant’s report appears to have overlooked undisputed evidence of crimes connected to Pudovkin and BM Group.

It said the Khabarovsk firms had the proper papers for their forest leases and logging activities, which was not in dispute. The point was the means through which they obtained them.

Yet when the court dismissed the bribery case against Pudovkin, citing his “active repentance”, SGS claimed, bizarrely: “no conclusion is possible regarding alleged past illegal activities and whether they retrospectively affect the legality of the harvested timber sold by [BM Group] or the compliance with the PEFC [forest management] standards.”

SGS said “no further information” was available for the court’s decision. But context was not hard to find.

A simple internet search would have turned up, for example, the earlier statement from prosecutors spelling out what Pudovkin’s “active repentance” meant: he had admitted guilt and helped investigators identify and prosecute his two accomplices in a kickback scheme centred on a state-backed sawmill complex that was never completed.

SGS, the statement continued, “was not in a position to comment” on whether the conglomerate and its affiliates breached PEFC standards while the case against Pudovkin was ongoing. This skirted over the earlier conviction of Khabarovsk official Vasily Shikhalev and the federal audit published months before the arrests, whose findings BM Group did not dispute.

The inspection outfit said it “was aware” of the situation regarding Asia Les and Logistic Les’ places on the priority projects list, yet, in the next sentence, called the decision by Russian authorities to blacklist both companies “unclear and not predictable”.

PEFC certificates for Asia Les and Logistic Les became “obsolete” and were withdrawn after both firms lost their forest rights when booted from the list, SGS said, adding that the sister subsidiaries and their leased lands had accordingly been removed from the scope of BM Group’s forest management certificate. BM Group would retain PEFC’s seal of approval until January of this year, when the conglomerate handed back its coveted accreditation after being contacted for comment for this article.

The SGS statement also addressed an apparent conflict of interest Earthsight had spotted on a public summary of a PEFC audit, whereby BM Group’s certification manager appeared on the same document as his friend and business partner, who was listed as an SGS representative who inspected the conglomerate’s forest leases. SGS called this an “administrative oversight” where certification documents had been updated without anyone bothering to change the auditor’s name.

It mentioned, as had Taiga King, that PEFC rules allow logging in large areas of undisturbed woodland scientists call “intact forest landscapes”, or IFLs, activities Earthsight reported BM Group and its companies as doing. Again, this missed the report’s point about the environmental damage this causes.

Concluding, SGS made an important admission. After highlighting that PEFC sets standards for sustainable forest management – standards which had in effect condoned fraud and corruption – it said: “forest certification is not a tool designed to confirm the legal compliance of all traded timber at any time.”

Read SGS's statement in full

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