Investigations by Greenpeace and Rainforest Action Network have confirmed that JP Morgan Chase (NYSE: JPM) client BlueLinx (NYSE: BXC), America’s largest building products distributor, is smuggling legally disputed, undocumented timber out of Indonesia’s critically endangered rainforests and flooding the U.S. marketplace with artificially cheap lauan plywood.
The conservation community is calling on JP Morgan Chase and BlueLinx to immediately comply with a voluntary corporate embargo of Indonesian forest products already in place at Centex Corporation (NYSE: CTX), International Paper (NYSE: IP) and Lanoga Corporation.
Information obtained from U.S. Customs & Border Protection, an agency of the U.S. Department of Homeland Security, proves that BlueLinx, a former division of Georgia Pacific (NYSE: GP), is knowingly purchasing from eight Indonesian mills that have well-documented histories of trafficking in illegal timber according to the Indonesian Department of Forestry. An IMD case study published on DirtyMoney.org details the trafficking of undocumented wood by current BlueLinx suppliers in Indonesia including Barito Pacific Timber, Decorindo Inti Alam Wood, Kayu Lapis Indonesia, Melapi Timber, Sangkulirang Bhakti, Sumalindo Lestari Jaya, Tunggal Agathis Indah Wood and Tunggal Yudi Sawmill Plywood.
On September 2, 2004 BlueLinx filed paperwork with the Securities and Exchange Commission for an initial public offering of common stock raising approximately $120 million. The required registration statement declared that BlueLinx has “a substantial amount of debt.” An attached amendment submitted November 26, 2004 documented a credit agreement dated October 26, 2004 as Exhibit 10.18[1] listing JP Morgan Chase Bank as a documentation agent and a leading lender for a $165 million loan.
In a December 10, 2004 letter to Charles H. McElrea, chief executive officer of BlueLinx, Michael Brune, executive director of Rainforest Action Network, and John Passacantando, executive director of Greenpeace, provided detailed investigative findings and probable forest degradation caused by the company’s practice of purchasing undervalued undocumented wood from corrupt cartels. On a January 21, 2005 conference call, Barbara Tinsley, general counsel to BlueLinx, indicated that her client had no intention of changing its Indonesian purchasing policies. In a January 25, 2005 letter to Mr. McElrea, Brant Olson, director of the Old Growth Campaign at Rainforest Action Network, requested a “description of any and all existing procedures at BlueLinx to identify vendors sourcing fiber from illegal and/or undocumented harvest operations including descriptions of any methodologies deployed to audit sources of timber for sawmills, any data collected regarding timber origin and any baseline data or benchmarking of such data over time.”
(Copies of correspondence available upon request.)
Indonesian Ministry of Forestry reports that 43 million hectares of the country’s forests have been damaged or destroyed over the last several decades due to illegal logging, with the average annual deforestation rate estimated at more than 2.8 million hectares (7 million acres) since 1998.
“Tropical timber producer and consumer countries should share a significant responsibility in combating illegal logging and its associated timber trade,” said Malam Sambat Kaban, the minister of forestry for Indonesia in a January 2005 speech. “Expecting or asking one country to combat illegal logging while at the same time, receiving or importing illegal logs does not support efforts to combat these forest crimes. Allowing or importing illegal timber will only encourage illegal logging in the timber producing country. Illegal logging can not be stemmed significantly without an effort to restructure the forest industry.”
“These illegal loggers are like terrorists,” said Nabiel Makarim, the former environment minister of Indonesia, referring to massive unlawful clear-cutting that has turned seasonal rains into deadly flash floods and landslides. “It is difficult to combat illegal logging because we must face financial backers and their shameless protectors.”
Mr. Makarim confessed to the Jakarta Post that the government “does not have a clue” how to combat rampant illegal logging. The ministry told the AFP news agency that illegal loggers have formed mafia-like international networks throughout Indonesia.
According to a recent BusinessWeek editorial titled “Indonesia’s Chainsaw Massacre,” Indonesia’s ravaged rainforests are “disappearing at a rate equivalent to the area of 300 soccer fields every hour, gobbled up by loggers eager to turn them into plywood and planks for McMansions across the U.S. and Europe.”
In its 2004 report “Illegal Logging and Global Wood Markets,” The American Forest & Paper Association, the largest and most powerful timber trade association in the United States, estimates that 55 percent of plywood exports from Indonesia are illegal.
Global Forest Watch, an initiative of Washington, D.C.-based World Resources Institute, estimated in a 2002 report “The State of the Forest: Indonesia,” that illegal logging “appeared to be the source of 50-70 percent of the country’s wood supply.”
Satellite and field-based analyses by a team of international scientists from the Yale School of Forestry and Environmental Studies confirms the “expansive and accelerating deforestation” of Indonesia’s disappearing lowland rainforests caused by decades of crime and corruption. The Yale report concludes that a failure to implement immediate solutions will lead to “irreversible ecological degradation.” The study published in Science magazine also concludes that “stemming the flow of illegal wood from Borneo requires international efforts to document a legitimate chain-of-custody from the forest stand to consumers through independent monitoring” and calls for “immediate transnational management” to end the massacre.
Loading...