Toby Smith

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In 2011 I assisted the Environmental Investigation Agency with the Image and Video documentation of their report on Illegal Logging in Peru.

The report is released today and I am assisting with the creation of interactive map, images and video downloads.





Exporters in Peru and importers in the United States and around the world are currently integral parts of a systematic flow of illegal timber from the Peruvian Amazon. Sometimes intentionally, sometimes through sheer negligence, each of the actors and agencies involved in this system are working as gears in a well-oiled machine that is ransacking Peru’s forests and undermining the livelihoods and rights of the people that depend on them.

In this report EIA documents for the first time the systematic export and import of illegal wood from Peru to the US. In many ways this report is not a new story: the system’s corruption is something of which everyone in the sector is aware.  EIA’s contribution lies in having identified and patiently put together the pieces of the puzzle to reveal the mechanism that allows this trade to happen: what we call here the “laundering machine”.

There are, of course, individuals and organizations in this sector who are trying to work legally; but corruption and illegality remain the norm, not the exception. Officials or offices attempting to do things right often have their hands tied by lack of resources both fiscal and physical.   And those who attempt to change the system are summarily dismissed or even threatened with physical violence and, in extreme cases, physically attacked.

Peru is receiving around 150 million dollars from different sources of international financing and national counterparts for programs of forest conservation and management that – directly or indirectly – contribute to reducing carbon emissions from deforestation or forest degradation (REDD). However, this investigation suggests that Peruvian authorities currently have little capacity to control what’s happening in their forests. The results of this report demonstrate that the Ministry of Agriculture – responsible for Production Forests – isn’t adequately monitoring the concessions in its purview; that the Ministry of Environment – responsible for Protected Forests – isn’t sufficiently preventing illegal logging in the forests under its charge; and that the Regional Governments do not yet have the capacity to impede illegal activities in the field nor to follow up on the legal cases that do arise.

The crime

EIA’s investigative work focused on reconstructing the routes that timber takes from the Amazon to the warehouses of US importers, through use of official information obtained under Peru’s Transparency and Access to Public Information Law.  The links in this chain are willfully obscured to perpetuate confusion about the origins of almost all timber traded in Peru. EIA was able to reconstruct the chain of custody for trade in cedar (Cedrela odorata) and bigleaf mahogany (Swietenia macrophylla) only because both species are protected under the Convention on International Trade in Endangered Species of Flora and Fauna (CITES) and thus require specific export permit documents. The same illegal modus operandi is being applied for other species, but the even more limited information available regarding non-CITES species trade makes it virtually impossible to connect the concession of origin with the shipments being exported.

By crossing public information on (a) the “supervision” inspections conducted by the Supervisory Body for Forest Resources and Wildlife (OSINFOR for its Spanish initials) on a series of timber concessions with (b) the documentation for CITES export permits for cedar and mahogany, EIA identified more than 100 shipments containing illegally logged CITES wood that were exported to the US between January 2008 and May 2010 – that is, more than 35% of all such shipments with CITES permits that left Peru for the US during this period.

Peru’s primary exporter, Maderera Bozovich, exported shipments under 152 CITES permits during this time, at least 45% of which included wood of illegal origin. It is likely that more supervisions in the field would discover that these percentages are actually higher.

The motive and the mechanism

Illegal logging is a lucrative business.  Expenses other than transport costs are low, without any concern for decent wages or environmental practices. A large old rainforest tree may produce around three cubic meters of export-quality wood, and exporters receive about US$1700/m3 for mahogany or almost $1000/m3 for cedar.1 In the US, the prices are even more dramatic: the wood from a single Peruvian mahogany tree can fetch over $11,000 on the US lumber market, and that from a single cedar tree over $9000.

Traders and financiers of illegal wood, however, face one significant challenge.  While there are plenty of remote areas in Peru where illegal logging can go undetected, the trader must still get the wood out of the forest, past forest authority checkpoints, through customs, onto ships and into the United States. Without the formal paperwork and (in the case of cedar and mahogany) export permits authorized by the forest authority, their wood can’t go anywhere.

The mechanism that the industry has therefore developed is simple to describe: the concessionaires submit for approval lists of trees that do not exist in the real world, and complicit authorities approve the extraction of this non-existent wood.   Backed by these “volumes” of imaginary trees, the corresponding official documents (Forest Transport Permits or GTFs) are sold in the black market and used to launder wood extracted illegally from elsewhere – national parks, indigenous territories, other public lands. No posterior controls will detect this illegality without returning to the original concession to verify whether logging was actually done.

And even when the fraud is verified in the field, this is apparently not sufficient to intervene and stop it. Despite the fact that many of supervisions OSINFOR continues to conduct have detected multiple illegalities, the majority of these concessions known to be at fault continue to operate and sell to the export markets.

The GTFs and false volumes that support them are the key to understanding how illegal logging is so systemic – and also to combating it. Without the necessary paperwork, lumber can’t be laundered, the exporters can’t make money, and the motivations to engage in or finance illegal logging evaporate.

In various conversations with US importers and their trade association representatives, as well as with exporters and Peruvian officials, many have assured EIA that Peru is not exporting any illegal wood, because everything goes out “with legal documents” and they are purchasing on “good faith”. This cynical ‘no questions asked’ approach by officials and traders who are perfectly aware of how meaningless these documents are has allowed illegality to flourish.

As long as the current system reigns, the prices and practices that responsible logging of the Peruvian Amazon would entail will never be able to compete. On the other hand, without the demand for illegal wood from final consumers, there would not be demand from importers, or from exporters, or intermediaries, and incentives for illegal logging would gradually disappear.


The effects of such systemic corruption are both severe and immediate.  In 2006, the World Bank estimated that the illegal logging sector in Peru generated between $44.5 and $72 million dollars annually,2 while recorded legal profits from timber sales in the same year reached only 31.7 million.3  Losses to the economy overall were estimated to be around $70 million as of 2002 due to tax evasion, non-payment of required fees, and devaluation of standing timber. By 2011, the government and industry of Loreto, Peru’s largest region, estimated that illegal logging was causing the country annual losses greater than $250 million dollars – 1.5 times the value of total timber exports.4

On an individual level, the consequences of the current system are also devastating.  Indigenous communities are almost universally swindled by intermediaries who want to remove the most valuable timber from their lands. Deadly local epidemics and violent conflict have resulted from contact between loggers and indigenous peoples in voluntarily isolation. Poor migrant workers are also frequent victims. In this report you will read first-hand stories of forced labor and sexual slavery practices from men and women hired to work at remote camps and kept almost as hostages for months on end, in exchange for minimum wages – wages that they may never even cash in, if the timber boss’s business deals go awry or they are injured and have to leave on their own dime.

As a World Bank report from March 2012 makes clear, an effective fight against this scourge has to look beyond the poor loggers in the forest or the petty criminals, and focus on those who are truly enriched by this illicit activity:

“In some countries, illegally harvested logs reportedly account for as much as 90 percent of timber exports [80% for the specific case of Peru]. These estimates do not capture the enormous environmental and societal costs of these crimes—how they threaten biodiversity, increase carbon emissions, cause landslides, and undermine the resource-based livelihoods of rural peoples, with ringleaders and organized crime profiting at the expense of the poor. Illegal logging also has detrimental economic impacts. It stifles economic development and distorts the marketplace, discouraging legitimate forest enterprises from making socially and environmentally responsible investments in forestry, and undermining attempts to achieve successful and sustainable management of forest resources worldwide. Finally, the extensive corruption associated with illegal logging weakens broader structures of governance and the rule of law”.5

The Institutional Context

In recent years, the Peruvian forestry sector has been reorganized a number of times. Between 2006 and 2007, the central government’s powers regarding environmental management were transferred to regional entities as part of a larger national decentralization process.  This decentralization process, rather than improving forest management by empowering authorities closer to the forests, has generated confusion regarding responsibilities and resources and has even opened new spaces for corruption, at least in the short term.

One aggravating factor is a lack of transparency in the sector, which turns simple public information requests into complex, onerous processes. In its third annual report about the transparency of public organizations with responsibilities over forests, the Peruvian NGO Derecho, Ambiente y Recursos Naturales (DAR) found it worrying that the average level of compliance with respect to transparency portals barely exceeded 50%, although recognizing a slight improvement from 2010 to 2011 (from 46.4% to 52.16%).6

In 2007, the US and Peru signed a free trade agreement that included a ground-breaking Annex on Forest Governance with binding obligations related to management and trade of CITES species, institutional strengthening, sectoral governance and support for indigenous communities’ legal participation in the sector. As part of the Annex, if there is evidence of illegal timber entering the US from Peru, the US government has the right to ask for audits or verifications and to impose a variety of sanctions, including the delay or denial of shipments.  Needless to say, almost two years after the deadline required of Peru to implement its obligations, little has been done to enforce the agreement—either internally or externally through US pressure regarding a serious breach of contract.

Where A Stamp Means Nothing

Beyond the Peruvian specifics, even beyond the forest sector, this report speaks to a problem applicable to the entire international trade in plants and wildlife: a “stamp” on an official document is not sufficient guarantee of something’s actual legality in many countries. This is a key issue in the context of laws like the Lacey Act, where the buyer is legally responsible for their products’ possible illegalities, even if s/he did not set out intentionally to buy illegal goods.

This means that importers, to achieve real compliance, need to go beyond asking for an official document in order to feel confident about the legal origin of the products they want to purchase. For Peru this could have tough consequences since, if importers conclude that they cannot rely on the oversight of national authorities, it is possible they will opt for suppliers in other countries where the system of control offers better guarantees of legal origin.

How to read this report

This report is divided into three principal parts:

Part One: History and Context, which reviews the technical, political, social and environmental background relevant to Peru’s forest sector.  It also includes a detailed diagram where EIA reconstructs the route that wood should follow from stump to US shores, according to Peruvian laws and regulations, and compares this with what happens in reality. (Sections 1 through 5)

Part Two: Case Analysis and Results, which presents three inter-related EIA case studies about the methods of illegal timber laundering.

First, we detail the analysis described above that reveals at least 112 shipments with illegal CITES wood.  Through description of 14 emblematic cases – taken from the OSINFOR Supervision Reports – we lay out the intrinsic problems of the concession system: the lack of capacity or political will for enforcement; impunity for concessionaires, forest consultants and public officials complicit in putting false information on official documents; forest censuses up to 100% fabricated that generate paper “volumes” used to launder real illegal wood; concessionaires who have no financial ability to actually log, etc. (Sections 6 and 7)

This second part also includes the history of OPEXA, a concession where EIA established  first-hand that export permits were linked to imaginary trees. In a visit to this remote concession, an EIA team verified through random stratified sampling that the forest census was entirely fabricated. This Chapter is also the story of Francesco Mantuano, a concessionaire who has spent two years attempting to get authorities to acknowledge the illegalities in his own concession, without succeeding attention beyond the ire of his trade association.  EIA’s journey is documented with maps, GPS, videos and photos in an accompanying interactive website (Section 8, also see

Third, this section reviews the case of four watersheds where cedar and mahogany logging was theoretically banned between 2000 and 2010, but where a series of authorities approved the extraction, trade and export of wood going explicitly against this law. After years of providing conflicting administrative interpretations, as the ban was about to expire the forest authority acknowledged that the law did not allow for any exceptions. However, until now EIA knows of no internal process with this agency to investigate the issue and sanction those deemed responsible. The General Comptroller of the Republic, however, does have an active investigation on the issue.  (Section 9)

Part Three: Conclusions and Recommendations, where we present suggestions that we hope will serve to open up the discussion about how to confront the problems documented here.


This information is based on various sources of complementary information. Most of the official documentation was obtained through public information access requests, with which we constructed the databases allowing EIA to connect information about problem concessions with exports. In parallel to the official files obtained, this report also draws from documents obtained extra-officially through officials or ex-officials concerned about the situation in the sector.

Once EIA had identified those concessions with clear illegal activity whose documents were linked to cedar and mahogany shipments to the US between 2008 and 2010, each concession’s complete supervision report file was closely reviewed.  EIA also conducted a survey of 2010-11 exporters and US importers of Peruvian wood with respect to the measures they take to prevent doing business in illegally sourced  wood. The complete responses are available at the online version of this report.

To capture the social and environmental impacts of illegal logging, EIA conducted fieldwork to document cases of illegal activity and recorded testimonials from loggers and victims of the local logging mafias. We also had many conversations off the record with experts, authorities, industry members and members of the indigenous movement, as well as analyzing many aspects of the legal and institutional framework.

Given limitations of time and resources, we have focused on failures within the concession system and have not examined other types of forest harvest permits and authorizations, but believe this should be considered an outstanding need. In addition, authorities did not give us more recent information (post 2010), analysis of which is an important follow up point for future investigations – both by Peruvian authorities and by American authorities, under the FTA Annex on Forest Governance and/or relevant laws such as the Lacey Act.

Why is the extraction of imaginary trees being authorized? Why are concessions that the government’s own inspections show to be in flagrant violation allowed to continue operating? Why does it take years even to initiate administrative processes against these violations? Why is all the information – already public under Peruvian law – not effectively accessible to the public in the government’s official websites? And why, after years of public evidence about Peru’s illegal logging problems, do US companies continue to import illegal CITES-protected wood? These are some of the questions that this report invites us all to ask, with the hope that civil society, the private sector, and authorities who read it will ask many more – and that we can begin to work together towards solutions.

70% of Peru’s national territory is covered by some of the most biologically diverse forests on earth.1 It is a place where the vast expanse of South America’s great rainforest meets the towering wall of the Andes mountain range, and the headwaters of the Amazon River emerge from dramatic canyons and valleys. Along the banks of the Ucayali, Marañon, and Tambopata rivers lie not only a fantastic range of ecosystems, but thousands of native communities from 56 distinct ethnic groups,2  whose cultural identities and livelihoods are closely tied to the forest. (See map on p.35.)

87% of Peru’s population lives on the coast or in the mountains,3 while the majority of territory in the jungle regions –Loreto, Ucayali, San Martin and Madre de Dios – is occupied by the poorest and most disenfranchised segment of the country’s population, Peru’s indigenous peoples.  For most of its history the Peruvian Amazon has been treated as a remote and sparsely populated hinterland, with a value determined solely by the resources that can be extracted and sold: oil and gas, gold, and timber.

How this extraction takes place historically has been of little concern – the extractive industries have siphoned wealth out of the jungle without restraint, the central government in Lima has encouraged resource extraction and imposed virtually no standards, and the international markets have accepted the products of Peru’s forests without question.