Conflict Wood: Under sanctions, prized Myanmar teak finds its way to US, EU markets via India

These are the key findings of an investigation by The Indian Express, in collaboration with International Consortium of Investigative Journalists, based on leaked customs data from Myanmar, global trade statistics and field visits to prominent timber markets.

Records detail how India has become, after China, a “leakage country,” the second largest importer of “conflict wood” from Myanmar – India hasn’t banned teak imports from Myanmar – for exports to the US and EU. These supplies of teak not only chip away at the country’s forest cover but also provide sustenance to the military regime.

According to global watchdog Forest Watch, between February 2021 and April 2022, Indian companies imported over $10 million of teak. Overall, since the coup, US-based Forest Trends has reported that almost a quarter of all timber exports from Myanmar has gone to India.

All this is now under increased global scrutiny in the face of sanctions by the EU, US, UK, Switzerland and Canada against the Myanmar forestry industry including the Myanma Timber Enterprise (MTE), the state-run monopoly company that has exclusive rights to the country’s timber.

These supplies of teak not only chip away at the country’s forest cover but also provide sustenance to the military regime. (Express/Ritu Sarin)

The case of Friends Timber, Nagpur

Trying to duck these sanctions is a clutch of Indian timber companies in the heartland and smuggling networks in border towns in Manipur, Nagaland, Assam. The two most prominent Indian exporters flagged in records are: MP Veneers and their associate companies, Akanksha Enterprises and Aetek, located in Bhopal and Nagpur respectively; and Friends Timber Private Limited (FTPL) also located in Nagpur.

Indeed, Friends Timber also figures in two reports of the UK-based Environmental Investigation Agency, a UK-based NGO that probes global violations of environmental crime and abuse.

In September 2021, tracking their financial trail and supply chains, EIA reported how Friends Timber was part of a sprawling network of European timber companies. The supply chain constructed by the EIA begins with the MTE and ends with teak supplies reaching Comilegno of Italy, via Friends Timber and later Croatian company Viator Pula.

Friends Timber also made payments IPL Pte according to the EIA, linked to the IGE group, which has made donations to the Myanmar military and has connections with Myanmar Economic Holdings (MYE), a sanctioned Myanmar holding company.

Some of the companies (including Comilegno) had given a collective response to the EIA calling the allegations illegal imports of Myanmar teak “unfounded and devoid of any foundation.” But the companies did not state whether they were continuing to import Myanmar teak after the coup.

Customs data obtained by Dutch newspaper NRC and shared with The Indian Express reinforces this link. It shows that Friends Timber exported Myanmar teak to a range of EU companies as recently as October 2022.

When The Indian Express visited Friends Timber in Nagpur’s Kapsi Khurd area earlier this year, its saw-mills and godowns had stockpiles of shipments of teak from Tanzania and Myanmar.

Records detail how India has become, after China, a “leakage country,” the second largest importer of “conflict wood” from Myanmar – India hasn’t banned teak imports from Myanmar — for exports to the US and EU. (Express)

Directors Sameer Jaiswal and Puneet Kohli admitted that more than 80,000 metric tonnes of teak – over 60% of their current stock – was imported from Myanmar but claimed payments for this was made prior to the military coup in 2021 and that some of those shipments were still coming in.

“For two to two and a half years, we have not exported Myanmar teak to the EU,” claimed director Kohli. “In the case of the US, we exported till 6-8 months ago since the regulation there is that they can import Myanmar teak bought before April 2021. US importers are given a complete chain of custody documents as well as log purchase documents. If they are convinced, they buy from us. So all exports to USA are third-party verified.’’

Asked about EIA reports and records that link Friends Timber to supply chains leading to sanctioned companies, Kohli denied any wrongdoing. “When this EIA report came out, we asked our suppliers and they said their lawyers have written to them (the EIA) and the matter was sorted out.”

He admitted that Friends Timber buys teak from IPL Pte but added: “Who they are linked with, we do not know… The last imports from them may have been around 6-12 months ago.’’

Akanksha faces German court indictment

For the second company flagged in records, Customs data obtained by NRC shows that M P Veneers imported teak from Myanmar until as recently as October 2022 and has been exporting it to a number of companies in EU countries including Alfred Neumann and MS Finaspan in Germany; MS Compensati Toro and Nord Compensati in Italy; and F A Mourikis in Greece.

Export data for its associate company, Akanksha, shows it recently exported to Alfred Neumann, Spain’s Maderas y Chapas Blanquer and Timber Team Polska zoo in Poland. Data from Myanmar Revenue Service, shared with ICIJ and its partners by Justice with Myanmar, a human rights group, and Distributed Denial of Secrets, a data transparency group, include documents for over a dozen shipments. These show consignments of imports of M P Veneers between April-August January 2021, procured via a company called Saw May Trading Co Ltd. These consignments are for teak veneer and teak plywood and have landed in ports like Chennai, Kochi and Mundra.

One major red flag in records investigated by The Indian Express is that Akanksha Enterprises’s Joint Managing Director and MP Veneers Director Ashok Kela was named in a German court judgment for allegedly providing fake documents and dispatching teak from Myanmar to a German company WOB Timber GmbH in contravention of the embargo that Germany had placed on teak imports in 2007.

These supplies of teak not only chip away at the country’s forest cover but also provide sustenance to the military regime. (Express/Ritu Sarin)

The owner of the company, Stephan Buhrich, was given a 21-month imprisonment on April 21, 2021. On November 17, 2022, following an appeal filed by him, the German High Court sent three questions for interpretation to the European Court of Justice (ECJ) which is now awaited.

The 94-page German District Court judgment, obtained by The Indian Express, contains details of 31 shipments confiscated by German authorities including three by Akanksha between March 2010 and May 2011.

It includes email records that show Ashok Kela offered Buhrich “the possibility of circumventing the embargo by having Akanksha ship the teak ordered from Myanmar to Mumbai where it would be reloaded and then transported from India to Germany with falsified documents of origin.” Kela, according to the court verdict, charged an additional cost of Euro 150 per cubic metre of hardwood.

Asked about these observations in a detailed email, Kela told The Indian Express: “It may be pointed out that import of Myanmar Teak from Myanmar is not prohibited or banned in India. Its import is permissible in India and there is no basic import duty. So amongst others, our company is also one of the importers and consumers of the Myanmar Teak, which is only used in manufacturing products meant for local consumption.’’

He said that over the last two years, M P Veneers procured more than 1000 cubic m from the governments of MP and Maharashtra and all its exports were “manufactured out of this Indian Teak only.

On his “involvement” in the Stephan Buhrich case and the German court’s indictment, Kela replied: “So far as the judgment of German Court is concerned, we do not have any knowledge thereof since we were not a party to that litigation, if any.’’

Across the border: smuggling and trade

Across the border, the plight of Indian teak traders in Yangon, once a large, prosperous community, is fraught. The Indian Express spoke to a longtime service provider for one of the country’s top manufacturing companies. He has been working in Myanmar since 1996 and says many of the 60-70 Indian teak factories and saw-mills have shut down. Some have been burnt.

“Now, it is mostly third party exports of teak that Indian traders are doing,” he said. “And there is a lot of teak that is being sent out illegally along the China and India borders. On the Indian side, it is happening along Nagaland, Mizoram and Assam borders.”

Frequent seizures from trucks laden with teak from Myanmar confirm this trend: from the October 2022 seizure of a mere 350 cubic metres of teak valued at Rs 5 lakh intercepted at Bokajan, Assam, to a massive seizure of 30 trucks carrying teak valued at Rs 22 crore at Kamjong, Manipur. Several other seizures have taken place between 2021 and 2022 in Dimapur and Kohima in Nagaland.