Timber trade shows corrosive price of corruption

Posted: 11 May 2004

Author: Greg Mock

In Sumatra's Jambi province, corrupt civilian and military officials collude with private loggers to illegally harvest and export timber - so much so that local legislators have, in the past, had to appeal to the army, police and officials to stop it. It is just one example of the corrosive price the environment pays for corruption.

"Whether it be high-profile embezzlement or a low-level bribe to a petty bureaucrat, corruption is a major force undermining environmental equity and destroying ecosystems," according to the latest World Resources Report 2002-2004: Decisions for the Earth.

From 50 to 70 per cent of Indonesia's timber production is estimated to come from illegal logging, resulting in the doubling of the country's deforestation rates to 2 million hectares annually.

Studies indicate that while corruption affects all societies, the incidence is particularly high in many of the poorest nations. Bribe-taking, graft, sweetheart deals, political payoffs, influence peddling, cronyism, patronage, and nepotism are a few of its many faces.

Growth industry

Natural resources offer a rich opportunity for corruption. Indeed, environmental crime - illegal logging, theft of public lands, diversion of oil revenues, or other illegal appropriations of public assets - is a modern growth industry that is frequently facilitated by corruption.

By their nature, corruption and environmental crimes are hard to quantify, but available evidence makes it clear that natural resource corruption is widespread. The global timber trade, for example, is plagued by high rates of illegal logging in many important timber-producing nations, abetted by corrupt officials.

Illegal timber comprised an estimated 80 per cent of all harvested timber - some 25.5 million of a total 30 million cubic metres - in the Brazilian Amazon in 2000, according to IBAMA, the Brazilian Environment Agency.

Analysts believe that at least 20 per cent of Russia's timber is harvested in violation of current laws. This could increase to 50 per cent in parts of Siberia and the Russian Far East.

In Cambodia, where a robust illegal logging trade has flourished since the mid-1990s, payments to government officials in the form of bribes are estimated at US$200 million for 1997 alone. That is more than 13 times the US$15 million in revenue the Cambodian government took in from legal forest operations that year.

The World Resources Report says that a combination of economic, social, and administrative factors creates favorable conditions for corruption. In developing countries, for example, low salaries for civil servants -- those responsible for the routine management of natural resources and enforcement of regulations -- increases the temptation for corruption.

Corruption also flourishes where the mechanisms of accountability and oversight are weak. These mechanisms can include independent audits, special investigative units or government inspectorates, NGO watchdog groups, a robust press, and vocal political opposition parties.

Bribe-giving

Expectations also vary. In many African countries, for example, corruption is common and quite visible, with most of those engaging in it believing they are entitled to the benefits they reap.

A final and critical factor in the corruption cycle is the bribe-giver or the "supply side" of corruption. Bribe suppliers are frequently not simply victims of greedy officials, but active partners in the fraud.

Taken together, the World Resources Report says that these factors lead to an entrenched culture of corruption, The social stigma attached to such practices may be lower and now tolerated by the public as part of everyday life and normal business practice, even if it does not wholly approve of corruption.

Since the early 1990s, public recognition and discussion of the problem of corruption has grown. From the World Bank, to watchdog groups like Transparency International, to the heads of state of the G-8 nations, calls for stronger action to confront this ingrained behaviour have shattered the taboo on speaking out about a public scourge.

The effort to combat corruption involves action on several fronts. Perhaps first and most difficult is the effort to change public expectations. Unless such practices are seen as unacceptable to practitioners and to the public at large, anti-corruption laws and procedural reforms are difficult to implement.

The media, and public advocates such as Transparency International and Global Witness are key players in exposing corruption and raising societal norms with regard to bribe-taking and abuse of public resources. Press freedoms and reform of overzealous libel laws that can muzzle watchdog groups go hand in hand with corruption reform.

Improvements in public administration and natural resource laws aim for greater financial transparency through such steps as simplifying procedures for issuing permits and granting concessions, reforming contracting practices for large infrastructure projects, or mandating independent audits.

"Where the political will to act is strong, strict enforcement of anti-corruption laws brings results," says the report. In Singapore, for example, severe economic penalties against foreign bribes have contributed to the nation's successful cleanup campaign.

Greg Mock is editor-in-chief of World Resources Report. The report is available at WRI