From grbarry@students.wisc.edu Wed Jan 31 09:49:03 2001
Date: Mon, 29 Jan 2001 16:59:09 -0600
From: Glen Barry 
Subject: BIOD: The Great Canadian Timber Heist

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS
The Great Canadian Timber Heist
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Forest Networking a Project of Forests.org, Inc.
   http://forests.org/ -- Forest Conservation Portal
   http://forests.org/web/ -- Discuss Forest Conservation

01/29/01
OVERVIEW & COMMENTARY
It has been revealed that commercial logging companies in British
Columbia, Canada, have robbed the province of an estimated $138
million in timber revenues over a 15-month period.  This does not
include the environmental costs that will be borne for centuries.
Industrial forestry is rife with illegal activities nearly everywhere
it is practiced.  The tragedy is that the World's remaining
tremendous old-growth ecosystems - including Canada's temperate
rainforests - have the potential to keep on providing economic and
ecological values essentially forever.  But the timeless values of
intact forests fade quickly as the timber cartels roll into town and
liquidate the forest capital in an orgiastic boom.  A bust always
follows.

There is no excuse for an economically well-off country like Canada
to tolerate the current system of economic patronage, financial
inducements and ecological vandalism that characterizes its timber
industry.  It is not the role of self-government to aid and abet the
industrial logging juggernaut in destroying Canada's ecological
heritage for the benefit of the rich and powerful few.  Industrial
forestry in old-growth forests cannot be redeemed, reformed or in any
manner made tolerable.  I repeat - it is not possible to reform
industrial logging in Canada.  Or Papua New Guinea.  Or Indonesia.
Or Brazil, America, Cameroon, Malaysia or anywhere.  The age of
ancient forest mining must end, it must be stopped, and you and I
must do it.

The answer for British Columbia is not to reform the stumpage revenue
system.  The World's remaining ancient forests, by virtue of making
life on Earth possible, must be left as global ecological reserves -
to ensure continued global ecosystem processes and patterns.  This
does not preclude pockets of ecologically sustainable certified
forest product use, but only to the extent that the context of any
such management is an intact, larger ecosystem that is not diminished
by the management activity.  Finding ways for humans to coexist with
large and intact forests and other ecosystems is a global imperative.
The first step is to end the age of wanton ecological plunder.
g.b.

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ITEM #1
Title:  Forest firms 'robbing' B.C., says ministry
Source:  Copyright 2001 The Vancouver Sun
Date:  January 29, 2001
Byline:  Gordon Hamilton Vancouver Sun

British Columbia forest companies have robbed the province of
millions of dollars in timber revenues and in some cases they may
have been breaking the law to do so, a ministry of forests
investigation shows.

The investigation, ordered by Forests Minister Gordon Wilson in
response to reports last fall of companies paying junk-wood prices
for prime timber, revealed a systematic and pervasive problem in how
forest companies harvest, measure and report the value of timber.
Wilson said it strikes at the government's ability to manage public
forests.

Although the minister has yet to establish how much revenue has been
lost, a separate report by the Sierra Legal Defence Fund, based on a
search of the forests ministry's own data base, claims the scheme
could have cost the province $138 million in a 15-month period. The
SLDF report is to be released today.

John Werring, SLDF researcher, said all five major forest licensees -
- Interfor, Weyerhaeuser, TimberWest, Western Forest Products and
West Fraser Timber -- have engaged in schemes to reduce the price
they pay for timber, a practice known as grade-setting.
In grade-setting, forest companies first log only low-grade timber
from a cutblock to have the dollar value for the entire cutblock
"set." They then log the rest of the cutblock, paying the low rate
for the remaining wood.

Interfor, which last week reported its strongest earnings performance
in six years, did the most grade-setting in terms of both volume and
number of cutting permits, Werring said.

"The companies would log minimal volumes, get their stumpage reduced
and then go to town," he said.

The forests minister said he is prepared to act firmly and swiftly
against offending companies, bringing in "draconian" regulations if
they do not voluntarily reform. Wilson said where violations of the
Forest Act can be identified, companies will be charged.

"It behooves us all to clean the system up and clean this up
quickly," Wilson said.

He also said he recognizes the burden coastal forest companies are
under -- their markets are in retreat and they face high operating
costs. He said he would rather work out a cooperative solution to end
the scheme.

If he cannot get cooperation, the alternative is sending a police
force into the woods to ensure compliance with provincial forestry
laws, Wilson said.

The minister intends to:

- Meet as soon as possible with companies to see if the issues can be
dealt with cooperatively.

- Increase investigative activities of forest licensees and proceed
with enforcement action where necessary.

- Establish greater legal accountability for registered professional
foresters -- requiring them to sign and seal documents -- to counter
pressure from companies.

Industry leaders responded by saying they welcome the chance to sit
down with the minister to discuss the entire stumpage issue, but
insisted they are doing nothing illegal. They say the problem is
related to British Columbia's stumpage system, which sets a target
for collecting revenues rather than basing stumpage on actual market
prices.

"We do know people are grade-setting. We still compare it to
optimizing your income tax by taking advantage of legal deductions,"
said Brian Zak, president of the Coast Forest & Lumber Association.

"All of this is more evidence of just how badly the system is
broken." Steve Crombie, director of public affairs for Interfor, said
the problems laid out by the minister "sound like all the symptoms of
a bad system." "Sometimes you have to get to a crisis point before
you begin to look at solutions," he said. "As soon as the minister
gives the word, we will be there." Wilson said the actions of the
forest companies in attempting to pay less for their timber
jeopardize any future settlement with the United States over lumber
exports. It also provides fuel to international environmental
campaigns against B.C. products and deprives the public of forest
revenues.

"There is no question: There has been an impact on government
revenues and we are going to have to address that," he said. "We need
to go back and collect." Although the total amount of lost revenue
has yet to be calculated, the government will be seeking repayment in
individual cases where the amount can be identified. Ministry staff
say it is difficult to put a dollar value on the scheme because if
companies were not able to get reduced stumpage rates, they may not
have logged the wood.

Werring said the SLDF does not accept that argument. Companies were
logging prime cedar and cedar markets are strong. He said even small
business loggers -- who were paying full price and more for their
timber -- were able to make money on cedar.

The issue of timber payments became public last fall when workers at
Interfor's Squamish dry-land sort told The Vancouver Sun they were
grading prime timber at a value no better than pulp wood. The workers
said they were intimidated by co-workers who felt their jobs depended
on the company being able to continue grade-setting.

A subsequent Sun investigation of cutting permits showed forest
companies were able to adjust the amount of stumpage they pay by
shipping out enough low-grade logs to set the stumpage rate as low as
25 cents a cubic metre and then bringing out high-grade logs worth up
to $40 a cubic metre at the lower price.

In one case, TimberWest paid only $22,700 for timber that was
originally valued at $3.7 million.

Wilson said he sympathizes with the problems forest companies are
facing under the current stumpage system, which is based on the
government setting a revenue target and then using a complex
regulatory regime to collect those revenues. The system has been in
place since the 1980s, a response at that time to American complaints
that B.C. forest companies were subsidized.

"This is no longer a useful way to calculate stumpage. The market is
different in the 2000s than it was in the 1980s. We do have to work
on that stumpage system. We are doing that in trying to move to a
more market-based system. From my point of view we can't get there
fast enough," said Wilson.

"I understand the frustration of the industry, which is why I don't
want to come in with draconian measures -- go in with a hard
enforcement policy -- prior to giving the companies an opportunity to
explain why they are doing what they are doing." - - -

INVESTIGATION'S KEY POINTS

The forests ministry investigation discovered: - Companies are
adjusting the grade of timber harvested by delivering a set volume of
low-grade timber to the sorting yard for scaling. Once stumpage is
set, sometimes as low as 25 cents a cubic metre, they then bring in
higher-quality wood worth up to $40 a cubic metre.

-Companies are storing high-grade logs at roadside landings -- a
practice called cold-decking -- while they wait for the stumpage to
be set on the low-grade logs already at the log-sort. Cold-decking is
a violation of the Forests Act.

- By hauling out logs 10 to 20 metres in length with tops no more
than 10 centimetres across, companies are using legal scaling
procedures -- where the top diameter of the log determines the grade
of the entire log -- to disguise the fact that the butt-end,
sometimes more than four metres across, is a premium- grade log.

- Data gathered by companies about the timber before it is harvested
and about costs that can be legitimately deducted from stumpage
payments may not be accurate. To ensure the data is what the company
claims it to be, the government is proposing that registered
professional foresters sign and seal documents, putting their
professional reputation behind the data.


ITEM #2
Title:  Abuse of stumpage system costing B.C. taxpayers millions of
   dollars says new report
Source:  Sierra Legal Defence Fund
Date:  January 29, 2001

VANCOUVER - Forest companies are using questionable means to avoid
paying hundreds of millions of dollars in stumpage, a new report by
Sierra Legal Defence Fund says.

The report, Stumpage Sellout, concludes that in two-and-a-half years
alone the major coastal forest companies avoided paying $224 million
to the provincial government. One company - International Forest
Products (Interfor) - accounted for nearly $100 million of that
amount.

"The companies have logged a fortune out of the woods and British
Columbians, who own the forest, are paying the price. The millions
lost in revenue in those years could nearly have doubled BC
Environment's annual budget," says Karen Wristen, Sierra Legal
executive director, "revenue that could have been channeled back into
much-needed field work and enforcement."

Using data provided by B.C.'s Ministry of Forests, Sierra Legal found
widespread evidence of grade-setting. Grade-setting occurs when
companies force the government to reduce initial stumpage rates. This
is done by logging low-quality wood first. The government responds by
reducing the rates and the companies then log high-quality wood at
considerable discounts.

"In area after area companies were so successful at the practice that
they got huge discounts on wood - often down to the bare legal
minimum of 25 cents a cubic metre, or $10 a truckload," Wristen says.
"Again, Interfor appears to have been the most successful. In the
fourth quarter of 1999 alone, more than half the wood logged by the
company on the Coast was assessed a 25-cent stumpage fee."

Significant cuts to field staff in the Ministry of Forests and
streamlining of the provincial Forest Practices Code have enabled
companies to avoid paying full stumpage fees.

"Clearly, there are not enough front-line workers in the Ministry of
Forests to ensure that the wood the companies present for assessment
fairly represents what's out there," says George Heyman, president of
the B.C. Government and Services Employees' Union (BCGEU). The union
represents front-line workers in the Ministry of Forests and endorses
the report.

"Without adequate staffing levels," Heyman says, "companies are left
to decide for themselves what they pay without proper monitoring."

"According to Sierra Legal's figures, British Columbians are losing
$138 million due to grade-setting alone. That would put a lot of
forestry employees back to work, with plenty of money left over for
social programs," Heyman says.

In a survey of Ministry of Forests staff last year, the BCGEU found
widespread unease among Ministry staff over MOF's inability to
monitor the actions of the forest industry. Between 1998 and 2000
alone, nearly 400 MOF positions were cut.

"We believe it is time for the provincial government to look
seriously at how the practices of the forest companies impact
taxpayers and working people," Wristen says. "We also say it's time
for a full review of the stumpage and assessment system by the
Auditor General, and a commitment by the province to take back
control of log scaling to ensure we get a fair dollar for one of our
most valuable natural resources."

To read the full copy of Stumpage Sellout (in pdf format) please
follow the link

Sierra Legal Defence Fund,  Vancouver,
http://www.sierralegal.org/


For More Information Please Contact:
Karen Wristen - (604) 685-5618
Executive Director
Sierra Legal Defence Fund

Carol Nielson - (604) 291-9611
Communications Officer
BC Government and Service Employees' Union

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