PORT MORESBY – It has been revealed that a 2017 risk assessment by the Bank of Papua New Guinea found illegal logging in PNG to be a major money laundering threat but that there was a lack of will in the PNG Forest Authority to investigate and prosecute.
A money laundering and financing of terrorism risk assessment by the central bank said that illegal logging generated very large profits and also had a highly detrimental impact on the economy and natural environment.
The document disclosed that there are strong indicators of large scale corruption and illegal logging in PNG’s forestry sector and that these are well known.
It said the risks have already led one commercial bank, which was not named, to “institute a policy of not dealing with companies involved in the logging industry”.
However, the PNG Forest Authority was said to be unconvinced, believing “the extent of illegal logging is seriously overstated”.
This was despite the risk assessment finding the Authority’s own records showed “extensive over logging” delivering what it termed “additional profits” to logging companies.
Because of the Authority’s intransigence, the assessment said there had never been an investigation into breaches of forestry laws that has resulted in a successful prosecution of a timber operator or an individual associated with the industry.
This was despite many reports of high levels of corruption in the sector and concerns that had been voiced over a long period.
The central bank admitted this approach “provided little disincentive for unauthorised activities”.
It said the scale of illegal logging dramatically reduces the financial benefits of the industry to PNG.
The loss of forest areas was also a major problem as almost one-third of logging involves land clearance leading to permanent deforestation.
The assessment said that in 2013, the UN Office on Drugs and Crime estimated the value of illegal logging in PNG and the Solomon Islands was around $US800 million [K2.8 billion] a year, double the value of legally exported forest products reported to the Bank of PNG.
The lost benefit to taxes and licence fees was also “very significant”.
It called for a joint task force to be created to conduct “a specific money laundering risk analysis for the logging industry [that would] address criminal activity in the industry.
The task force would also "provide the basis to reduce criminal behaviour and increase public confidence in the integrity of the industry”.