NOOSA – Banks operating in Papua New Guinea - including Westpac and ANZ - have provided the country’s five largest exporters of logs with at least K300 million in credit over the last 20 years.
But gaps in company reporting and murky funding processes mean the true amount could be three times as high, reaching close to a billion kina.
This has been revealed in a report released today by advocacy organisations Act Now and Jubilee Australia.
Even as the money flowed from banks to loggers, there were multiple government reviews, court judgments and reports exposing illegal practices in PNG’s logging sector.
The report finds that PNG’s Bank South Pacific (BSP) and Kina Bank, and Australia’s Westpac and ANZ have all provided financing to one or more of the top five logging companies.
Westpac and ANZ said they have ended their financial relationship with logging companies that lack appropriate certification, but BSP and Kina Bank failed to provide the same assurances, although BSP is believed to have made policy steps in this direction.
Despite this, however, BSP appears to be currently providing K64.8 million in credit to subsidiaries of logging giant Rimbunan Hijau.
Two subsidiaries, Wawoi Guavi Timber Co Ltd and Gilford Ltd, have been implicated in environmental destruction and named in reports of police violence against landowners.
Satellite images have also shown Wawoi Guavi logging in areas where it is not legally allowed to harvest.
In 2017, the country’s central bank, Bank of Papua New Guinea, stated in a risk assessment that illegal logging posed a significant money laundering threat.
The central bank stated:
“There are strong indicators of large-scale corruption and illegal logging in the forestry sector in PNG, which result in high levels of proceeds of crime [and] it is widely accepted that the problem is widespread and the lost revenue is extensive.”
Act Now campaign manager Eddie Tanago said:
“For decades there has been overwhelming evidence of widespread illegalities in the logging sector in PNG.
“It is completely unacceptable that high street banks should be facilitating and profiting from the destruction of vital tropical forest resources.
“We are calling on all the commercial banks operating in PNG to end all banking services to companies involved in large-scale tropical forest logging.
“In addition, they must publish information on current banking relationships with the sector.
“They should also commit to providing redress to communities affected by logging operations where the banks have been directly or indirectly linked to human rights abuses.”
Jubilee Australia policy director Fyfe Strachan said:
“Any bank that chooses to finance PNG’s tropical forest logging risks being complicit in illegal activity associated with that sector.
“Investors in BSP and Kina Bank, including their Australian shareholders, should be asking some tough questions right now about where their money is going, and what risks they might be exposed to.”
The Act Now/Jubilee report calls on the Bank of PNG to allow its Financial Analysis and Supervision Unit to investigate potential money laundering and other illegal activity associated with PNG’s commercial banks and the logging sector.
The report also wants to see appropriate enforcement action taken wherever breaches are identified.