Records show how environmental certification firms and middlemen legitimize deals that start with Myanmar’s brutal junta and end as yacht decks. By Scilla Alecci and Jelena Cosic
In the summer of 2021, as Myanmar’s military junta pressed a bloody campaign against its pro-democracy opponents, a 220-year-old US lumber company that boasts of its commitment to responsible forestry quietly struck a deal with a subsidiary of a timber-processing firm with links to the junta.
Maryland-based J. Gibson McIlvain Co., a high-end dealer that has provided wood to such institutions as the White House and Yankee Stadium, bought about $100,000 worth of teak boards from Win Enterprise Ltd., according to leaked records from Myanmar’s tax agency.
The teak shipment was one of at least two that took place in 2021 and 2022, after both the United States and the European Union had imposed sanctions on Myanmar’s monopoly teak producer in response to a military coup that toppled a democratically elected government.
While Win Enterprise was not under sanctions, it was listed at the time on the state monopoly’s website as a unit of the Forest Products Joint Venture Corp. Ltd. (FPJV), a timber firm majority-owned by the state monopoly and a state agency. Win Enterprise, which shared a director with FPJV, says the listing was a mistake.
On its website, J. Gibson McIlvain claims to have “total quality control throughout the entire supply chain from the forest anywhere in the world”. It also prominently displays a green “responsible forestry” logo issued by the Forest Stewardship Council, which verifies the chain of custody of forest products through third-party auditing firms. Also known as FSC, the nonprofit council, based in Bonn, Germany, is a leader in a voluntary, fee-based certification industry whose tree-festooned label attests that the products aren’t connected to deforestation, illegal logging or human rights abuses.
Myanmar teak is prized by luxury yacht and high-end furniture makers worldwide. The wood is so dense and weather-resistant that some call it the “king of woods”.
It’s also a vital revenue source for Myanmar’s regime. Local news organizations have reported that military forces have seized illegally logged timber and auctioned it off to finance their operations, including widely condemned human rights abuses and environmental crimes.
Deforestation Inc., a cross-border investigation led by the International Consortium of Investigative Journalists (ICIJ), shines a light on the roles of intermediaries like Win Enterprise and certification organizations such as FSC in the widely condemned trade in Myanmar teak. The investigation also exposes broader flaws in the global system meant to prevent deforestation and combat climate change. Conducted with 39 media partners, the probe shows how environmental auditors and so-called certification firms have given their seal of approval to products linked to deforestation, logging activities in conflict zones and other abuses to enter markets all over the world.
The inquiry into Myanmar’s continued teak trade is based on leaked files from Myanmar’s tax agency, publicly available trade data and interviews with teak traders in 11 countries. The confidential files ー most from 2021 and 2022 ー were shared with ICIJ by Justice for Myanmar, a human rights group, UK-based news outlet Finance Uncovered and Distributed Denial of Secrets, a data transparency group.
ICIJ’s investigation found at least 10 teak traders and retailers besides J. Gibson McIlvain holding green certifications while buying from Myanmar suppliers. These certification displays continued after some European authorities began restricting the import of Myanmar wood in 2017 and after the EU and the US imposed sanctions in 2021; the sanctions prompted certification companies to stop allowing the use of their logos on Myanmar wood or by the country’s forest programs.
Among the traders and retailers: a Florida firm that manufactures decks for yachts and a New Zealand timber trader that supplies wood to architects.
In response to ICIJ’s queries, FSC said it is investigating teak supply chains bearing its certificates.
ICIJ also found that some EU member states simply don’t enforce the EU’s trade restrictions, put in place in response to concerns about illegal logging. An Italian firm has continued to supply Myanmar teak by the ton to shipbuilders in other member states even after EU experts declared invalid any certifications of Myanmar teak because of unreliable record-keeping in the junta-controlled business, ICIJ found.
The upshot: a brutal military regime raises cash through dealings with Myanmar teak traders, and Western firms continue to market themselves as “sustainable” while selling high-end furniture and yachts made with Myanmar teak.
“Forest exploitation is still going on in areas where there are more high-value commercial species like teak”, said Win Myo Thu, an environmentalist and forestry expert from Myanmar who assisted the ousted democratic government as a forestry consultant.
Meanwhile, he said, the military regime is using teak profits “to crush democratic forces”.
A devastating effect
Myanmar’s rich natural resources – oil, gas, gold and tropical hardwoods, like teak – have been an important economic engine, and source of conflict, throughout the country’s history, including during a long period largely under military rule since 1962.
The state-owned Myanma Timber Enterprise, or MTE, has a monopoly over the country’s timber production and trade. It contracts with logging companies, including some controlled by the military, which harvest timber for sale to neighboring China and Thailand and many countries beyond.
The logging companies especially exploit remote forests out of the reach of environmental watchdogs. The MTE pays the government a royalty for the logs, which it sells at auction to traders, including some owned by politically connected oligarchs.
Logging, under both military and civilian governments, has had a devastating effect on the country’s forests. Myanmar has lost tree cover in an area roughly the size of Switzerland since 2001, according to data from Global Forest Watch.
The situation began to shift after an army-backed civilian government took power in 2011, followed by a government led by Aung San Suu Kyi, a Nobel Peace Prize laureate, whose National League for Democracy party won a landslide victory in 2015 elections. To help draw up standards and regulations, a government forestry agency turned to the international environmental certifications industry.
In 2017, the Myanmar Forest Certification Committee partnered with the Geneva-based Program for the Endorsement of Forest Certification (PEFC) to establish sustainable forest management standards and create a certification process. PEFC helped train auditors in classrooms and in forests until 2020, Thorsten Arndt, the organization’s head of communications, told ICIJ.
The forest certification movement, including such organizations as PEFC and FSC, emerged in the 1990s and was designed to ensure that consumer products are sourced according to strict, yet voluntary, environmental and human rights standards. Certification organizations don’t vet products themselves. They accredit dozens of third-party auditing firms to check timber companies’ forestry practices and follow the wood’s chain of custody from forest to store shelves or boat showrooms.
Critics have long alleged that the voluntary, fee-based model of forestry regulation was riddled with conflicts of interest, too industry-friendly and ineffective. Defenders say voluntary certification is better than the alternative – relying on governments like those in Brazil and Indonesia, where forest protection is notoriously weak.
Products’ dubious journeys
While FSC and PEFC ceased endorsements of Myanmar teak after the 2021 coup, one company has not: Double Helix Tracking Technologies Pte Ltd., a self-styled “verification firm” based in Singapore that helps clients establish that the teak they buy was logged according to Myanmar law.
Founded in 2008, the firm became one of four accredited by the Myanmar Forest Certification Committee to audit forest product manufacturers and traders and certify their compliance with local forestry standards.
In an interview with ICIJ, the firm’s co-founder and chief executive, Darren Thomas, said Double Helix was created to help clients conduct due diligence on supply chains based on “the ability to trace products back to points of origin”.
The firm relies on information provided by Myanmar’s forestry authorities to verify certificates, licensing agreements and other paperwork that document when and how trees are logged, transported and approved for export. Since the 2021 coup, Thomas said, the number of clients has decreased and the firm focuses on determining whether the teak its clients trade was logged before the sanctions and therefore not linked to the military government.
But experts say conditions in Myanmar are so chaotic that verifying forestry practices is not possible – and that the timber trade, in any event, benefits the junta.
Win Myo Thu, the environmentalist who accompanied Myanmar forestry officials on inspection tours while advising the democratic government in 2018, said that even before the coup, the government’s fragile hold on power in remote areas made effective forest governance virtually impossible.
He said during his inspections he found “huge discrepancies” between data provided by the officials and the reality on the ground. Sometimes, the source of timber couldn’t be verified. On other occasions, government agencies lacked accurate data on either inventories of logs or the remaining standing trees.
In a 2019 report citing findings of Win Myo Thu’s organization, Advancing Life and Regenerating Motherland, and other research, U.N. and EU observers wrote that some identifying marking on logs were so poorly applied as to make it difficult to trace their source, while some stumps had no markings at all, leading to the conclusion that “some timbers are being extracted illegally”.
Given the government’s shortcomings, Win Myo Thu said he doubted that Double Helix – or anyone – could reliably verify the legality of logging practices in Myanmar.
European regulators would agree.
In 2020, following a series of European court rulings, an expert panel of European officials concluded after extensive study that information provided by Myanmar’s authorities “could not be verified”, making Double Helix’s attestations unreliable. The panel, known as the Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests, found that Double Helix’s methods couldn’t “reliably exclude that the timber tested was harvested from within or outside specific forest harvesting or conflict areas”.
Despite the findings, Myanmar-based companies and teak traders from countries that haven’t sanctioned businesses linked to the junta, including India and Singapore, use Double Helix certification to vouch for the source’s sustainability. In the US and some European countries, so do firms that claim to have bought the teak before sanctions were imposed.
Double Helix CEO Thomas stands by his firm’s methodology and conclusions.
The EU authorities’ “position is that it is impossible to conduct due diligence in Myanmar, and it’s impossible because the entire system is corrupt. So it doesn’t matter what piece of documentation you have, you cannot trust it”, Thomas said. “I completely disagree with that”.
He added that pulling out of Myanmar would hurt ordinary forestry and mill workers. “I have no interest or support for the current Myanmar military government, but do support the Myanmar people who have to put up with the current crisis with no international support,” he said. “I see no point in attacking or removing another source of economic income for private enterprise and factory workers who are already struggling to survive”.
Toothless sanctions on Myanmar
On Feb. 1, 2021, military forces stormed the residences of top Myanmar political leaders in a predawn raid, declaring a state of emergency. The military arrested senior officials, including Aung San Suu Kyi, who had won a landslide victory only a few months before. In the days and weeks after the coup, thousands protested this violent seizure of power. The military responded by shooting into crowds and jailing hundreds. An ensuing civil war has since claimed nearly 3,000 lives and displaced 1.4 million people, according to human rights groups.
