The Fixers: Key Findings From The Investigation

• Earthsight and Mongabay’s year-long investigation into Brazil’s largest flooring exporter, Indusparquet, involves four case studies that span the country - from the company’s headquarters in São Paulo to the heart of the Amazon in Pará and unique habitats such as the Atlantic rainforest in Paraná.
• We detail how Indusparquet is charged with using fixers to illegally grease the wheels of its timber supply chains. We also discovered it has sourced wood from suppliers fined millions for illegal practices to make its products. The firm’s flooring is found all over the United States. It claims to have supplied wood for prestigious projects like the Mirage Hotel in Las Vegas, the house of actress Jennifer Aniston and even the Vatican and Taj Mahal.
• Indusparquet is charged in bribery lawsuits in two different parts of Brazil, relating to its use of public officials to gain access to timber supplies.
• A look at a small fraction of Indusparquet’s hundreds of suppliers, meanwhile, shows they have been fined the equivalent of 3.7 million US dollars between 2015 and 2021 for illegal logging - including falsifying information on official databases, violating indigenous lands and logging in protected forests.
• This report identifies several court proceedings involving Indusparquet and related parties, who have been the focus of corruption charges.
• In the first of these cases, detailed in the chapter The Fixer in Paraná, Indusparquet’s veteran co-founder José Antonio Baggio has faced both civil and criminal charges for the illicit enrichment of a public official in lawsuits in the southern state of Paraná, home to Brazil’s threatened Atlantic Forest. After being tipped off about the case by an anonymous source, Earthsight obtained access to hours of wiretaps and video footage from the civil case which reveals how, at Baggio’s request, a local Environmental Official sought to secretly help procure ‘bracatinga’ (Mimosa scabrella), a wood species endemic to the Atlantic Forest, for the firm.
• Replies to freedom of information requests confirm that bracatinga from suppliers named in the court case was bought by Indusparquet during the same period. The leak also reveals how an unnamed American client’s request for this wood had set in motion the chain of events that culminated in the filing of civil and criminal charges by Paraná prosecutors. Though Indusparquet’s boss was found not guilty of criminal charges for his role in the scandal in August 2022, prosecutors have confirmed there is still room for appeal. Meanwhile the civil case against him and his company remains ongoing.
• The second ongoing corruption case (detailed in the chapter Our Man in São Paulo) documented in this report relates to a major raid on the Indusparquet headquarters in São Paulo, nicknamed Operation Patio, in 2018.
• Though Indusparquet ended up with just a small fine following the initial investigation under suspicious circumstances, federal prosecutors revisiting evidence collected at the time have now charged the company and its employee in both criminal and civil courts with playing a central role in an alleged large-scale timber laundering scheme. The evidence shows an Ibama analyst was regularly bribed by an Indusparquet billings clerk to manufacture or amend forest origin [DOF] credits and to release seized wood stocks using the country’s national timber accounting database. The Ibama official, whose actions are alleged to have benefited Indusparquet and several of its business partners, has since confessed to receiving bribes from the company’s staffer to his wife’s bank account.
• A forensic analysis by the prosecution in the São Paulo case of the illegal transactions they carried out shows that Indusparquet derived benefits of R$154,372,773 (almost 30 million USD today) equal to the laundering of 19,753 cubic metres of timber stocks.
• Prosecutions in both the civil and criminal courts relating to the São Paulo case remain ongoing. Indusparquet denies wrongdoing in all of the cases against it.
• Over in the heart of the Amazon in Pará, a state which is Brazil’s largest timber producer, we discovered Indusparquet has sourced wood from sawmills linked to Operation Handroanthus, the biggest illegal timber raid in the Brazilian Amazon’s history, which took place in late 2020 and resulted in the apprehension of a record 226,000 cubic metres of wood. Two sawmills connected to the case that we found supplied Indusparquet before and after have collectively been fined more than half a million dollars for timber laundering and other violations of logging rules in recent years.
• One of the farms in Pará which had wood seized in the raids has powerful landowners who lobbied Brazil’s disgraced ex-Environment Minister Ricardo Salles to come to its aid in the aftermath of the seizures and who have been accused of land grabbing and logging within protected forests. Salles’ subsequent visits to the area to intervene in Operation Handroanthus triggered one of the two Supreme Court investigations relating to illegal timber that led to his resignation in June 2021.
• In another part of Pará, Earthsight traced wood from a threatened indigenous reserve, known to be home to uncontacted peoples, to the Brazilian flooring giant. Two sawmill suppliers which sourced wood for Indusparquet from a property within the Ituna Itatá indigenous reserve in the Xingu river basin were collectively fined USD 466,198 for entering false information on the origin of wood in official timber accounting databases. The owners of the property within the indigenous reserve that was the source of this wood were also fined 2.7 million dollars in 2021 for destroying nearly 1,000 hectares of native forest within the reserve and violating access restrictions for an area where uncontacted indigenous peoples are present.
• Indusparquet is Brazil’s largest flooring exporter and the United States accounts for 90 per cent of its exports, while 4 per cent is destined for Europe. Between January 2017 and August 2022, during which time it has been mired in scandal, Indusparquet was nevertheless able to export more than 27,500 tonnes of timber to the United States, a weight of wood equal to that of the Statue of Liberty, including its concrete base. This is flooring with a US retail value of a quarter of a billion dollars.
• Despite being slapped with record fines in 2016 for importing illegal wood under the Lacey Act (which bans it) and being closely watched by the US government since, big-box store LL Flooring (formerly known as Lumber Liquidators) has been one of Indusparquet’s biggest US clients in recent years. It started purchasing wood from the firm just a month before its headquarters was targeted by Operation Patio and continued buying flooring from it for years afterwards. It has bought flooring from the firm for its ‘Forest Hill’, ‘Esperanza’, ‘Bandera’ and ‘Padre’ flooring ranges. The firm did not respond to requests for comment.
• Another major US retail chain, Floor & Decor, was Indusparquet’s single largest US customer during the period the court cases cover. Evidence uncovered by Earthsight also shows that Floor & Decor has sourced a wood flooring product made of the same species that was the subject of the Paraná court case from an Indusparquet subsidiary based in Paraná, and that it stocks a product made with bracatinga for its ‘Quest Exotic Hardwoods’ range. The firm is very likely the American customer referred to in the Paraná case mentioned above.
• When contacted, Floor & Decor said that it had ceased all purchases from Indusparquet in 2019 and the bracatinga wood flooring product in question has since been discontinued. Although the webpage advertising the product has disappeared from Floor and Decor’s website after we contacted it for comment, Earthsight and Mongabay were able to purchase some of this bracatinga product from a Floor and Decor store in Virginia in September 2022.
• Even US home improvement giant Menards stocks Indusparquet’s products – though at least some of these claim to come from across the border in Paraguay. Menards did not respond to requests for comment on our findings.
• Indusparquet’s European subsidiary CPF Parquet is responsible for most of its EU imports while French-owned retail chain Leroy Merlin sells Indusparquet products in Brazil.
• Recent studies have shown that illegal logging in the Brazilian Amazon is worsening. It has been suggested that as much as 90 per cent of timber leaving the Amazon could now be illegal. This wood is all laundered into legal supply chains.
• In the wake of the devastating fires which made headlines in 2019, the US has recently announced a renewed commitment to helping protect Brazil’s forests. But this report reveals the ongoing hypocrisy of such promises, given that the US continues to drive their destruction through its consumption of ‘forest risk commodities’ like timber, soy, beef and leather.
• A draft law is currently before Congress which would ban US imports of agricultural commodities produced on land illegally cleared of forest overseas. It must be passed. But the existing law banning import of timber sourced illegally must also be strengthened to bring it in line with the newer draft law, and put the onus on importers to eliminate the kinds of risks seen in the Indusparquet case. It must also be better enforced.
• Urgent reforms are also needed to address the problems at their root in Brazil. Above all, this report shows how efforts to address illegal deforestation – a major source of climate changing emissions - must ensure they take into account the real nature of forest ‘crime’ in Brazil and elsewhere, including the corruption and undue industry influence which allow it to continue and serve to launder its proceeds.

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