Investigation reveals hypocrisy of US administration's recent commitments to help protect Brazil's forests

• Investigation reveals how exotic wood flooring linked to illegal logging, from a firm embroiled in multiple corruption cases in Brazilian courts, has been pouring into the US over the last five years. 
• Brazilian firm’s products have been sold by hundreds of US retailers, including major chains. One was able to buy the suspect wood despite having its purchases closely monitored by US authorities. 
• Findings prove US law meant to prevent imports of stolen wood is failing and show further action to halt imports of ‘forest-risk commodities’ from places like Brazil is urgently needed.

September 29, 2022 – Brazil’s largest flooring exporter is entangled in a complex web of bribery and corruption court cases, whilst selling suspect exotic wood worth a quarter of a billion dollars from precious habitats in the Amazon and Atlantic rainforest to the US, a year-long investigation can reveal. This has happened in spite of a US law meant to prevent imports of stolen wood, and calls into question recent commitments by the Biden administration to help tackle deforestation in Brazil.

‘The Fixers’, published today, reveals that flooring giant Indusparquet sourced wood from suppliers fined millions for illegal practices – including suppliers connected to the largest Brazilian illegal timber bust this century. At the same time, the company has also been the subject of multiple charges of bribery and corruption relating to its wood procurement. Despite this, its products have been sold by some of the US’s most well-known retail chains and remain on sale in thousands of stores across the country.

The revelations come amid growing global attention to the fact that illegal logging and clearance to supply commodities for export is the biggest driver of tropical forest loss worldwide. This makes it a key contributor to the rapidly worsening climate emergency.

“This shameful hypocrisy has to end”, said Tara Ganesh, Earthsight’s Head of Timber Investigations. “The US government must act swiftly to finally block its markets to the products of forest destruction – not only wood but also beef and soy. Given the rampant laundering which is known to occur, a new approach is also needed, one which puts the onus on importers of high-risk goods to prove they are legit”.

The investigation by Earthsight, a London-based environmental group, and Mongabay found Indusparquet’s suppliers 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.

In a scandal in Pará, in the Amazon region, investigators found Indusparquet sourced wood from two farms that had their wood seized in Operation Handroanthus. The biggest illegal timber raid in the Brazilian Amazon’s history, the 2020 Operation resulted in 226,000 cubic metres of wood being seized.

Elsewhere in Pará state, Earthsight traced wood from a threatened indigenous reserve, Ituna Itatá, that is home to uncontacted peoples to Indusparquet.

The investigation also charts several court cases which have examined widespread corruption and illegality claims concerning the firm’s wood sourcing. Indusparquet denies wrongdoing in all of them (for further information on their response, see Editors’ Notes below).

In a case relating to the southern Brazilian state of Paraná, Indusparquet was accused by Brazilian prosecutors of using public officials to gain access to timber supplies. Following an anonymous tip, Earthsight accessed hours of wiretaps and video footage revealing how an official with the local agency charged with licensing logging helped procure bracatinga, a wood species endemic to the threatened Atlantic Forest, to help the firm meet a request from a mystery US client.

Indusparquet’s boss told the court he did not know that the person he was dealing with was an official. Though both he and the local official were found not guilty for their role in the alleged scandal in August 2022, prosecutors have confirmed they are exploring the possibility of an appeal. Meanwhile, a parallel civil case against him and his company was ruled to be barred by the statute of limitations, but is also the subject of a pending appeal.

Two more ongoing prosecutions, both civil and criminal, stem from another major enforcement operation in 2018 known as Operation Patio. Though large fines issued against Indusparquet following the initial investigation were cancelled under questionable circumstances, federal prosecutors revisiting evidence collected at the time have now charged the company for playing a central role in a large-scale timber laundering scheme in a court in São Paulo. An Ibama analyst confessed to being regularly bribed by an Indusparquet billings clerk to manufacture or amend forest origin credits and to release seized wood stocks using the country’s national timber accounting database.

Between January 2017 and August 2022, despite being mired in scandal, much of it in the public domain, Indusparquet was able to export 27,500 tonnes of flooring to the US: a weight of wood equal to that of the Statue of Liberty, including its concrete base.

Despite receiving record fines in 2016 for importing illegal wood 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 buying wood from the firm just a month before Operation Patio and continued buying flooring from it for years afterwards.

Another major US retail chain, Floor & Decor, was Indusparquet’s single largest US customer during the period the court cases cover. Evidence strongly suggests that the firm was the American customer on whose unwitting behalf Indusparquet was seeking to procure the bracatinga wood at the centre of the Paraná case.

In the wake of the devastating fires in the Amazon rainforest which made headlines in 2019, the US recently announced a renewed commitment to helping protect the world’s forests.

A draft law currently before Congress, the FOREST Act, would ban US imports of agricultural commodities produced on land illegally cleared of forest overseas. It is vital this law is passed, and that the existing law banning import of timber sourced illegally – the Lacey Act – is strengthened and better enforced.

“Studies have shown that most tropical timber produced in Brazil is illegal. But laundering and the complicity of government officials make it almost impossible for authorities in consuming countries to prove this for a particular shipment”, Ganesh added. “The US must follow the path already taken by other big consumers of suspect wood like the EU and UK, and put the onus on importers to demonstrate that what they buy is risk-free.”

Ends

Notes to editors:

• Earthsight is a UK-based non-profit organisation that uses in-depth investigations to expose environmental and social crime, injustice and the links to global consumption.
• Mongabay is an environmental news platform created to raise awareness about social, climate, and environmental issues.
• Earthsight and Mongabay contacted the companies concerned in advance of publication. Indusparquet denied wrongdoing in the São Paulo and Paraná cases. With regard to the São Paulo case, Indusparquet stated that the prosecution has provided no evidence of an illegal operation, and this has been recognised by the judges who denied injunctions to block the company’s activities at a preliminary stage. Indusparquet denies receiving any benefits from IBAMA or having an illegal relationship with any of its employees. The company claimed that it has strict policies regarding supplier due diligence. It did not specifically respond regarding its suppliers in Pará having been repeatedly fined for illegal activities including links to Operation Handroanthus and Ituna Itatá. Floor & Decor said it had ceased purchases of Indusparquet flooring in 2019 and that it had discontinued the ‘bracatinga merida’ line. However, Earthsight and Mongabay were still able to purchase some of this product from a Floor and Decor store in Virginia in September 2022. LL Flooring did not reply.
• ‘The Fixers’ can be read here.
• Photos, video and infographics can be downloaded here.

For more information please contact: Clare Sterling at claresterling@earthsight.org.uk