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Logo of Phnom Penh Post newspaper Phnom Penh Post - PMs sign "million meter" timber deals with Thais

PMs sign "million meter" timber deals with Thais

THE Prime Ministers have personally signed over a million cubic meters of timber

to 17 Thai companies, in three separate deals marked "confidential."

The deals, struck in January and February, follow Jan 18 talks in Bangkok between

Agriculture Minister Tao Seng Huor and Thai Defence Minister and Deputy Prime Minister

Chavalit Yongchaiyuth.

Prime Ministers Prince Ranariddh and Hun Sen told Thai PM Banharn Silapa-archa that

the timber had already been cut before the April 1995 logging and export ban.

However, Seng Huor's own ministry's records show that there's only 331,000 cubic

meters of felled timber left in the Kingdom.

British environmental lobbyists Global Witness have confirmed that many of the Thai

companies which appear on the Government's "million meter" list are cutting

trees again.

This was a departure, done in secret, from the Government's logging ban, Global Witness

directors Patrick Alley and Simon Taylor said.

Taylor and Alley also obtained a copy of a permit "officially" stamped

by the "Khmer Rouge Government", given to one of the same Thai companies

on the Royal Government's concession list. It is signed by "Timber Selling Committee

No. 909" and was issued on March 3, expiring four months later.

Alley and Taylor said the Thais were "gearing up" for freshly cut timber

from Cambodia. They had seen documents from the Thai Foreign Ministry to local customs

offices telling officers to expect the timber so it can be taxed.

Some of the Thai logging companies were new in the area, so couldn't possibly have

pre-felled timber inside Cambodia, they said.

Alley and Taylor were told that "fresh timber" would be available within


A million cubic meters of wood equates to about 200,000 trees - and at world market

prices, worth anything from $350 million to $600 million or more.

"The question must be asked where all the money's going," Alley said.

The documents don't say how much income Cambodia expects to receive. They don't mention

any money at all, other than to say that timber tax will be paid into the Ministry

of Finance.

Seng Huor said the deals were "in principle only", and he agreed that there

was nothing like a million cubic meters of timber in Cambodia already felled before

the Government ban.

He said the Thai companies had told the Government how much felled timber they reckoned

they had, and Ranariddh and Hun Sen signed the deals on the understanding that Cambodian

authorities would verify this. The logging companies would have to prove the quantity

and quality of their reserves before they took a single log across the border, he


There would be no fresh cutting of trees, he said.

"If they say [they have] 10,000 m3, but only show us 1,000 m3, we will accept

only 1,000m3," Seng Huor said, adding that the timber would be re-checked on

the Thai side as per his agreement with Chavalit.

Seng Huor also said he had whole files of applications from Thai companies, saying

they had old logs to bring out of Cambodia.

The tax the Thai companies will pay to Treasury would depend on the amount and quality

of the timber exported, he said.

On average, Treasury only gets about $35 per cubic meter in royalties, according

to Global Witness figures confirmed by international bankers spoken to by the Post.

Global Witness have previously recorded a conversation with a Thai logging official

who said that cash from timber is split between Thai and Cambodian officials - including

the Prime Ministers and Seng Huor, and others - the military, the Khmer Rouge, and

the logging companies' own profit.

International donors contacted by the Post had heard "rumors" of logging

deals having been struck with the Thais.

When presented with proof, one donor chief said he "would watch with interest"

to see whether such a large, "unexpected" windfall would find its way into

the State coffers.

Treasury revenue estimates approved in November by the Council of Ministers show

that only around $11 million in forestry revenue is expected for 1996 - the amount

being so low because the logging ban is still to be in place. This includes income

from illegal logs seized by authorities and auctioned.

Aid donors - preparing for July's Donors' Consultative Group meeting in Toyko where

Cambodian aid would be discussed - are losing patience with the Government over logging.

"If the Government is selling natural resourses in excess of $100 million, and

the money doesn't get to the Budget, then the taxpayers in Japan, the United States,

Australia and everywhere else would be entitled to ask why are they are giving money

to Cambodia," said one high-ranking donor official.

Despite Seng Huor saying there was no new cutting going one, Global Witness visited

the Thai border rest areas and has proof there is. The donor official said it appeared

that the Thai deals were not consistent with Cambodia's export and cutting ban. "It's

horrible," he said of the deal, "but it's their resourse, they can do what

they want."

The secrecy of the deal has been criticized, especially at a time when "transparency"

is being sought.

"If the deals signal an end to the logging ban, then why was there no public

or Parliamentary discussion," one source said.

"If they needed to cut trees to get money to feed the poor, why wasn't it done

in the open, under debate? And why are these deals marked 'Confidential'?"

The Thai concessions are in "hostile" territory along the western border,

much of it Khmer Rouge-held.

Alley said it was impossible to follow International Tropical Timber Organisation

(ITTO) guidelines of "control and supervision" in such areas, a convention

Ranariddh consistently claims Cambodia adheres to.

Despite donor impatience, they still find themselves hamstrung to do much about it.

World Bank representatives overseas have said privately that the Government is "unwilling

to compromise" over its logging practises, according to sources.

They quote Bank officials saying that the Government should get a good lawyer to

renegotiate its logging deals.

"The sincerity of the Royal Government is in doubt... it all depends on Hun

Sen controlling the army's logging operations," Bank officials told one Western


The Bank, the IMF and other donors are likely to tell the government in Tokyo to

"pause, hold and review" its logging concessions.

A critical World bank/IMF report on logging has recently been given to the government

(it's Executive Summary review on Page 5).

The Ministry of Finance - whose minister Keat Chhon will be asked the "hard

questions" about logging at the donors meeting - has signed the report. Seng

Hour, it is understood, has yet to sign it. He told the Post he hoped to sign it

by this week.

Seng Hour, severely criticized in a new Global Witness report as denying the Ministry

of Finance information on timber revenues, is "feeling the heat," according

to one Western source quoting the World Bank.

Alley and Taylor have lobbied donors in Europe and America in the past three months,

calling for "positive" conditionality on aid.

For a variety of reasons - and despite donors' concerns - putting conditions on aid

is unlikely to happen. "They say 'if we cut aid it will only affect the poor

sections of the community'," Alley said. "We're telling [donors] that if

the forests go, then that very same section will be hurt anyway. It's not like the

money is flowing into their pockets now anyway."

Donors are also worried that if they stand alone calling for aid conditions, they

would be criticized by Cambodia. "We're telling donors to do it all together,"

Alley said.

Hun Sen has already effectively told donors to give aid and shut up, or don't give

any aid at all. Sources say Hun Sen can say this because the government stands to

get more money from timber than it would from many donors.

"It's a just question of mathematics," said one.

Multi-lateral donors say a timber export ban doesn't work because it "retards

rent capture" - that is, forests will always be cut, and all a ban does is to

stop money from timber from going into the State budget.

"The World Bank and the IMF want 'controlled' exports. We say that's crazy...

if [the Government] can't control a ban, how can they control a control? The ban

has got to be enforced without exception," Alley said.

Global Witness has also called for all existing timber concession to be terminated

and renegotiated, and a full forest inventory carried out.

The present situation - where the Prime Ministers and Agriculture Minister Seng Hour

have full authority to award concessions - must change, Alley said.

"The Ministry of Finance do not possess sufficient authority and information

to capture even a fraction of timber revenue," Alley said.



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