This is one of 16 locations (three sawmills and 13 cutting sites) over a 16 square kilometer area inside the Pheapimex-Fuchan concession in Kampong Thom, where commercial and luxury grade trees have been illegally logged and sawn by military personnel in defiance of the 2002 logging ban. The operators try to conceal what they are doing by setting up military checkpoints on key access tracks, blocking roads with logs, burning stumps of felled trees, and concealing logs under dense forest cover. The report and photographic evidence were submitted to the Cambodian Forest Administration on June 3.

T

he publication last month of the first quarterly report by the new official independent

monitor of Cambodia's forest sector, SGS (Société Générale

de Surveillance SA), offers the first insight into the Swiss company's activities

since it commenced operations last December.

Given that this is SGS's first report, it is perhaps premature to reach a final conclusion

on the effectiveness of the new independent monitoring framework and its implementation.

Nevertheless, the report exposes serious shortcomings which the Government, donors

and SGS themselves should urgently address.

The impression that the SGS report leaves is of a flawed and restrictive independent

monitoring mandate that is being very narrowly interpreted. This unfortunate combination

manifests itself in a range of significant omissions and errors of interpretation.

These are exemplified by SGS's conclusion that forest crime is perpetrated only by

poor people - a suggestion that would be no more than comic were it not for the damage

it stands to cause if taken seriously. Thankfully, it appears to have cut little

ice with Prime Minister Hun Sen, who clearly identified the role of high-ranking

officials in commissioning forest crimes in his speech at the Forest Administration

(FA) on May 31.

Independent forest-crime monitoring was first introduced to Cambodia in 1999, following

mounting international concern at illegal loggers decimating the country's forests.

The system was designed to provide international donors, the Cambodian Government

and the general public with an independent assessment of the incidence of forest

crime and the measures that Government agencies were taking to combat it. As such,

independent monitoring represented an innovative attempt to strengthen governance

in a sector plagued by corruption and the absence of accountability. As an institutional

framework, it is still unique within Cambodia and should play a key role in efforts

to combat forest crime and establish the rule of law.

Following the Government's announcement in January 2003 that it would no longer work

with Global Witness, an NGO which had been appointed as the official Independent

Monitor in 1999, the Government and the World Bank sought both a new monitor and

a new working framework within which it would operate. The particular interest of

the World Bank stemmed from conditions it had attached to its $15 million Structural

Adjustment Credit to Cambodia, one of which was a requirement for an independent

monitor of the forest sector.

In April 2003, the Forest Administration released terms of reference (ToR) for a

new Independent Monitor. These removed those established features of the role designed

to safeguard the independence of the executing agency, notably the right to release

uncensored findings publicly. The FA also excised aspects of the mandate which enabled

effective monitoring to take place, guaranteed access to official records, and the

right to undertake unannounced field visits. The World Bank loan Task Manager, Bill

Magrath, who had helped the FA make the changes, told me over the phone: "I

was shocked at how good they [the new ToR] were." He was praising revisions

to the ToR which robbed the independent monitoring role of any meaning.

Of ten organisations invited to bid, only one - SGS - submitted a completed application.

SGS's involvement in forest sector projects around the world usually entails inventorying

legal round-log exports for government agencies, in cooperation with logging companies

- a rather different undertaking from tracking efforts to fight forest crime. The

company's interest in playing such a role in Cambodia in fact represented something

of an about-face. As early as 1997, pressure from the IMF had prompted the Cambodian

Government to seek an independent agency to monitor illegal logging and the effectiveness

of its log export ban. Despite advanced negotiations with the Government, SGS ultimately

withdrew its bid, citing security concerns. "The company was not confident it

could do the job," said Richard Hines, then Chief Executive of SGS in Cambodia

(Phnom Penh Post, January 24, 1997}.

Subsequent to what the World Bank termed "international competitive bidding",

the uncontested appointment of SGS was confirmed in December 2003. This followed

several months of negotiations between the company and the Government, as well as

amendments to the proposed terms of reference, which had met with public derision

on their publication the previous April. Under the terms of the deal, SGS was hired

by the Forest Administration at a cost of $425,000 per year, with the funds drawn

from a $5 million World Bank loan to Cambodia.

The World Bank used the appointment of SGS as justification for its release of the

final $15 million tranche of its Structural Adjustment Credit loan in December 2003.

Several of the forest-sector-related conditions attached to this loan had not been

met, however the WB found it expedient to claim, falsely, that the appointment of

SGS was the only condition left outstanding. The WB also asserted that the international

donor Working Group on Natural Resource Management (WGNRM) had approved the revised

terms of reference. Members of the WGNRM denied having even seen these, much less

given their endorsement.

While the revised terms of reference that SGS were eventually issued in December

2003 are an improvement on those published the previous April, they nonetheless constitute

a far more restrictive mandate than that exercised by Global Witness between 1999

and 2003. The terms of reference which Global Witness worked to stated that "Independent

monitoring should be organised so as not to be under the direction, control or influence

of any Ministry that will be audited or reviewed." Funding for monitoring activities

was therefore provided directly by international donors, with no involvement from,

or contribution by, Government agencies. By contrast, SGS is hired and paid by the

Forest Administration, whose performance they are charged with scrutinising. Corruption

within the FA runs deep and senior FA officials enjoy close links with prominent

players in Cambodia's logging mafia. It is extremely naïve to think that SGS

would not come under pressure from their employers to turn a blind eye to these underlying

causes of forest crime.

Provisions of the new ToR regarding information disclosure further compromise the

independence of SGS. It is largely denied the right to disclose information without

interference or constraint - the company may release reports, but only on a quarterly

basis, and then only after the Government has had six weeks to review their initial

draft. This means that the results of an investigation by SGS at the start of a calendar

quarter will not see the light of day for as long as four-and-a-half months. The

nature of forest crime is such that after four-and-a-half months there can be little

scope for verification of SGS's findings by members of the public or third party

organizations.

As for monitoring in the field, the scope for SGS to fulfil the independent monitoring

role is also severely constrained. Field visits must be "facilitated" by

the Cambodian Government (ie the Forest Administration). This gives the FA effective

control of SGS's field monitoring operations. Given that a high proportion of forest

crimes in Cambodia are carried out with the collusion of FA staff, field inspections

following these ToR are likely to consist more of theater than actual monitoring.

SGS's contract also precludes it from "random checking of reported illegal actions

that have not already been passed on to the relevant agency". Without unaccompanied

field visits, it is all but impossible for SGS to establish the baseline understanding

of the situation on the ground essential to an informed appraisal of Government agencies'

performance. Furthermore, the ToR's token allocation of field visits (a set series

of visits once a quarter) and aerial surveys (four flights a year), is derisory and

appears to offer no scope for SGS to respond quickly to new developments.

SGS's first report, covering the period from December 2003 to the end of March this

year, does little to dispel fears that the new monitor would be hamstrung by the

limitations of its mandate. Time spent verifying Government agencies' performance

outside Phnom Penh, for example, appears to have been confined to one aerial survey

and one on-the-ground inspection. Moreover, SGS has adopted an exceedingly narrow

interpretation of its role. The Independent Monitor reports on only five cases of

reported forest crime that it has examined between December and March, and in each

of these SGS appears content merely to cross-check selected data reported by the

FA. The company betrays scant interest in establishing the nature of the crime or

the identity of the perpetrator. It is therefore poorly placed to offer insight into

the way the authorities responded.

The lack of information or analysis does not prevent SGS from drawing a series of

favourable, but unsupported, conclusions about the presumed actions of its employers,

the Forest Administration. Upon inspecting a site in Battambang "for approximately

five minutes", one month after a reported case of illegal logging, SGS was unable

to see any ongoing illegal activity. The company therefore concludes that "in

this specific area illegal logging had been suppressed as reported by the FA".

There is no serious attempt to verify the FA's claim of suppression. Nor is there

any consideration of alternative and more mundane explanations, such as the possibility

that the loggers might simply have completed their operation and moved on.

SGS draws a similar conclusion in the case of a sawmill on Route 5, on the outskirts

of Phnom Penh, where illegal activities were reported in December 2003. On the basis

of a visit to the site in February, during which "there was no sign of ongoing

saw-milling activity", SGS determines that "any illegal sawmilling had

been suppressed". Once again, no evidence is produced to support this assumption,

which is undermined two pages further into the report, where the FA is cited as saying,

that they "had no record of any operation being carried out to suppress the

(Route 5) illegal sawmill activities". A more obvious conclusion - that the

sawmill had simply finished processing its stock of illegally-sourced logs - is not

considered.

Elsewhere, SGS asserts that "in some areas the Forestry Administration's efforts

in the suppression of the illegal logging have resulted in a shift from large-scale

land-clearing to selective logging as a side-effect". SGS offers no evidence

for this conclusion beyond cursory observations made from an airplane as the team

travelled to the site of the Battambang case.

The lack of investigative rigor, or even curiosity as to the reality on the ground,

is most apparent in SGS's inspection of Tumring rubber plantation in Kampong Thom.

Since its inception in August 2001, Tumring has exemplified the logging mafia's shift

from acquisition of timber through the forest concession system - which has been

in suspension since January 2002 - to use of plantation development or economic concessions

as the preferred means of accessing the resource. Under this system, senior officials

grant authorization to companies to develop plantations which, not coincidentally,

happen to be situated in forests. The forests thus have to be clear-cut to make way

for the "development" and proceeds of the resultant timber sales are pocketed

by the companies and brokers of the deal. The system is, in essence, a forest concession

by another name. A key difference is that the destruction of areas of forest is terminal

- with the forest completely cleared there is no scope for regeneration.

Tumring remains a stand-out case among the industrial logging operations masquerading

as plantation developments, not least in its initiation by the highest levels of

Government. It also has the distinction of involving the most powerful of Cambodia's

timber syndicates. Cutting and transportation of logs from Tumring has been organised

by a company owned by Seng Keang, the wife of Dy Chouch, a cousin of Prime Minister

Hun Sen. Seng Keang and Dy Chouch operate as logging subcontractors for several timber

concession companies, as does Seng Keang's business partner, Khun Thong, who also

owns a sawmill. The well-connected Khun Thong is the father-in-law of Forest Administration

Director Ty Sokhun and the brother-in-law of the Minister for Agriculture, Forestry

and Fisheries, Chan Sarun.

Seng Keang has organised the extraction of logs from Tumring, in defiance of the

ban on log transportation, for processing into plywood at a factory near Phnom Penh,

which she and Khun Thong have surreptitiously taken over from former timber concessionaire

Kingwood company. The illegal transports are expedited by permits issued to Seng

Keang by Kampong Thom foresters, which describe the two-to-three-metre-long log sections

as "firewood". Firewood incurs a royalty tax of $1 per cubic metre, as

opposed to the $54 per cubic metre due on logs. Courtesy of the firewood permits,

the Cambodian treasury has been deprived of at least one million dollars over the

past two years.

The clear-cutting of Tumring has destroyed a community forest area claimed by the

local population, who in return are promised a share in the profits of a rubber plantation

which will not produce yields for 5-to-10 years. The logging has also involved the

illegal felling of vast numbers of trees that local people tapped for resin and which

were therefore protected under the 2002 Forestry Law. Tree resin collection sustained

the livelihoods of many of the households in Tumring, as did the gathering of other

non-timber forest products that have also now disappeared. In essence, Tumring offers

a classic example of social injustice, Cambodia-style: members of the elite illegally

reaping vast profits at the expense of some of the country's poorest citizens.

SGS's failure to understand or address the forces at work in the Tumring debacle

lies behind its contention that illegal logging "is closely related to poverty

alleviation", and that "illegal activities [are] in most cases being carried

out by people in desperate need for income and /or land on which to live". SGS

does not question the foresters' claim that only firewood is being moved out of Tumring,

in the face of abundant evidence that this is a lie. Moreover, despite visiting Tumring

- now thousands of hectares of denuded soil where once was forest - SGS concludes

"that the FA staff has successfully prevented the transport of logs from this

area". SGS likewise fail to question the foresters' claim that the perpetrators

of forest crimes in Tumring are villagers, who are going to be "re-educated".

The methodology SGS is following appears to consist only of seeking to verify data

recorded by the foresters. No account is taken of any omissions in these records.

Put another way, if the foresters fail to record an illegal activity, because they

lack information or because it is they who have commissioned or facilitated it, SGS

will not examine the case. SGS is not verifying the performance of the FA, as SGS

is paid to do, but rather verifying what the foresters choose to include in the reports

they share with SGS - two quite different things. SGS therefore takes no account

of the fact that these reports on forest crimes might contain serious omissions resulting

from either corruption or incompetence by the FA, or that many crimes may not be

reported by the FA at all for the same reasons.

SGS fails even to mention several significant cases of forest crime which have occurred

and received widespread media coverage between December and March 2004. No mention

is made, for example, of the FA's much-publicized crackdown on illegal timber businesses

in Siem Reap and Oddar Meanchey between November and January. This operation resulted

in the confiscation of around half a million dollars worth of luxury timber, which

has since disappeared from the Siem Reap Forest Administration office and appears

to have been stolen. Other high-profile cases, such as the efforts of Phnom Penh

Governor Kep Chuktema's entourage to shoot their way through an FA checkpoint, and

the role of the Minister of Commerce and the Deputy Director of the FA in facilitating

illegal luxury timber exports, likewise fail to register.

Whether as a result of institutional constraints or its own timidity, SGS's first

published findings provide little insight into the performance of the FA and other

Government agencies in tackling forest crime. Unless the underlying reasons for these

shortcomings are addressed now, it is unrealistic to expect any substantial improvement

in subsequent reports.

The significance of Independent Monitoring goes beyond performance assessment of

the FA, however. The Government does not hesitate to portray its existence to international

donors as evidence of commitment to addressing governance problems in Cambodia. An

independent monitor that is no more than a paper tiger is therefore not only a waste

of $425,000 per year in loan money which Cambodia will be repaying the World Bank,

it also stands to be used by officials as a political prop, conveying an impression

of political commitment that in reality lacks substance.

In this regard, a toothless independent monitor is in fact counter-productive. The

Government, the World Bank, and SGS itself, must act now to rectify the current flaws

in the independent monitoring mandate and its execution, if the institution is to

retain any degree of credibility in Cambodia.