THE current management of Cambodia's forests is described as "a total system

failure" in a scathing report sponsored by the Asian Development Bank (ADB).

The Cambodian Forest Concession Review draft report - produced by a Fraser Thomas

Associates consultant team for the ADB/Royal Government of Cambodia's Sustainable

Forest Management Project - says a combination of "greed, corruption, incompetence

and illegal acts," makes logging unsustainable and will lead to the destruction

of the economic system based around it.

The Department of Forestry and Wildlife (DFW), under Ministry of Agriculture, Forestry,

and Fisheries (MAFF), is responsible for the management of forests outside of protected

areas - at least in theory.

The report says: "High-ranking government officials are issuing cutting permits

to individuals directly, outside the control of the responsible department [DFW].

"The review team found out that special teams assembled by the MAFF, completely

outside of their authority of the DFW, are inspecting concessions and the DFW is

receiving instructions from these teams to issue cutting permits.

"This sheds doubt on the transparency of the concession control mechanism and

the policy of the Royal Cambodian Government (RGC)to designate the DFW as the sole

responsible agency for managing, protecting and controlling the forest resources."

Under the contractual agreements, management plans for the areas of forest to be

logged are the responsibility of the concessionaires, but these plans are subject

to DFW approval. The concessionaires must also conduct inventories of their coupes

and submit annual operation plans before felling can begin.

The report says: "Apparently plans are made more to suit the needs of the processing

industry, which has a very high capacity, than for the sustainable management of

the forests themselves.

"Involvement of the DFW staff - under an undeclared contractual arrangement

by the concessionaires - to prepare concession maps, carry out inventories and prepare

forest management plans, is a clear case of conflict of interest.

"The DFW staff are effectively acting as contractors and regulators for the

same resource at the same time."

Ty Sokhun, Director General of the DFW, said he was not yet prepared to comment on

these allegations.

The report says the richest forest areas are to be cut first, in violation of sustainable

management principles, because concessionaires want to recover their investment costs

as rapidly as possible, then make profit from whatever timber is left.

"In permitting this level of forest exploitation, Cambodia displays a classic

example of unwise forest resource utilization. The country may soon turn from being

a net exporter of timber to a net importer."

Suppressing illegal logging and enforcing the contracts between the concessionaires

and the Government is the responsibility of the DFW, but the report concedes that

the department has little power "in an environment where the illicit component

of the industry is strong and widespread, and where violators are armed and aggressive

enough to intimidate unarmed civil servants."

The report says violators of Cambodia's forestry laws are often working with officials

more powerful than those in the DFW, and department requests for legal and logistical

support are "often overruled or simply ignored."

It is the weakness of the legal system - the ambiguously written laws, confusion

about which laws remain valid, laws which contradict each other, and enforcement

authorities without mandates to act or who are simply in collusion with the violators

- that allows the destructive practices to continue, says the report.

The forest concession review's legal team investigated contractual compliance of

the concessionaires. They found none of the concessions were in compliance with meeting

investment commitments, payment of minimum royalties to the Government, and reporting

of their annual accounts.

"The appalling quality of the current management plans, the severe lack of technical

capacity of many concessionaires, a complete lack of resource assessment, monitoring

and planning of silviculture operations, extremely poor infrastructure in most concessions,

indifference to communities and their development all constitute clear evidence that

concessionaires have not complied with their contractual agreements," says the

report.

The concession review team recommends the Government take immediate action to ensure

the logging of the forest is sustainable and can be monitored, and to terminate the

contracts of concessionaires that do not comply.

A legal review conducted by the law firm White & Case in 1998 found the concession

contracts had terms "grossly disadvantageous to the Royal Government of Cambodia

(RGC)."

White & Case said the contracts strongly favor the concessionaires and, because

the contracts are so poorly drafted, the RGC's ability to enforce or terminate the

contracts is impeded.

"The concession contracts have few provisions specifying a date for concessionaire

performance of obligations, few provisions liquidating damages, and few provisions

specifying procedures for claiming default," said White & Case, adding the

RGC would likely face substantial financial risk if it tried to terminate the contracts.

But the ADB's concession review's legal team said because there has been no serious

attempt to manage the concessions sustainably, this constitutes a violation of the

prime objectives of the concession agreements.

"We strongly believe that the RGC has the right to obtain assurances from concessionaires

that [sustainability] can and will be maintained. The absence of a specific law of

existence of poorly written agreements should not prevent the Government [from] protecting

its resources that belong to the nation as a whole, even if such action may entail

adverse financial consequences."

Among the review's recommendations are that concessions belonging to Lansong International

Co Ltd., Long Day Machinery Industry Co. Ltd., and Cambodia Timber Product Pty Ltd.

be terminated. "Forest resources have been depleted to such a critical level

that sustainable management and log production are no longer compatible."

It also recommends the RGC declare a moratorium on some or all logging operations

until new management plans meeting international standards for sustainable logging

are prepared. The review team believes another seven concessionaires will not be

able to meet these proposed requirements because of the depleted state of the forest

in their concessions.

Henry Kong, Chairman of Cambodia's Timber Industry Association, said he prefers to

withhold comment on the report until the April 20, 21 workshop where its findings

and recommendations will be discussed. But Kong expects concessionaires to contest

many of the report's allegations of mismanagement and illicit activities.

The concession review's team leader, Orhan Baykal, said the concessionaires with

enough timber resources left to make a long-term commitment to the industry will

be "happier and better off" if they renegotiate with the Government - particularly

when it comes to the issue of royalty rates which Baykal said should be adjusted

according to a set formula.

On a more positive note, the review team reported "a drastic reduction"

in illicit felling and processing since a January 1999 order from Prime Minister

Hun Sen to bring order to the forestry sector.

And since the Forest Crime Monitoring units were established by MAFF and the Ministry

of Environment in April last year, improved records of illegal logging activity should

place the Government in a stronger position to punish offenders.

Baykal said the track record of Prime Minister Hun Sen on forestry issues has been

"very positive" and he expects Hun Sen's response to the report's clear

recommendations will be "strong."

A diplomatic source said the report clearly indicated RGC action is required on the

report's recommendations.

He said although the donor nations have generally been pleased by progress made in

Cambodia's forestry sector - particularly in respect to forest crime monitoring and

crackdowns on illegal logging - he expected this report to "play" at the

Paris donor's conference in May.

Another diplomat agreed, saying: "There is a lot of serious material [in the

report] about failures by the companies to fulfill their obligations.

"There is a lot of donor attention now on how the Government will follow this

up. One has to allow the Government a reasonable length of time to consider the report

and come to its own conclusions.

"But people will be looking at what happens between the [April 20, 21 workshop]

and the Consultative Group meting at Paris - with the expectation that there will

be serious, vigorous follow-up to this report by the Goverment."