Hiding Behind Pledges of Good Intentions: How the Association of Overseas Chinese Serves to Cover Up Forest Crimes in Gabon
Raw Intelligence Series – #5 Gabon Overseas Chinese Association
Some criminals and their enablers hide behind anonymity and secrecy. Others – like Mr. Pierre Lu – choose to hide in plain sight, as shown in EIA’s last installment of the Raw Intelligence series related to the current state of the Gabonese logging sector. Mr. Lu is the Secretary of the Association of Overseas Chinese in Gabon and a leading figure in the Forest Union of the Asian Industry in Gabon (UFIAG). He doesn’t miss an opportunity to publicly defend Chinese logging companies in Gabon, and to assert that these entrepreneurs operate with the best of intentions. Yet behind closed doors, in a series of meetings with EIA’s undercover investigators, Lu openly described the illegal practices these companies employ to make a profit.
In order to bring evidence of forest crimes to the public eye, earlier this year EIA launched the video series “Raw Intelligence.” Through minimally-edited undercover videos, capturing timber sector managers speaking in their own words, EIA demonstrates how the crimes documented in its report Toxic Trade – including money laundering, tax evasion, bribery and other violations – are pervasive, structural and indisputable.
When 450 containers of precious Gabonese hardwood mysteriously disappeared earlier this year in the “Kevazingogate” scandal, the UFIAG quickly made a public statement denouncing generalized negative assertions about the Asian entrepreneurs of the timber industry, and insisted that the few bad apples caught during the investigation into this massive timber theft do not reflect the actions of the majority of Asian entrepreneurs operating in Gabon. Mr. Pierre Lu appeared to be at the forefront of this initiative, as the picture released by the UFIAG indicates.
Article about UFIAG’s members’ letter, showing Mr. Pierre Lu
Source: L’union, Mardi 19 mars 2019, p.5
The official picture of the commitment made by 12 Chinese companies, showing Mr. Pierre Lu at the center of the festivities.
Source: Gabon Economie, 24 juin 2016.
Mr. Lu said that he is aware that Chinese companies in Gabon evade taxes. For instance, according to Lu, a relatively small company such as Wan Chuan Timber Sarl (WCTS, see EIA Raw Intelligence #2) easily defrauds the Gabonese authorities of over US$1.6 million each year through unpaid tax. Companies artificially inflate the cost of production and reduce the value of sales by keeping two books: an official one for authorities, with inflated cost and reduced sale values, and an unofficial one that keeps track of the real financial flows.
As Mr. Lu explained to EIA undercover investigators: “When it comes to paying taxes, they [logging companies] make their books appear to be having a loss, so they only pay that one percent sales tax, income tax is free, since the profitability is so low. […] Another way to avoid paying taxes is through an offshore company, there is no profit in your local company here, thus you pay no tax.” According to Lu, logging companies also avoid taxes through the creation of multiple smaller local partner firms, in order to spread across several companies the reported amount of timber exported.
Mr. Lu told EIA investigators that corruption occurs throughout all aspects of Gabonese public office, with officials at all levels asking for bribes from logging companies; the logging companies, not wanting to be exposed or penalized for their own illegalities, inevitably choose to pay. As an example, Lu claimed to personally know five or six ministers involved in corruption. He said he plays a particular role in helping Chinese companies solve their problems through bribing officials. Because he knows all of them and speaks French, he is usually involved in the “negotiations” with top officials.
Despite the changes in the Gabonese government following Kevazingogate, and the release of EIA’s report “Toxic Trade,” Mr. Pierre Lu continues in his highly visible role. The pervasiveness of the crimes committed and described in the Raw Intelligence series indicate that Gabon faces significant challenges in cleaning up its forest sector, and in taking action to penalize bad actors such as Mr. Lu and his acolytes.
On a positive note, Gabon has recently undertaken some important reforms in the forest sector; a new results-based cooperation agreement signed between the Central African Forest Initiative (CAFI) and Gabon provides USD 150 million to Gabon over a 10 year period for the protection of the Gabonese rainforest in the fight against climate change. A cooperation treaty has reportedly been signed between Gabon and China, in support of forest governance and protected areas.
EIA has proposed an initiative in Gabon to support what would be an unprecedented level of transparency. In September 2019, EIA-US’s Executive Director, Alexander von Bismarck visited Gabon to discuss with Ministry officials the importance of transparency and traceability in the timber sector. EIA plans to work with members of civil society and the government to bring real transparency and accountability into the timber sector and to fight the rampant corruption. Gabon’s forests can and should be protected and managed for the wellbeing of its people.