European Logging Company Exposed for Tax Scams in the Congo; says Greenpeace

Press release - 30 July, 2008
A new Greenpeace International investigative report, "Conning the Congo", launched today, reveals tax evasion by one of the main logging companies operating in the region, exposing how industrial logging is not only a key force in climate destruction, but also fails in developing one of the world's poorest regions.

The German-owned and Swiss-based logging multinational, Danzer Group, is using an elaborate profit-laundering system to move income out of Africa and into its offshore bank accounts. Greenpeace calculates that the loss to the governments of the Democratic Republic of Congo (DRC) and the Republic of the Congo could be nearly 8 million Euros in tax revenue -- the equivalent of 50 times the DRC Ministry of Environment's annual operating budget. (1)

"The DRC is one of the poorest places on the planet and that companies like Danzer Group are looking for ways to avoid paying taxes is simply outrageous," Michelle Medeiros, Greenpeace International Africa Forest Coordinator said today at a press conference in Zurich. "The awful irony is that while the international community is pouring billions into the war-torn DRC to help it re-build, it stands by as companies like Danzer continue to con the country out of substantial wealth through tax evasion, capital flight and aggressive tax avoidance.

What's more, these same countries are plundering the natural resources, thus contributing to climate change and depriving local populations of sustainable means of future employment."

The Congo rainforests of Central Africa form the second largest rainforest block on Earth after Amazonia. They are of incalculable importance for the global climate, the forest-dwelling communities who depend on them for resources and livelihoods and the planet's biodiversity. (2)

The DRC government has committed to a legal review of all forest concessions which starts on 30 July (3). Greenpeace is calling on the DRC government to cancel all illegally awarded and non-compliant titles including those in breach of the moratorium or of the DRC's Forestry Code. Greenpeace also calls on the government to maintain and enforce the May 2002 moratorium on the awarding of new logging titles and the extension and renewal of old ones.

As illustrated in the "Conning the Congo" report, Greenpeace believes that the value of the DRC's forests as a carbon store could potentially be far greater than the income generated for the country by industrial logging. Deforestation accounts for about one fifth of global greenhouse gas emissions and replacing industrial logging in the DRC by an internationally-backed forest protection system would not only be financially beneficial to the people of the DRC it would make the country a key player in climate protection. (4)

Other contacts: Michelle Medeiros, Greenpeace International Africa Forest Coordinator (in English), Tel: +31 646 16 20 41 Jerome Frignet, Greenpeace France Forest Campaigner, (in French) Tel.: +33 679 93 15 30Asti Roesle, Greenpeace Switzerland Forest Campaigner (in German) Tel.: +41 44 447 41 35 Dietlind Lerner, Greenpeace International Forests Communications Manager, Tel.:+31 646 16 20 26

Notes: (1) Evidence obtained by Greenpeace International estimates that the Danzer Group's proposed profit laundering and suspected non-compliance with tax exemption agreements may have denied the governments of the DRC and the Republic of the Congo at least 7.8 million Euro in tax revenue, in 2000 prices.(2) Fifty million hectares of rainforests in Central Africa are controlled by the logging sector, with the vast majority of this area being in the DRC and the Republic of the Congo.(3) The legal review process, which has been criticized as extremely limited, leaving social, environmental and human rights considerations almost completely aside, will determine how many of the existing logging titles in the DRC can be converted into legal concessions. (4) Greenpeace has the solution. Forests for Climate is a landmark proposal for an international funding mechanism to protect the world's remaining tropical forests. For more information go to: http://www.greenpeace.org/forestsforclimate(5) Previous Greenpeace reports have already exposed Danzer's involvement in trading illegal timber, bribery, and suspected forgery of documents. Its April 2007 'Carving up the Congo' report exposed the endemic corruption of the DRC's logging sector, and further documented the fact that international logging companies operating in the DRC are causing social chaos and wreaking environmental havoc. http://www.greenpeace.org/international/press/releases/congo-report

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