Press Release / June 19, 1998

$50 million worth of Cambodian logs destined for Thailand via Laos in new illegal export deal

In yet another massive contravention of Cambodia's log export ban, the notorious Pheapimex-Fuchan logging company is set to export 100,000m3 of logs into Laos, from where they will be imported into Thailand by Thai logging company Pipat Forestry, according to Global Witness.

The export of the luxury and #1 timber, worth $7.5 million at the World Bank recommended economic rent of $75 per m3, or $50 million at world market prices, was authorised by the Lao government and at a senior level in the RGC. Pheapimex' boss, Choeng Sopheap, is a close confidante of Hun Sen. The logs will fetch $280 per m3 on the Lao-Cambodia border and sell for $450 per m3 at the Thai border. The logs are exiting Cambodia though three points: via Ban Phon Sa-at and Ban Napkiap (about 30km south) in Champasak Province, and either along Route 13 or the smuggling road a few km to the north. Local loggers stated that Pheapimex will pay $50 per m3 to the Lao government for passage, and alleged that up to 30% of the profits were destined for officials in the Forestry Department in Phnom Penh.

The logs, cut in the Siem Pang and Tala districts of Stung Treng Province, are trucked to the Lao border. The upgrading of route 13 is being funded by the ADB, but materials and machinery are being diverted to build logging roads heading east from route 13 towards Ban Phon Sa-at. On one day, in a five hour period in late May, 30-40 trucks loaded with gravel did not unload on route 13, but diverted along the logging road. Thus the ADB are indirectly funding the construction of logging roads. The logs are stockpiled near the Lao border at Vengnang and Khamphok villages and along the banks of the Mekong. As of late May 8,500m3 had already been exported into Laos.

Pipat Forestry will transport the logs through Laos into Thailand and has contracted Phnom Penh based oil supply company Continental Indochine to set up two fuel depots, one in Ban Phon Sa-at village near the Lao-Cambodia border. Until the closure of the Thai border in 1995 Pipat was identified by Global Witness as a prime importer of logs from KR held Samlot. "We have written to the Thai Prime Minister and the Interior and Foreign Ministers to notify them of this illegal deal," said Patrick Alley of Global Witness. "Laos is deliberately flouting their commitment to prevent illegal log imports from Cambodia, and both Cambodia and Laos will try to dupe Thailand into believing the logs are from Laos". Thailand is currently alone amongst Cambodia's neighbours in honouring their commitments to prevent illegal log imports from Cambodia across their land border.
"Pheapimex-Fuchan is an example of all that is wrong with forestry in Cambodia" said Simon Taylor at Global Witness. "They enjoy the protection of Hun Sen, they cut what they like and it seems that no-one has the power to do anything about it. If the World Bank Forest Transition Paper is going to have any chance of success the RGC are going to have to clamp down on companies like Pheapimex. The World Bank and the Forestry Department should insist that before the Cambodia Timber Industry Association (CTIA) can play any role in forestry issues in Cambodia any of its members involved in illegal logging should be suspended or expelled. Pheapimex is a leading founder member".

News of these illegal exports will disappoint the World Bank who not only funded the TA projects, but also, through the Global Environment Fund (GEF), support the Laotian Xe Piane National Biodiversity Conservation Area (NBCA) across which the logs from Khampok will pass. This park is one of the richest wildlife areas in Laos. Another wildlife rich proposed NBCA, Dong Kanthoung, is also at risk as logs may also be imported from Cambodia via Ban Khem, Mounlapamok District in Laos' Champasak province.

In addition to the Pheapimex deal, Illegal logging businessmen are converging on the Siem Pang area to transport logs down the Mekong when the river level rises.

"Military Region 1 completely control these exports with the blessing of the co-Prime Ministers. With the release of the ARD report the Prime Ministers now know without doubt that their policies, or lack of them, will have destroyed Cambodia's forests within five years. It was the Prime Ministers who signed the permits that opened the flood gates into Vietnam and probably to Laos as well. It's up to them to close them," said Patrick Alley of Global Witness.

Editors notes:

_ Logging in Laos is controlled by a State/Military parastatal, DAFI.
_ In Stung Treng Province, as in Ratanakiri, logging activities are controlled by Military Region 1 (MR1), primarily by its commander, Major-General Seuy Keo, his deputy, Noun Phea, Virak Chet (local representative of Pheapimex-Fuchan and Vice Chief of Military Division 42) and another MR1 officer Ly Sareth (aka Lao Sochiat) who is the brother in law of a high official in DAFI. High ranking local government officials are also involved including the Provincial Governor and the Siem Pang district chief, and three civilian operators Sai Kern, a Mr. ___ Seng from Phnom Penh and Ms. Kim Tan, the mother of Virak Chet and godsister of Noun Phea.
_ Pipat Forestry are based near Bo Rai in Thailand's Trat province, opposite the former KR stronghold of Samlot. Pipat formed a 'shadow' company, SA Pharmaceutical, to obtain a log quota in the 'million metre deal', exposed by Global Witness in April 1996.