The logging company Danzer is depriving the governments of the Democratic Republic of Congo (DRC) and the Republic of Congo of millions of euros in taxes as well as driving rainforest destruction and climate change, according to a new report from Greenpeace. The organisation calculates the loss to be approximately £8m. This is the equivalent to 50 times the annual budget of the DRC Environment Ministry. (1)
The report, entitled Conning the Congo, accuses the Danzer Group - a German owned multinational - of moving its profits offshore to escape paying tax in the countries in which it operates. Historically, Danzer has maintained strong business links with a number of British companies including Brook Bros, Smee Timber, Timbmet and International Timber. All of these companies have received timber from Danzer‚s operations in the Congo which are at the centre of the tax evasion schemes detailed in the report.
Greenpeace claims that multinational companies like Danzer are engaged in a double scam, robbing these countries of their timber before depriving them of state taxes owed for these resources. Greenpeace believes that under a robust international forest protection scheme, the value of the DRC‚s forests as a carbon store could be far greater than the income generated for local people by industrial logging. (2)
"The DRC is one of the poorest places on the planet, and the fact that companies like Danzer are looking for ways to avoid paying taxes is simply outrageous," said Michelle Medeiros, Greenpeace's Africa Forest Coordinator. The awful irony is that while the international community is pouring millions into the war-torn DRC (3), it is turning a blind eye to companies like Danzer who continue to con the country out of substantial wealth through tax evasion, capital flight and aggressive tax avoidance."
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 planet‚s biodiversity and the forest-dwelling communities who depend on them for resources and livelihoods. (4)
The DRC government has committed to a legal review of all existing forest concessions due to start today, many of which were illegally awarded following a moratorium on new logging titles in 2002. (5) Greenpeace is calling on the DRC government to cancel all illegally awarded and non-compliant titles, including those in breach of the moratorium and DRC's Forest law.
Globally, deforestation accounts for about one fifth of global greenhouse gas emissions. 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.
Footnotes:(1) This calculation is based on evidence obtained by Greenpeace International and shows that the loss to the governments of the DRC and the Republic of the Congo could be nearly £8m in tax revenue between 2000 and 2006. The DRC Ministry of Environment annual budget was around $156,000 in 2000
(2) Greenpeace's Forests for Climate proposal is a comprehensive framework for an international funding mechanism to protect the world's remaining tropical forests.
(3) For example, this year, the UK Government pledged £50m of taxpayer's money to protect the Congo Basin forest.
(4) 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.
(5) The legal review process has been criticized as being extremely limited, leaving social, environmental and human rights considerations almost completely aside. It will determine how many of the existing logging titles in the DRC can be converted into legal concessions.
