Episode #182: The Dark Side of Teak
“As a wood, it's very durable and pliable, and it is really resistant to water,” says Shirsho Dasgupta of the Miami Herald, describing teak. “It has a wonderful golden hue, so it's used for furniture, but also for making the decks of boats and yachts. For centuries, it has been considered to be a symbol of affluence… [and out of all the places where it is sourced], Myanmar teak is generally considered to be the best.” Dasgupta joins the conversation along with Timo Schober, a German-based journalist who works at Papertrail Media.
Following a leak from Myanmar’s tax department which indicated a high volume of teak exports, the International Consortium of Investigative Journalists (ICIJ) convened a group of 39 media outlets to work together in uncovering where all this teak was going, and if the post-coup US sanctions on Myanmar Timber Enterprises (MTE), the military-linked corporation intimately connected to the teak trade, were being evaded.
During the Colonial period, teak became a highly prized hardwood, particularly sought after by the British Navy. As a result, there was extensive clearcutting of Burma’s vast teak forests. Even so, by the time of Burma’s independence in 1948, forested areas still comprised 70% of the country. However, Dasgupta explains how the real decimation of Myanmar’s teak forests began with the rampant crony capitalism that started in the 1990s; today, just 40% of the country remains forested. Since that time, corruption has been rife, child labor has often been used, and working conditions have been extremely unsafe, with narcotics flowing freely throughout the camps. “It's not like things were hunky dory in the past,” Dasgupta explains, even about the period before sanctions when it was possible to obtain legally sourced Burmese teak. Still, it was challenging to determine if the teak being imported met all the requirements of legality.
During the NLD years, attempts were made to introduce transparency and establish a paper trail to document the chain of custody in the timber industry. However, the results were limited due to the ease of forging paper documents. “It was still an ongoing process when the coup happened,” Dasgupta says, “changing and reforming an industry which has existed and operated in a certain way for more than 100 years, it takes time.”
This brings us to the military coup in 2021 and the implementation of sanctions by the US, which hasn’t actually stopped the international sale of Burmese teak. Schober explains how the ultra-rich are driving this illegal trade. “If you're a millionaire, or a billionaire, you want the best [teak], and the best is naturally grown teak.” Dasgupta adds that “the demand and the prices is influenced by the fact that very rich people want teak as their furniture, and they want teak as decks on their luxury yachts.”
Almost all of Myanmar's forests are state-owned, and all of its teak trade is funneled through MTE, which runs private teak auctions, the only venue where private companies can purchase Burmese teak. Those companies, in turn, act as middlemen, selling the teak they get from MTE to individual traders. With MTE sanctioned, it might seem that any sale of teak from Myanmar should be illegal; however, many European traders argue that because they don't actually buy directly from MTE, and so are complying with the sanctions. Customs agents know is that MTE is sanctioned, so if their name appears on documentation, the teak is considered illegal. But when the name of a private company appears on the documentation, the teak is often let through; the net result being that a huge amount of illegal teak is still being traded despite the sanctions.
In numbers, this has amounted to a staggering $400 million worth of teak having been exported from Myanmar since the coup, with one-fifth of that figure reaching European and American markets. Dasgupta estimates that six million pounds of teak has reached the US alone, valued at $25 million. “We haven't really seen much of an effect,” he notes flatly about US sanctions.
As far as Europe goes, Schober describes how some companies manage to gain entry into the EEU by targeting countries with laxer customs restrictions, and claiming that their teak originated from Thailand or India. Often by the time that a transaction is properly investigated, the teak in question has long since been sold. To combat this, Schober advocates that stricter measures be implemented. “I think it is important that the [European] authorities are aware of what an import of Myanmar teak means,” he says. “This is something that is actively financing a very brutal regime, with human rights abuses… it would make more sense to make a total ban of Myanmar teak imports.”
Dasgupta also sees value in carrying out wider advocacy campaigns, perhaps in the way that publicizing the evils of the African blood diamond industry increased social pressure against unethical purchases. “As we all know, enforcement can only go so far,” he says. “Advocates that we spoke to, who are engaged both in the environmental and conservation fields, and also pro-democracy activists in Myanmar, all of them basically say that… we have to raise enough awareness about the issues surrounding this product, so that there is a fall in consumer demand. Because as long as there is a demand on the consumer side, even if you enforce it stringently, even if you go for outright bans, there will be ways in which this product is procured.”
Dasgupta points out that strictly enforcing sanctions and investigating violations regarding Myanmar's timber trade is currently not a priority for the US, due to resource limitations and the relatively small volume of trade with Myanmar. “Enforcing complicated sanctions and investigating violations on products with small trade volumes and whose consumers honestly may be politically influential and financially well heeled, is probably not priority right now, unfortunately.” He explains how the Financial Crimes Enforcement Network (FinCEN), responsible for investigating sanctions violations, is not only understaffed, but also primarily focused on sanctions against Russia related to the war in Ukraine. However, the Justice Department recently established a special interagency task force called the Timber Working Group to address illicit wood trade, potentially indicating future action. It is uncertain if traders importing Burmese teak to the US after sanctions have been investigated, as ongoing cases are not confirmed or denied by the Justice Department.
Dasgupta has reached out to companies involved in the teak trade, and he says that many of them believe their sales are legal because they purchased the teak before the sanctions were imposed, claiming that the wood was already in private warehouses. However, Treasury officials argue that the date of purchase does not exempt traders from the sanctions, and the origin of the wood and its export through ports controlled by, or affiliated with, the military should raise red flags.
At the end of the day, Dasgupta reminds listeners that it all boils down to finding a way to speak directly to the consumer about this murky business, in hopes of discouraging future teak purchases. “A lot of luxury products that we covered, they do lead to conflict and the destruction of the environment, and we should keep in mind that even if we're not buying teak, we might be complicit in in other ways when we buy these products.”
Read their original articles here:
· Miami Herald: How Florida wood traders navigate ban on repressive regime’s rare teak: Tree DNA tests
· Der Spiegal: Superreiche wollen Myanmar-Teak für ihre Jachten – und die Junta profitiert
· Der Spiegal: Teakholz aus Myanmar strömt trotz Sanktionen nach Europa