Transcript: Episode #182: The Dark Side of Teak
The complete transcript for this podcast episode is provided below. This transcript was generated using an AI transcription service and has not undergone human review. Due to this, there may be inaccuracies in the text compared to the actual spoken words. This is especially relevant for speakers with strong accents, as AI transcription can result in errors during interpretation and transcription. As such, this transcript should not be referenced in any article or document without cross-referencing the timestamps to ensure accuracy in representing the guest's precise words.
Host 00:22
Thank you for taking the time to listen to today's episode. As you know, the current crisis in Myanmar is extremely concerning. And we appreciate that you're taking the time to stay informed. There is even value in just becoming more aware and helping to inform others. So please consider sharing this episode so that more people may learn about what is happening in the country. It's critical to ensure that this issue remains present in public discourse. But for now, let's get on to the interview itself.
01:19
Is Tina, he ate my way that really have a good day today.
Brad 01:57
And welcome back. Our topic today is one that like many of the topics we cover on this show is often overlooked. Specifically today we're going to be looking at wood and even more specifically teak wood, highly prized wood for which Myanmar is famous. And I'm joined by not one but two guests today Timo and Sher Shah, who are going to speak to us about the different elements of the International teak trade and the ways in which this applies to Myanmar and the various underhanded elements that connect the tea tray to many unsavory elements of past and contemporary Myanmar politics and history. So I'm going to start with shisha and have you introduce yourself or our guests?
Shirsho Dasgupta 02:42
Hi, I'm sure shudders Gupta. I'm an investigative reporter with The Miami Herald and I'm based out of Washington, DC.
Timo Schober 02:50
Yeah. Hi, it's Tim Shoba. I'm also an investigative reporter with Papertrail media. We are based in Munich, and we're working together with several media outlets such as stash Beagle, and to f in Germany, the standard in Austria and the media in Switzerland.
Brad 03:08
Okay, thank you. And you've both worked on this issue of of teak. But you've both worked slightly, slightly differently. But if I understood correctly, Timo, you focus more on the tea that is transported to the European Union, then she'll show you focus more on the tea transported to the United States. How did how did you guys start collaborating? Were you collaborating before? Or did you happen to be independently working on Tikkun and find one another?
Timo Schober 03:37
This whole investigation was led by the ICI J. That's the investigative, the International Consortium of Investigative Journalists. That's an NGO based in the US, and we came together because I think it totaled 39, media outlets for cooperating. And yeah, in the beginning, there was there was a leak from the Myanmar Tax Department, which has shown that the teak exports, both to the US and to the European Union, and several other countries are going on despite some sanctions. And yeah, so in the beginning, I guess both of us were starting to get into the topic, like the teak trading of Myanmar, how important it is for the regime over there. And then we naturally both focus on our reporting areas. So I focused, I had a special focus on Germany, but also in the European Union in general. And yeah, sure, maybe you can tell something about your focus with the US.
Shirsho Dasgupta 04:41
Yeah, I think, for us, you know, obviously, an overall sort of picture of the Tegan portion of the US was kind of irrelevant, but, you know, because we cover Florida, the Miami Herald for us. The word was sort of most important in terms of coverage was the tick that was entering through Florida sports and the Florida companies, which were sort of involved in this in this trade.
Brad 05:16
Interesting. And so I'll continue on with you show. What so what can you tell us about teak? I think our audience is sort of aware of the Myanmar context, I think many people would be aware of teak goods as something that is associated with Myanmar, but we clearly looking at a very global context and a global phenomenon, why why is teak relevant? You know, why do people care?
Shirsho Dasgupta 05:44
I think so like as a word, it's, it's very durable and pliable. It is, you know, resistant to water. It has wonderful golden hue. So it's, it's used a lot and furniture, but also for making the decks of boats and yachts. And for centuries, it has been considered to be a symbol of affluence, and among the different varieties of tea that you get, I think you get Deakin Asia and Africa as well. So among these varieties, Myanmar, teak is generally considered to be the best. Now, this reputation combined with decreasing supplies due to deforestation and a very laborious extraction process from deep in the rainforests of Myanmar. And it's sad in some parts of Myanmar's neighboring countries sort of combine and make the big, quite expensive luxury product nowadays.
Brad 06:47
But nevertheless, so teak, clearly is a very sort of highly sought product in the Myanmar context. And I've seen the teak forests myself, I traveled to the center of the country, like they are quite large and quite impressive. But you you're saying that there's deforestation? How much of a deforestation are we? Are we looking at? Are we are we getting into the territory where this industry is simply not sustainable? Or is it just a temporary sort of over exploitation that can easily be corrected for?
Shirsho Dasgupta 07:24
I think, there there, there are efforts to sort of harvest teak and plantations. But, you know, which in turn will, you can argue that, you know, over time that will become sustainable, because they're just growing it for this product. But at the same time, if you're talking about old growth take from the, from the forest themselves, that the stalks of those trees are dwindling. So you know, poor World Bank's estimates, forests made up 70% of Myanmar when the country became independent 1948. But now that figure stands out a little more than 40% on the country lost a fifth of its forest in just the two decades between 1990 and 2010, according to the UN. So you know, you can imagine it's if you're talking about old growth, tea growing and forests, you know, it is dwindling, and I don't know about what the situation is like in Africa.
Brad 08:31
So can you say you've used the term old growth and it's definitely a term that we hear thrown around a lot when we talk about deforestation and environmental concerns, but I'm wondering like, what's, what does old growth in context actually mean? And what is it in contrast to
Shirsho Dasgupta 08:49
I think it's basically a forest that you know, which has sort of attained kind of age as as you if you will, without any significant disturbance from humans and human activities. And so you know, it has it's sort of unique, ecological and you know, features and it's kind of like its own ecosystem in a way.
Brad 09:21
So does that have an impact on the wood itself? Or is it just one of the places where we could get teak from
Shirsho Dasgupta 09:29
I'm not sure it has an impact on the word itself in terms of either quality or price, but the the thing is like you know, even if you're sort of like harvesting D just for just for export or for production for like furniture and stuff for manufacturing products as it were, you you will be basically clearing land where which, which means, you know, in a country like Myanmar, where you know, most of the country is under forest cover, that does mean that forests are still getting destroyed. And, you know, as we know, deep obviously takes a long time to grow. These are like, big massive trees. So, even harvesting will take years, maybe even decades. So it's not like in the short term, just harvesting is not sustainable in any way.
Brad 10:32
Okay, so let's let's take a historical view, because this is something that that I know that we we discussed previously. So the teak industry as such, goes back quite, quite a quite a long time. I think. We're talking about like two centuries or something along those lines for international demand for Myanmar, Myanmar, teak. So how, how has the industry that the teak industry in the teak exploitation evolved? What was it like during the colonial period prior to 1948?
Shirsho Dasgupta 11:07
So okay, so Myanmar, Rick comes independent from the British in 1948. And then within like, I think around 15 years, it comes under a military dictatorship in the early 1960s. And the economy is closed off. The country again starts being opened up in the 1990s. But the military is still in power. And the businessmen who take charge of the economy are essentially oligarchy regime. Now, in 2014, Myanmar has its first sort of free elections, and in the next decade, they enjoy a kind of semi democratic rule. And countries like the US and the EU, they lift a lot of sanctions during this period. But even at this point, the people operating in the timber sector as a whole still have links to the military. And some of them have, you know, allegedly also been involved in smuggling and drug running and, you know, all sorts of illicit activities. Now, since the 1880s, when timber started being logged commercially by Europeans in Myanmar, this whole industry has been plagued by Labor abuses. And, you know, as I mentioned, on top of that rapacious logging has led to deforestation. Now, you know, sort of Fast forward to February 2021, the military orchestrates a coup and seizes power again. And a few months later, the US the EU and you know other some other countries start imposing sanctions against individuals and companies which are controlled by the Myanmar military. This includes the Myanmar timber enterprise, or MD, which is the state form that de facto controls the timber trade in the country. Now, what the sanctions does, at least from the US perspective, is they make it illegal for Americans to do business with the sanction individuals and entities and prohibit any transaction with them in US dollars. Now, since most global with global business is done via US currency, the measures restrict the finances of the individuals and the entities which have been sanctioned. And the sort of ultimate aim is to freeze them out of the international banking system. But, you know, in terms of what the industry is, like, as I said, there was a Department of Labor study with cited Myanmar's timber sector as extremely prone to labor abuses. It is and it always has been sort of overrun with corruption and rife with illegal logging. I had spoken to Derek Mitchell who was a former US ambassador Myanmar, and he said that in a doing business and T basically means you need to know the right people and pay the right people off. widespread poverty in the country also means that children are sometimes found working in these logging camps and, you know, drug consumption is very high. There was a I think 2020 or 2021 study with said that the drug consumption in some of these camps are so severe that it can shorten the life expectancy of children involved in the logging sector. So you know, it's not like clean industry in any way and it never has been like we are talking about this industry now in terms of of the coup sanctions, but it's not like things were hunky dory in the past as well.
Timo Schober 15:10
I think shisha has explained that pretty well. I just wanted to tell you one, one number that illustrates the loss of the forest in Myanmar. I mean, we have the military governments are and elected civilian governments. But if you look on the tree cover that Miam, you can see that Myanmar has lost since 2001, roughly the size of Switzerland, according to run to an NGO, and I think that illustrates pretty well, what has been happening there. Regarding deforestation and illegal logging. I mean, it is, it is common sense that especially illegal logging is a huge issue in Myanmar. That's also one of the major concerns regarding the legal import, or it has been before the coup when there have been no sanctions. So in some countries of the European Union, for example, in Germany, it has been common sense that a legal import that complies with the European trade regulation is not possible, because the locks cannot be traced. And it cannot be said if there have been locked legally or illegally. Yeah, that's just something that that I wanted to add. And another aspect of why the teak of Myanmar is so precious that there are now alternatives like artificial teak. But yeah, it's common sense that natural teak wood is the best teak wood for example, for the decking of yachts. And yeah, in the industry is still very popular and the demand is still very high. And so it is a vital revenue source for the regime.
Brad 16:55
So just just on that, before I start breaking down the the historical element, you have both mentioned specifically, the application of teak in the decking of yachts, and yachts tend to be quite large, I would imagine that the decking of a yacht requires a significantly greater amount of teak wood than, you know, applications such as making furniture or making small sort of handicrafts. But yachts set off a red flag for me, is is the demand fatigue being driven by let's say, affordable luxury, just nice little trinkets that that normal people might like to have on their coffee table? Or is it being driven by the wealthy elite layer in the West? Who have concerns such as, what what am I going to use for my yacht? Is there is there a weird sort of socio economic split here?
Timo Schober 17:57
Now, I think we're definitely talking about the demand of luxury yacht, because if you compare the amount of teeth that you need for decking of, of a packet of Russian oligarch, for example, and compare it to normal furniture, there's a huge difference that everyone can see. So yeah, I mean, I've visited some trade fairs, I think shear show as well. And if you talk to the suppliers there, everyone says that, if you're a millionaire, it was one conversation that comes to my mind. Now, I was speaking to a captain on a fare. And he was walking on the ship. And actually, it is not allowed to go on the ship on a yacht on a trade fair with shoes, because they fear that the teak might be demolished by normal shoes. And he was the captain was telling me that well, if, of course, you can take artificial teeth, and it's possible. But if you're a millionaire, or a billionaire, you want the best, and the best is natural grown teak and they're still in extremely high demand because it's the best product. And that's what is driving the demand.
Brad 19:09
This is I mean, I I've been doing this podcast for a while this is one of the most unusual and, and mind boggling, let's say contrasts that that I've been presented with thus far that we have here. massive deforestation of of a very rare and precious natural resource. And one which is you know, rife with with as you've both mentioned, you know, labor abuses and, and hazards and just we'll get into the criminality but, but definitely underhanded business tactics and sanction busting and on the other hand, we have yachts, the actual symbol of opulent wealth and luxury. It it just seems perverse that it could be possible that that so much sort of destruction and devastation in one country is being driven by something that is so ridiculously niche, and exclusive to the mega wealthy. I'm just having difficulty wrapping my head around this reality, it just, it just seems too absurd. I don't know what to say about that I was genuinely not expecting that I thought it would be, you know, tables and chairs or something like that. But
Shirsho Dasgupta 20:30
so I mean, like, just just take take a step back, you know, me, you, you mentioned tables and chairs. But again, you know, like, if you're buying, like, pure teak table or chair, or like other furniture, like cupboards and stuff, you're probably like, pretty rich, like, even if you're not the billionaire, or even millionaire level, like even that is pretty expensive. So like, you're well off. Now, you know, of course, we're talking about luxury yachts. But which is sort of like, you know, the, the pinnacle, as it were. But, you know, in Florida, you know, just to like, sort of, you know, put put this in context. In Florida, you do have teak also being used in like smaller boats, and smaller yachts, where which may be bought by like, people who are like, still affluent, but not like a millionaire. But, you know, like, you're, you're probably right, and saying that, you know, sort of the demand and the prices is sort of is influenced by the fact that very rich people only want to speak as their furniture, they only want to speak as decks on their luxury yachts. In terms of sort of, like solid data, you know, once these tea products are imported as planks are, generally both in the US and the EU. So after the point of an import, like what happens to these planks, it becomes very hard to trace, like, it's not like we can say that, yeah, this was converted into tables or boats and stuff. But we've seen that most of this is probably going to boats, because the companies which are trading in this in this product, they generally advertise themselves as being suppliers to you know, big boat and yacht manufactures.
Brad 22:46
Interesting. I mean, that's, I was just not expecting that I'm not gonna lie to you, I was just, that's very unusual.
Timo Schober 22:55
I mean, if you look at it from an economic perspective, it's all about the quantity and the revenue you can get. I mean, just imagine, you are doing the furniture and the decking of one huge act, and it's just a huge quantity. And of course, a huge revenue because those people are willing to pay high prices. So generally, almost 100% of the forest in Myanmar are state owned. And so they are not owned by the military, of course in the regime. And when the locks get cut, there are some auctions organized by an association called Myanmar, TEMA enterprise. MT is the abbreviation. And this is, this is where the military regime is getting the money from so because it is owned by them, and if you want to buy as a private company, I mean, of course, there are existing private companies that are dealing with TK, Myanmar, if you want to deal with the locks, you need to buy it directly from the MTU at these auctions. And the problem are kind of a problem is that, for example, in the European Union, and I think in the US, it is the same situation as far as I remember. The MTE so this association that is doing the auctions and organizing the trade is sanctioned. So this specific entity, and the argument of a lot of traders in Europe is well, the empty might be sanctions. But of course I do not buy directly from the empty, but this is not how it works. So they buy it from private companies. So the lock is being cut in the forest that is stained on that it gets to the MTE. And then there are some auctions and it gets bought by private companies, and then those private companies they resell it, and I mean de facto it is not impossible to comply with the sanctions and with the ongoing trade regulations. But as I have I've made the experience that some authorities like customs, they are not able to deal with the sanctions bill because they only look at the empty, and if it is not coming directly from the empty and if it's not written in the documents. They say okay, there is no entity, there is no association that is being sanctioned by the European Union. So it's okay.
Brad 25:16
Okay, so. So once again, opening up a whole bunch of different windows there to look at. So let's, let's look at it in, in sort of the different dimensions. There's the government slash military component, there's the actual industry of logging and teak itself within Myanmar. And then there's the international trade component, the sanction busting. So So you're saying that the actual organizations who are going in and cutting down the wood are owned by the state they're owned by the government is, is that in the post 2021 cu world? Does that mean that the teak industry in Myanmar is effectively owned by the military?
Shirsho Dasgupta 25:58
Yes. Yeah, so from from sort of the the point of cutting in the forest to the auctions, like, every step of the ways, is controlled by the MT, which is a state firm. So you know, right now it's being controlled by by the military, after the auctions, once they go into sort of private hands, so to speak. You know, they can be there. They're generally processed in like sawmills and stuff. But we've heard experts say that, firstly, a lot of these sawmills may also be partly owned by the military or owned by people tied or close with the regime. And, you know, these private companies are also generally tied to the military in some way or the other. Because, you know, again, like, like I'd said, this is a very sort of closed off sector, and historically, you know, you had to be politically connected to the regime and and that has sort of, you know, always in the case.
Brad 27:18
So, during the NLD, government period, 2015 until the coup of 2021, was the any attempt made by the government to remove the people in positions of ownership and positions of control within the tech industry, who have close personal family or financial connections to the military owe their positions to the military and an advocate for the military within the Democratic and industrial sort of sectors that that exist within Myanmar?
Shirsho Dasgupta 27:51
Yes. So there were some reforms introduced, some transparency, some steps towards transparency was taken, you know, there was this document, which was created, which sort of maps out the different processes and like the different points at which, you know, you'd need like paperwork, to prove sort of like the chain of custody, I think that sort of like the term which is used in the sector. And what it essentially means is it you know, like, there will be some sort of trail ideally electronic, but if not, but in the context of Myanmar, it was like a paper trail, which shows that this word came from this forest and passed through the hands of, you know, XYZ entities or people or whatever. But this, the, the sort of results from these steps, were a, it was minimal, because, again, this, this was a paper trail. So, things were easy to forge. And even during this period, you know, some of the heads of like, the entities and even like, empty sections, etc, we're still sort of controlled by the people who are like close to the military. So, you know, it was still like sort of an ongoing process when the coup happened. You know, obviously, changing and reforming an industry which has existed and operated in a certain way for like more than 100 years. It takes time. Right? And we didn't really have the time to see that.
Brad 30:08
Okay, so so that means as as the coup happens, we still have the industry be carried by momentum and legacy, largely in the hands of people who have close personal connections to the military, and who are therefore happy to continue supporting the military through the revenue that they raise. Is that the case?
Shirsho Dasgupta 30:29
Yes or no, in the sense that yeah, like, not everyone was probably close to the military. But there were some people who were, and there were also like, a lot of actors who are like, otherwise, kind of corrupt, and, you know, allegedly had their hands dirty. Right, right. Right. Right. Right.
Brad 30:47
Okay. And so Turning now to the actual industry itself, because I think this is a very important point, like, I know that we have to talk about the the trade, the international trade and the sanctions. And we will, but I don't want to overlook the suffering of the people who actually working in this industry. You're talking both of you have mentioned labor abuses, and specifically, among them child labor, what, what sort of conditions are we are we talking about, it doesn't appear at first glance, it's not something that we would associate with with abuse. When we look at the mining industry, we understand the conditions in which mining occurs, and how that could very easily turn abusive. But the logging industry does not, on face value appear to be an inherently an industry that lends itself to labor abuses. Like that. So what what's actually going on in this industry,
Shirsho Dasgupta 31:50
I don't, honestly, I don't have any sort of first, like, I didn't speak to any person who had like, first hand experience. But sort of my understanding from speaking to experts is that, you know, as I, as I mentioned, there's a lot of drug consumption in these logging camps. These logging camps are located very deep in the jungles, and you know, these kids, sometimes they're not even accompanied by their parents, they work in these camps for months at a time. They have to operate sort of like heavy machinery to sort of cut down the trees. So it this is not like a safe work environment. You know, there, there isn't really much safety equipment, which children or like even adult laborers have in the sector. But but there is like one thing, which we should also sort of take into context is that, you know, we're sort of looking at it from a kind of, you know, Western perspective of labor and human rights, which is fine. But it's not like, children are always forced forced to work in these camps. There are cases like that, which the US labor department cited, but at the same time, like a lot of these children also go willingly because the, the whole country is so poor, and their villages might be so impoverished that, you know, this is the only way they can like earn money for themselves, and maybe also their families so that they can survive.
Timo Schober 33:43
Yeah, if I may jump in here. I mean, we have to be clear that reporting on the ground in Myanmar was not possible, because it would be too it would have been too dangerous for regarding those labor conditions. We have to rely on NGOs and reports. And what they say is that, for example, children under 18 are participating in very dangerous tasks, such as using chainsaws to fell trees. And yes, she has already mentioned drug abuse for children that are presented locking campsites. And yeah, they are also according to the report, there's a high high incidences of injuries and occasional fatalities while they are working in the informal logging sector. But we have to be clear we have to rely on the reporting of the United Nations or several NGOs because we have not been there to the reporting on the ground because because it would have been too dangerous for for reporters.
Brad 34:45
So the other question I have about these camps, teak the logging is often illegal. In fact, the illegal logging industry is one of the primary black market industries in Myanmar along with The, you know, human trafficking, drug trafficking and weapons trafficking and endangered animals and gemstones. And the question is, is there a, is there a danger to these workers? Like when we talk about illegal logging? Are we talking about armed criminal organizations that that come in and, and felled trees? or steal those trees that have already been cut down? Or are we talking about something that's more illegal on a higher administrative level, but it's not actually posing a danger to the people on the ground?
Shirsho Dasgupta 35:34
I think like, it's hard to answer, I think it's probably a bit of both. Because I, I've heard from, like, people I spoke to in Myanmar, who said that, you know, on one hand, there is sort of illegal logging, which is then mixed up with the sort of legitimate, you know, official sort of supply chains at some point in the process. So sort of the legitimate t becomes, quote, unquote, legitimate tick. But at the same time, you know, some of these, in some areas, you do have, especially right now, you might have the military operating some camps directly. And, you know, historically, we've also seen instances of some of the armed ethnics, ethnic groups who also like operate some logging camps. And then these logs are smuggled into China or India.
Brad 36:46
Interesting. Okay, so let's then jump to the international component of this. So what has happened post coup? Obviously, we've seen a lot of sanctions coming from the United States, and a lot of sanctions coming from the European Union. How have these affected the the tech industry as the tech industry also been actually targeted by the sanctions? Or? Or has it's just sort of been left to the side?
Timo Schober 37:21
Yeah, as I have already mentioned, in the sanction of the European Union, empty so the Myanmar team enterprise has been targeted. And if you look at the trade statistics on the official trade statistics in the EU from from Euro stat, you can see that the import of teak and teak from Myanmar especially, has definitely been declining, since the sanctions have taken place. But it has not disappeared, because the demand is still there. What what has actually happened is that some companies in the industry have found new ways to import teak. So there have been in Europe there have been several cases where one company in the country with poor law enforcement in comparison to other member states of the European Union, was importing the teak, sometimes directly from Myanmar, sometimes through third countries, from a third country state like India, or Thailand, etc. And the problem is that when in Europe, a company is doing that, and one, for example, one customs agency is failing to do a proper due diligence and the tick is in the European Union, there will be no longer control because when it's one once it has entered the European market, there are no longer controls. Because it is it is free to trade because it's a free trade zone. So I guess, speaking from a European perspective, the demand is still high. The trading has been declining. But it is still possible to get teak via Myanmar, although it is becoming more difficult. Also, because especially after the coup, a lot of authorities are aware of of these schemes and the law enforcement is becoming more strict
Shirsho Dasgupta 39:22
for our analysis of sort of trade data from the United Nations, Myanmar mean, at least 400 million in timber in timber exports since the coup and a fifth of that came from the combined sort of sanction markets of the US and the EU. In terms of like the US. You know, we haven't really seen any decline. So, as I said, you know before 2014 like things were trade was very restricted anyway, so things only started being or being opened up after that. So if we look at sort of trade data from the US Bureau of Economic Analysis with sort of, you know, our records, import values from 2013 to 2022. You know, trade in wood products from Myanmar sort of peaked in 2019, at like 20 million, but in 2021, and 2022, it was like 14 point 7 million each year. And that is only the sort of second place in the last 10 years. So we haven't really seen much of an effect of the sanctions. nearly 6 million pounds of timber from Myanmar entered the US after the sanctions. And the total value of this is, you know, currently around $25 million dollars.
Brad 41:11
So, you'll see nearly 3 million tons of would have gone to just the United States alone.
Shirsho Dasgupta 41:19
6 million.
Brad 41:21
You said 6 million pounds.
Shirsho Dasgupta 41:22
It's like oh, yeah, yeah, then it's like, but it's metric tons. Yeah. I don't think it's like divided by two. I'm not sure.
Brad 41:33
Yeah. 2.2 is it doesn't matter. But you're saying so you think $400 million since the coup alone,
Shirsho Dasgupta 41:41
which is and the US and EU combined? Yeah. In the Yeah, sorry. Sorry. For 400 million globally and 20% of that in the US and EU
Brad 41:55
so so effectively in the last two years. And what is that five months? Approximately $18 million of teak has been transported in violation of sanctions to the United States and to the European Union. Is that Is that the correct statistic?
Shirsho Dasgupta 42:17
Yeah. We don't know whether it's like a violation proper. Because, you know, as Timo mentioned, there are ways of getting around the sanctions. But yeah, we can say like after the sanctions were imposed. This that is sort of the figure.
Brad 42:34
So you're saying that we can take the teak from Myanmar, if we take that Myanmar, teak, and we transport it to the European Union? That would be illegal. But if we take the teak and we transport it to a third country, and from there we transport it to the European Union, now it can become legal that that sounds exactly like money laundering, but with wood. How is that legal? Like how does that not still count as a sanction busting?
Timo Schober 43:06
Now, actually, I have to correct maybe I was, I was a bit unclear, it is still illegal. So okay. Because due to the sanction, it is not possible to legally imported, it is just the way if you wish to get it by a third country, it is just a way to deceive the authorities. And of course, it is harder to check. And it's harder to do a proper due diligence control and it is still illegal. And as I have already said 20 minutes or something like that ago, already in 2017. Countries like Germany, have concluded that it is not possible just because of the European trade regulation, to import teak from Myanmar legally, because illegal harvesting the level of illegal harvesting is that high? Yeah, it is definitely not legal. It has in some countries been illegal before the sanctions. And the coup has taken place,
Brad 44:04
which is very heartening to hear. And that's good. But then the question is, is there anything that can be done to prevent this if if you have shipping by a third country, I presume that third country would have to be a country that itself is a teak exporting country? Otherwise, would it not raise eyebrows to say, here is a shipment of teak coming from a country that famously does not have forests? Or are people not investigating at that depth?
Timo Schober 44:34
Yeah, sure. That's India, for example, because they have also natural growing teak there. But something that is very popular among importers is that they say that, yeah, you're right. It's teak from Myanmar, but it has been locked before the coup. So it's illegal. If you take free countries for European countries before the coup, you have free legal opinions. And that that was the problem because it has not been illegal in Europe. Some countries have said, yeah, it's easily illegal. Some countries said no, it's still possible. And so this is something what is common sense generally, in the European Union, it is not possible to trace the locks until they have been locked. So it depends a bit on the authority. And something that is, you can say funny, or it's pretty crazy. That despite, it is definitely illegal to import tea, or it has been in 2022, the European Union respectively euros that has official statistics, where you can see the tick of Myanmar is still being imported into the EU.
Brad 45:39
So they know, then they know that this is happening. Yes, they do. Is anyone doing anything?
Timo Schober 45:47
depends on your point of view. I would say posted from our experience during the research that in some countries, the authorities are aware of the problem. And they are aware what it means if you have an import from Myanmar. But there is one specific case that comes to my mind, that is a really good example of how authorities are sometimes not able to deal with this issue. So in general, in Europe, you can if you want to import a good into the European customs area, you can import it anywhere. So for example, you're in Germany, and you want to import the goods. But you can declare it already in I don't know, let's say Estonia, because it's the same trade zone. So, and that is one of the schemes, there have been extra from from from Austria company, I hope it does not get too, too difficult now, and Austrian company has had a subsidiary in Poland. And this subsidiary in Poland, as ora teak. And actually it was imported into the EU in Estonia. And then it passed the whole way to Poland. And it went also through Germany. And they had to declare it. And but they said, okay, the teak is being brought to Poland. And the German authorities when they heard about this case, they immediately informed the authorities in Poland. But they also got notice of this. But it took so long until they started to examine this particular case that the teak has already been sold to, I don't know who. So the tea, therefore it is they knew that there was an import of tea, that was probably illegal. And they also make an examination, but it was just too late. The tea was already sold.
Brad 47:40
So we can just because of the four freedoms within the European Union, we can just exploit member states who have sort of less less developed, or slower bureaucracies and slower investigative mechanisms and just go into those countries openly committing a crime. But being able to move out of that jurisdiction before law enforcement is able to do anything.
Timo Schober 48:08
Yeah, exactly. There was also a case in Croatia, there has been a company that was important, teak, and it was kind of the drug dealer. Let's take it back. He was kind of the dealer for several European countries, because this particular company that was really important tons of teak, worth millions of euros, it did not even have an own warehouse. So it was not even stored in Croatia, it just got declared in Croatia, and then it might went directly to Germany to Italy, etc. And that was how it worked for a long time. They were to have been similar cases in Italy, for example. And that's basically the scheme that European companies have been using to circumvent sanctions.
Brad 48:54
That's I mean, that's absurd. With I'm wondering, is there any way to tell but if you're presented with with a piece of wood, is there any way to tell number one, how long ago was this wood cut down? And number two, where did this would actually come from? Like, is there any scientific examination that we can perform?
Timo Schober 49:15
Yes, yes, that's also some thing that authorities has been have been doing in Germany when they were investigating one wholesaler. And that's actually what they have been doing. And it can be, it cannot be saved with 100%. But like with a very high probability when it has been cut and varied comes from. If you declare, if you declare a booth at the border of your opinion, this is not being done. This is only a special investigation thing.
Brad 49:43
So that's what I was going to ask then considering the nature of teak considering the fact that that, you know, the numbers that Yeshua has given us, indicate that $18 million have been transported to the US and the EU in violation of sanctions. That Just in the last two and a half years, wouldn't that make it important enough to automatically put a freeze on all TK imports into the zone, until such time as they can be they can be properly examined? Or is that just going to be far too disruptive to pull off?
Timo Schober 50:17
Might will definitely not happen that every tick import is going to be examined that way, because it's just too expensive. And I think that's a political question. That's something that someone else needs to answer.
Brad 50:31
Depressing. So let's let's turn into to show and enter the United States context. The United States is not like the European Union, the individual states of the US do not have, as far as I know, independent trade relations, and independent customs regulations. So how are people getting the tick into the United States if they can't exploit the same loopholes that the European Union presents?
Shirsho Dasgupta 50:59
So I think, for for the US, it's basically a resource and a problem of priority. So, you know, investigating sanctions violations, generally falls on the small agency, which is part of the Treasury Department called the Financial Crimes Enforcement Network, or FinCEN. Now, we know from like prior reporting about FinCEN, that they are understaffed. Now, on top of that, you know, some experts we spoke to including former FinCEN and Treasury officials said that the sort of veritable avalanche of sanctions against Russia due to the war in Ukraine is probably sucking up all of the resources right now. Secondly, the volume of trade that the US does with Myanmar is tiny compared to like many other big countries, right. So enforcing complicated sanctions and investigating violations on products with small trade volumes and whose consumers honestly may be politically influential. And you know, financially well heeled, is probably not a priority right now, unfortunately. Having said that, I think around a month ago, the Justice Department did announce a special interagency task force called the timber working group to combat illicit world trade. So maybe hoped we will see some action in the near future. We don't know if any of the world traders who have imported Myanmar tea to the US after the sanctions if they've been investigated, it is possible that that is happening. Justice Department does not confirm or deny ongoing cases generally. And there is also the possibility that a special exemption has been granted for these imports. That has happened before. But when we reached out to the government to these companies, that we reported on, and to like these, the trade associations, which represents them, none of them would say whether they had received an exemption, so we just don't know there is a lack of clarity on that. And and again, you know, like, why there is seemingly no action right now is probably because of the war in Ukraine, honestly.
Brad 53:48
Okay, so, with with this in mind, due diligence requires that we pose this question and I'm apologize in advance for asking for conjecture on something that you can't possibly be in a position to, to say with certainty. But the companies that are importing the Myanmar tick, just as many companies who import goods in violation of sanctions or in violation of ethics, is there a possibility or what is the likelihood that these companies are simply so large, that they're not internally making the connection? They're not consciously aware of the fact that they are importing tea from a country where it's unethical to do so? Or that they're importing teak in in a way that is potentially even criminal? I mean, certainly, in the European context. What what Timo was saying, having a dealer going through Poland or going through Croatia, those people obviously know that they're committing a crime Otherwise, why would they do that but with other commodities we've discussed on this channel for example, aviation fuel, the possibility lingers, that some kind Companies are unaware of the impacts that they're having and unaware of the fact that what they're doing is illegal or immoral, until it's pointed out to them. Have you had any interaction with companies? Can you speak at all to whether these companies are aware of what they're doing? Or whether there's just a misunderstanding?
Shirsho Dasgupta 55:17
So I've had limited interaction with some of them, with a couple of them. Actually, they did not answer too many questions. And most of them did not answer our sort of detailed questions that we'd send prior to publication. But it's, I mean, it is possible that they don't know. But I think like at a basic level, you know, I obviously I cannot speak to like, what they think about it in terms of morals or ethics. But in terms of sort of the legalese involved in this. They don't think it's illegal, because, according to them, they bought the stake before the sanctions were imposed, and it was lying around in warehouses in private hands. And it was only due to sort of supply chain issues due to COVID that they're receiving these shipments now. But having said that, again, you know, the sort of former Treasury officials we spoke to, who sort of looked at the language of, of the sanction or regulation that was issued, they firstly clearly said that a the date does not matter. And that was how this specific sanction was denied. What was designed sorry, that the date of purchase would not matter. And secondly, you know, even if it's even if you sort of take for granted that your word is lying in warehouses, in private hands, outside the purview of the MTA, you know, from just like a due diligence perspective, it's like, yes, but it's still in Myanmar, it's being exported through the ports of Yangon. And, you know, we don't some of the terminals we know are controlled by people close to the military are directly controlled by the military. It's like, these should be raising red flags, like do you really want to risk prosecution? I like it just seems from due diligence perspective, it just seems very risky. Like, you know, we have to keep in mind that if an entity is found to have violated Treasury sanctions, there are civil and criminal penalties which can exceed several million dollars and bring up to 20 years of prison time. And another risk of ignoring sanctions is that violators properties and assets might be frozen if the Treasury Department deems it to be related to a prohibited prohibited transaction. So, you know, it just seemed from a due diligence perspective too risky. But you know, the word traders, if you ask them, they will just say that, you know, we're not doing anything wrong, because we bought this board, like we placed the order for this word, long before the sanctions were imposed.
Brad 58:51
Fair enough. And I want to check in with Timo as well, have you had different experiences with different companies? Or have you been interacting with the same companies Sher Shah has
Timo Schober 59:01
now had interaction with different companies and most of the companies were denying any wrongdoing, especially in Germany and in Europe. But the case were which I've been telling some minutes ago, like this import to Poland, from the from the Polish subsidiary of an Austrian very huge wood company, actually, when we confronted them, they admit the wrongdoing and they said it was their own mistake. And actually, they said it was the mistake of one of the workers, but they admitted everything and said it should not happen again. So at least something
Brad 59:39
I mean, that's comforting. So then, my question following on from that, and this is, I'll start with you as you're looking at the US context. What is it that should be done and what is it that could be done in order to limit this because 10s of millions I mean, you're saying a $14 million industry since the coup that's, that's, that's going to buy a lot of bullets, it's going to buy, you know, a lot of guns, and ultimately, it's going to pay for a lot of civilians to be killed. So this is this is a problem that must be solved. What is it that we can actually do? Starting with the US context to try and stem this this trade and therefore stem the flow of money to the military?
Shirsho Dasgupta 1:00:24
Okay, so it's not 14 million, it's 400 million.
Brad 1:00:28
I'm sorry. My mistake.
Shirsho Dasgupta 1:00:30
But yeah, I think, you know, obviously, enforcement and investigation lightly like Timo said, you know, a few sort of route, the route route the, your sort of supply chain through several countries, it makes it harder to track, which means that if you have, if you have to investigate it properly, you know, it requires more time and resources. So, there's that. But, you know, at a basic level, you as we all know, enforcement can only go so far, I think, you know, advocates that we spoke to both who are engaged in sort of like the environmental and con conservation fields and also pro democracy activists in Myanmar, you know, all of them basically say that, you know, like enforcement, yes, obviously, but we have to sort of raise enough awareness about the issues surrounding this product, so that there is like a fault consumer demand. Because as long as there is like a demand on the consumer side, even if you like, enforced, stringently, even if you like, go for outright bans, and staff, you know, there will be ways in which this product is procured.
Brad 1:02:00
So, basically, all we have to do is to get billionaires to stop caring about the third world.
Shirsho Dasgupta 1:02:09
Yeah, I guess so. Yeah.
Brad 1:02:10
Awesome. Awesome. That that fills me with so much hope. So, Timo, same question, but for the European perspective, is there anything that we could be doing or should be doing to stem this this trade?
Timo Schober 1:02:26
Well, I think it's a pretty hard question. I think it is important that the authorities are aware of what an import of Myanmar tick means. Like that this is something that is actively financing a very brutal regime with human rights abuses, etc. And I guess it would be, especially from a European perspective, it would make more sense to make a total ban of Myanmar tick important not only to import the Myanmar, TEMA enterprise, because in my opinion, and in the opinion of a lot of expertise is not a loophole. But a lot of companies are trying to use this construction as a loophole. And I think it would be just, it would be very clear also for your authorities that it is not possible to import Myanmar tick legally. And I guess this would be something that would be very helpful. But of course, this is something that policymakers need to decide and what we cannot decide.
Shirsho Dasgupta 1:03:33
I think, you know, we spoke about sort of, you know, the story behind the scenes on how tea is produced, and the sort of ramifications and effects it has on the workers and the environment. And right now, you know, it is financing a very brutal regime as Timo said, but I think we also need to keep in mind that there are other products like this as well. There are conflict diamonds there, you know, gold mining in the Amazon. So, you know, a lot of luxury products that we sort of covered, they do lead to conflict, that the destruction of an of the environment and we should sort of keep in mind that, you know, be are also complicit in that even even if we're not buying Teague, we might be complicit in in other ways when we buy these products.
Brad 1:04:36
Very true. And Timo same thing. Is there any final thought you'd like to leave for our audience?
Timo Schober 1:04:42
Yeah, actually, Ashish was taking my foot. Thanks for that. No, I just would agree 100% With with your show and just I would just like to tell anyone if you're buying a product that has do something to do with T I try to look at it when it comes to specifically and always keep in mind that if it's natural teak it is, it might be very likely that it is sourced originally from Myanmar. And this is revenue for a brutal military junta that is actively shooting down its people.
Host 1:05:37
After today's discussion, it should be clear to everyone just how dire the current situation is in Myanmar. We're doing our best to shine a light on the ongoing crisis. And we thank you for taking the time to listen. If you found today's talk of value, please consider passing it along to friends in your network. And please also consider letting them know that there is now a way to give the supports the most vulnerable and to those who are especially impacted by the military's organized state terror. Any donations given to our nonprofit mission that are Burma will go to the vulnerable communities being impacted by the coup. If you would like to join in our mission to support those in Myanmar who are being impacted by the military coup, we welcome your contribution in a form currency or transfer method. Your donation will go on to support a wide range of humanitarian and media missions, aiding those local communities you need to post donations are directed to such causes as the Civil Disobedience movement CDM families of deceased victims, internally displaced person IDP camps, food for impoverished communities, military defection campaigns, undercover journalists, refugee camps, monasteries and nunneries education initiatives, the purchasing of protective equipment and medical supplies COVID relief and more. We also make sure that our donation Fund supports a diverse range of religious and ethnic groups across the country. We invite you to visit our website to learn more about past projects as well as upcoming needs. You can give a general donation or earmark your contribution to a specific activity or project you would like to support. Perhaps even something you heard about in this very episode. All of this humanitarian work is carried out by our nonprofit mission that Oberman and the donation you give on our insight Myanmar website is directed towards this fun. Alternatively, you can also visit the better Burma website better burma.org and donate directly there. In either case, your donation goes to the same cause in both websites except credit card. You can also give via PayPal by going to paypal.me/better Burma. Additionally, we can take donations through Patreon Venmo GoFundMe and Cash App. Simply search better Burma on each platform and you'll find our account. You can also visit either website for specific links to these respective accounts or email us at info at better burma.org. That's better Burma. One word, spelled b e t t e r B urma.org. If you'd like to give it another way, please contact us. We also invite you to check out our range of handicrafts that are sourced from vulnerable artists and communities across Myanmar. Available at a local crafts.com Any purchase will not only support these artists and communities but also our nonprofits wider mission. That's a local crafts spilled a l o ka crafts one word a local crafts.com Thank you so much for your kind consideration and support.
1:09:05
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