THE COURT REPORT
Forest Authority abusing the law to defeat 1991 reforms
In 1989 the Barnett Commission of Inquiry passed damning judgement on the conduct of the logging industry and state of forest management in Papua New Guinea.
Corruption, human rights abuses and unsustainable logging were rife. Foreign-owned logging companies were described by Justice Barnett as acting like robber barons:
It would be fair to say… they are now roaming the countryside with the self-assurance of robber barons; bribing politicians and leaders, creating social disharmony and ignoring laws in order to gain access to, rip out and export the last remnants of the province’s valuable timber.
In response to the Commission findings a new law governing forest management was formulated and the Forestry Act 1991 was unanimously passed by Parliament.
Gone was the old Department of Forests, gone were the colonial concepts of Timber Rights Purchase Agreements (TRPs) and Local Forest Areas (LFAs).
In their place would be a new PNG Forest Authority to oversee governance, and the National Forest Service to implement the new laws.
Together these bodies would formulate a new sustainable National Forest Plan. In the future all new large-scale forestry operations were to be set up and managed as Forest Management Areas. These areas would involve agreements signed by the local landowners and the State who would then put the timber rights out to tender and monitor the logging operations. All this was designed to ensure full landowner consent and engagement and sustainable harvesting levels.
Fast-forward almost 30-years and we find that the Forest Act 1991 has been largely ignored.
Yes we have the PNG Forest Authority in control rather than the old Department of Forests, but the same corruption, human rights abuses and unsustainable forest management methods have all continued unabated.
One key contributing factor is the PNG Forest Authority. It has totally failed to make the shift from administrating forest operations under the old colonial era TRPs and LFAs to the new Forest Management Areas.
The statistics are shocking.
In the 10 years from 2009 to 2018, more than 20 years after the 1991 Forestry Act, 55% of log exports still came from old TRP and LFA areas under agreements signed by local landowners more than 50 years ago.
Only 19% of exports come from ‘new’ Forest Management Areas developed under the 1991 Forestry Act.
The rest of the exports were authorised under Forest Clearance Authorities (25%), many issued as part of the notorious SABL scandal, and Timber Authorities (2%) issued for road-line clearances.
And the problem is getting worse, not getting better.
In 2018, log exports for the whole country rose by 25%, from 3.2 million cubic metres to 4 million.
The bulk of this increase came from the pre-1991 TRP and LFA areas.
Log export from TRP areas were up over 500,000 cubic metres (53%) on 2017 and from LFA’s 35%. The increase from the post 1991 FMA areas was just 14% and FCAs 4%. Log exports from TA areas were actually down 17%.
How is any of this legal you might well ask. Well it is not, as a recent court case clearly demonstrates.
The National Court decision in Dengnenge Resources Development Limited -v- Vanimo Jaya Limited exposes how the whole rotten scam is being facilitated by the PNG Forest Authority acting on behalf of foreign owned logging companies.
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The Open Bay Consolidated TRP
The Dengnenge Resources case centres on a large-area of customary owned forest in the Open Bay area of East New Britain. In 2017 the traditional owners decided to challenge the legality of two new logging permits granted over their land to the logging company Vanimo Jaya Limited by the PNG Forest Authority.
The landowners claimed the permits were unlawfully issued in breach of the Forestry Act and without their consent.
The history dates back to 1967 and 1968, when seven Timber Rights Purchase Agreements (TRPs) were first signed. The agreements were executed between the Colonial Administration and clan agents representing the landowners.
Each of the agreements was for a term of 40 years and expired in 2007 and 2008.
Collectively the seven TRP areas were known as the Open Bay Consolidated TRP project.
Two timber permits were issued over the areas covered by the agreements to Open Bay Timbers Limited. Firstly TP 15-50, and subsequently TP 15-53.
In 2016, despite there never having being any valid extension of the underlying TRP agreements, Vanimo Jaya Limited applied to the PNG Forest Authority for an extension of the two Timber Permits.
The Forest Authority seemingly saw nothing wrong and the two timber permits were duly extended and granted to Vanimo Jaya Limited in August 2017 under Section 78 of the Forestry Act.
Section 78 provides that the holder of a timber permit may apply for an extension or renewal of the term of the permit.
As the Court noted, Vanimo Jaya was not the holder of the two Timber Permits at the time they expired in 2007 and 2008. Can a person who is not the holder of a timber permit apply for an extension under Section 78? No said the court.
The court held that the seven Timber Rights Purchase Agreements covered by Timber Permits TP 15-50 and TP 15-53 survived under Section 137 of the Forestry Act 1991 until they expired in 2007 and 2008.
Section 137 provides that all timber permits, and timber rights purchase agreements, valid and in force immediately before the installation of the new Forestry Act, continued to have full force and effect for the granted duration.
As the court noted, the purpose of Section 137 was ‘to ensure the smooth transition and continuity of agreements and permits that had been entered into under the repealed Act’.
When the seven TRP agreements expired in 2007 and 2008, the land reverted back to the plaintiffs as the traditional owners of the land. The agreements were never extended
As the agreements had not been extended prior to their expiry they ceased to exist when their term finished. Once that happened no person could have qualified to apply for any of the agreements, or the two Timber Permits, to be extended.
Therefore the two Timber Permits granted by the PNG Forest Authority to Vanimo Jaya were unlawful and in breach of sections 78 and 137 of the Forestry Act.
The two Timber Permits were also ruled unlawful because the PNG Forest Authority had failed to secure the consent of all the landowners as required by Section 46 of the Forestry Act, before granting the extensions
The two Timber Permits were declared null and void.
Vanimo Jaya was ordered to immediately cease all its operations in the permit areas. It was given 28 days to vacate the land.
The TRP agreements and the Timber Permits expired and ceased to exist in 2007 and 2008.
It was therefore not possible for anyone to apply for an extension of the Timber Permits in 2016 and 2017.
In any event, the Timber Permits could not lawfully be extended unless there was also an extension of the underlying TRP agreements, but no application had been made to extend the agreements.
And anyway, the company that applied for and received the extensions was not even the holder of the original permits when they expired.
Vanimo Jaya was therefore not qualified under Section 78 and Section 137 of the Forestry Act to apply for the extension of the Timber Permits.
And to top it all off, the PNG Forest Authority had failed to take any steps to obtain the consent of the rightful landowners before extending the Timber Permits and granting Vanimo Jaya the rights to harvest logs on the Plaintiff’s land.
How could the PNG Forest Authority have possibly thought what it was doing was legal?
Who is Vanimo Jaya Limited?
Vanimo Jaya Limited was registered in 1992 as a shelf company, Celtex No.1 Pty. Limited. It changed its name to Vanimo Jaya Limited in September 1998.
The company began operating in 1999 and by the end of its first year was involved in logging, saw milling and barging. According to the company’s annual return for that year it had assets of K1.5 million and 180 employees.
By the end of 2017 those assets had grown to K88 million but, peculiarly, the number of employees was still exactly the same as in 1999, 180. See Vanimo Jaya Annual Return 2017
The company is owned by a group of nine Malaysian businessmen. The largest shareholder is Ngie Yung LAU who owns 39% of the company. Tiong Ding KUONG owns 19% and Toh Heng LU and Tung Mei SII own 10% each.
The other shareholders are Ngik Chiew LAU, Wang Ping KO, Huat Ping TING, Keng Ping LAW and Pang Heng CHEW.
According to data collected by the monitoring company SGS, in 2018 Vanimo Jaya was responsible for 7.6% of all declared log shipments from Papua New Guinea. Those shipments totalled 307,532 cubic metres in volume and had a total declared value of K91.5 million.
The logs were harvested from a total of six forest areas: Bewani Finchin (LFA West Sepik), Feu Agriculture Block (TA / West Sepik), Hinuke Agriculture Block (TA / West Sepik) , Danfu Blocks 12-15 snd 18 (TRP / New Ireland) , Dengangi and Simbali TRP and the Makapa Timber Area (TRP / Western Province).
The Bewani, Feu and Hinuke logging operations are managed by Vanimo Jaya associated company Border International Timber Co. Limited and the Danfu operations by Sentawan (PNG) Limited.
Vanimo Jaya has previously operated in these areas:
- Aiatape West (FCA) in West Sepik,
- Ulamona (TA and TRP / WNB), the Numbing Agriculture area (TA / West Sepik) and Surali Rasirik LFA in New Ireland
- West Gaidasu TRP in Central (through another associated company Mekar (PNG) Limited)
- Tatau Mining Lease TA in New Ireland, through associated companies Niugini Forest Planning and Management Limited and Tactical Service Limited (Morevona TA / WNB and Maututu TRP / WNB).
According to Investment Promotion Authority records, Vanimo Jaya is also the owner of the PNG registered companies Eco Palm Limited, Pelangi Subur Shipping Limited, Sterling Investments Limited and VJ Travel Services Limited.
Sterling Investments owns Moresby Bearing Limited.
Eco Palm, in partnership with One-Uni Development Corporation, owns Aitape West Palm Oil Limited.
Vanimo Jaya was one of a number of foreign-owned logging companies censured for its role in the Special Agriculture Business Lease (SABL) scandal.
The SABL Commission of Inquiry revealed that in 2006, Vanimo Jaya received a 99 year SABL over 47,626 hectares of land known as Portion 248C in West Sepik.
Although the lease was initially granted jointly to Vanimo Jaya and a local landowner company, One-Uni Development Corporation, the landowner company subsequently sold its share to Vanimo Jaya for a mere K2000.
Chief Commissioner John Numapo described it as “… one of the cheapest land sale in modern times” and “the most reckless act any landowner chairman could commit”.
The Commission recommended the chairman, Ignaz Aro, be criminally charged for forgery and fraud.
Not only was the transfer of the landowners share the bargain of the century it was also illegal. The Land Act forbids the transfer of title over customary land to a foreign company.
The COI did find there was credible evidence that Vanimo Jaya was taking steps to uphold its commitment to establish an oil palm plantation and up to 200,000 palms may have been planted. However, logging had already consumed a much larger area of forest. Rather than proceeding in 500 hectare blocks as stipulated in the Forestry Act, Vanimo Jaya had been logging in 5,000 ha blocks.
The COI recommended the immediate revocation of the SABL title so the whole transaction could be properly reviewed and renegotiated.
PNG, the golden goose for Malaysian interests
Forestry rights over land at Open Bay area of East New Britain were originally handed over to private interests by the former colonial power, Australia.
The colonial era legal regime was swept away following the logging industry’s bruising encounter with the Barnett Commission of Inquiry.
Responsible and sustainable logging for the benefit of Papua New Guineans was the policy moving forward, or so it seemed.
Since the passage of the Forestry Act 1991, the country’s precious timber resources has remained under a sustained assault, primarily by Malaysian companies, in an epidemic that can only be described as neo-colonial in nature.
Timber in Papua New Guinea is on the one hand immiserating impacted landowner communities, and on the other, enriching companies owned in large part by Malaysian interests.
It is gross and egregious contradiction, the owners of the resource are suffering as a result of the latter’s global market value, while offshore individuals are raking in the lion-share of benefits.
All this is being done with the connivance of national officials, who have overseen illegal regimes of forestry resource extraction.
Marape has promised PNG will become the richest Christian nation. One wonders what Jesus would have made of a nation rich in earth’s natural bounty, destroying its birthright and giving its riches away to offshore interests who breach laws of all stripes …
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