Woodlark Island Logging Scam Part 1: Ebony Woods
A foreign owned company, Kulawood Limited, has applied for a permit to clear 30,000 hectares of forest on Woodlark (Muyua) Island under the guise of an agriculture and tree planting project.
The company says logging will be followed by the establishment of tree, rubber and cocoa plantations. However, many of its claims about the project do not stand up to scrutiny. Furthermore, its application is riddled with errors, inconsistencies and false information.
Woodlark’s forests include stands of the highly prized ebony tree and the proposed logging permit boundaries enclose the whole island, some 77,000 hectares in total.
The proposed logging will yield, it is claimed, 840,000 cubic metres of logs. Those logs will be worth around US$87 million (K282 million) on the export market at current prices; much more if the valuable ebony trees are included.
But the details of where exactly the logging will occur and how the plantations will be established are vague. Added to this the suitability of the island for such plantations is highly debatable. An assessment conducted by the Department of Agriculture (DAL) recommends completely different crops. Just as serious, the logging company’s claims to be locally owned are false and the so-called ‘landowner company’ is privately owned by a single individual.
These serious irregularities must be set against the backdrop of widespread logging scams exposed by the Commission of Inquiry (COI) into the Special Agriculture and Business Lease (SABL) scandal. The COI found government departments were failing in their duties to properly vet and approve applications for long term agriculture leases that were often being used as a cover for large scale logging operations.
As the chief Commissioner explained:
With corrupt government officials from implementing agencies riding shotgun for them, opportunistic loggers masquerading as agro-forestry developers are prowling our countryside, scoping opportunities to take advantage of gullible landowners and desperate for cash clan leaders [Numapo, p242]
PNGi’s investigation into the Woodlark island logging proposal has not uncovered evidence of illegal leases. However, it does reveal that the SABL COI has not put a stop to the practice of agriculture being falsely used as a pretext for logging. Our investigation also shows that government authorities are still failing to properly assess such schemes and ensure the rights and interests of landowners are protected.
The good news is, in this case the logging has not yet been given final approval. Therefore, the opportunity exists for the National Forest Board and the Forest Minister to step in and ensure the application is rejected.
With the eyes of the world increasingly on PNG as the APEC Leaders Summit approaches, the proposal for logging on Woodlark Island could be a litmus test for the government. Is it serious about its international commitments to good governance, the protection of human rights and sustainable forest use?
This PNGi investigation report is being presented in four parts. Part 1, below, looks in detail at the local project partner, Ebony Woods Limited. Part 2 will examine the details of the DAL assessment process and project approval. In Part 3 PNGi will present an analysis of the logging permit applicant, Kulawood Limited. Part 4, will examine how the rights and interests of customary landowners have apparently been bulldozed.
What's in a name?
The name Ebony Woods Limited appears prominently across all the documentation for the Woodlark Integrated Agriculture and Forest Planation Project.
- Ebony Woods Limited is the company named in the project approval letter issued by DAL on 24 March 2017;
- Ebony Woods Limited is the name that appears on the Certificate of Compliance for a Forest Clearance Authority, also issued on 24 March 2017;
- Ebony Wood/Woods Limited is the company named in a letter of consent issued by the Samarai Murua District Development Authority on 23 November 2017;
- Ebony Woods Ltd is the company repeatedly named in the FCA Project Proposal submitted by Kulawood Limited to the PNG Forest Authority in February 2018.
However, according to the records of the Investment Promotion Authority (IPA), there is no such company as Ebony Woods Limited. The closest match on the IPA database is an Ebony Woods Investment Limited.
The sole shareholder and director of Ebony Woods Investment Limited is Samson Siguyaru. A Samson Siguyaru is also named in the DAL Project Assessment Report as an ‘investor’ for the ‘Agro-Forest Project on Woodlark Island’.
According to Department of Agriculture officers, Mr Siguyaru was kind enough to fund ‘accommodation, meals, transport (air and land) and all arrangement done’ for the three-man DAL assessment team from Port Moresby. [Assessment Report, page iv]
So it appears reasonable to hypothesise that the company referred to in all the official documentation as Ebony Woods Limited is really Ebony Woods Investment Limited.
Ebony Woods Limited or Ebony Woods Investment, the point may seem like a small one but it could be important when it comes to legal liability and the enforceability of contracts.
The difference in the names also points to another important failing. Nobody from the government agencies, it appears, has thought to take the basic step of checking IPA record to establish the bona fides of a company proposing to undertake a multiple million kina project. This is a project that will directly impact the lives of the more than 8,000 people living on Woodlark Island.
Failing to undertake such basic due diligence would appear to be a serious derogation of duty. Especially once we dig a little deeper into the IPA records.
A close examination of those records reveals that, at the time approval letters and a certificate of compliance were issued, the company Ebony Woods Investment Limited did not exist!
When was I born?
The company now known as Ebony Woods Investment Limited was first registered in 2013 by Joseph Ken under the name ‘Boss Airways Limited’. Ken was the sole shareholder and director at that time.
The shares in Boss Airways Limited were transferred to Samson Siguyaru on 1 July 2017. On the same date, he was appointed a director, replacing Joseph Ken.
One of Siguyaru’s first actions as Director was to sign a board resolution approving a change of company name as the firm ‘will be developing Timber Prospects in the Milne Bay Province‘.
On 14 July 2017 an application form was completed and signed requesting to change the name of Boss Airways Limited to Ebony Woods Limited. The application was duly lodged with the IPA on 10 August 2017.
So, on the 24th of March 2017, the date DAL issued a project proposal approval to Samson Siguyaru, Chairman of Ebony Woods Limited, not only was there no company of that name in existence, Mr Siguyaru was not the owner or a director of the company Boss Airways that would later become Ebony Woods Investment Limited.
Did DAL make no effort to check whether any company with the name Ebony Woods even existed?
The DAL approval letter issued to Ebony Woods Limited states the Department has completed a “technical assessment and economic analysis” of the project proposal.
Clearly, as we have seen above, that technical assessment did not include a check to see if the company proposing the project actually existed. But surely the economic analysis would examine the financial status on the company?
According to IPA records, Ebony Woods Investment Limited has never filed an annual return and therefore has no registered assets or employees on public record. Despite this, the DAL assessment report confidently asserts ‘the investor [has] also shown financial strength’ [page 13]. There is no evidence presented or referenced to in support of this assertion. Except, of course, the startling admission that Mr Siguyaru funded the DAL team’s trip to Woodlark.
This is not an inconsequential matter. In serious cases brought before the Courts, omissions, failures and falsehoods with respect to corporate disclosure, have been identified as signposts for potential corruption – the case of Eremus Wartoto and Travel Air Limited being a stand out example.
In the instance of Ebony Woods, no allegation has yet been made of corruption. But these irregularities are nonetheless worrying.
Is it acceptable that DAL has approved a multi-million kina project that will impact the lives of thousands of people when the proposal comes from a company, which at the time was not registered, and which has no disclosed assets or staff, and which has never even filed an annual return?
Landowner company or not?
The DAL approval letter for the Woodlark ‘Integrated Tree Farming & Agriculture Development Project‘ repeatedly refers to Ebony Woods Limited as a ‘landowner company’. In Papua New Guinea the term ‘landowner company’ is used to describe a company which represents the interests of a group of customary landowners. Such a company must be owned and controlled by them through their representatives sitting on the board, often one director from each clan, family or land group.
The Forest Clearance Authority application submitted by Kulawood Limited to the PNG Forest Authority in February 2018, also describes Ebony Woods Limited as ‘a landowner company’ [page i and page ii] and goes on to state it ‘is composed of the leaders of every village within the project area’.
This is a misleading narrative that is repeated again in a letter of support issued by the Samarai Murua District Development Authority. The support letter, issued on 23 November 2017, describes Ebony Woods Limited as a ‘Landowner Group’.
Contrary to these descriptions, Ebony Woods Investment Limited is not a ‘landowner company’ at all. As the IPA extract clearly shows, all the 100 shares in the company are owned by one individual, Samson Siguyaru, and he is the only director.
The National Court has made clear in cases where a firm is held out as being a landowner company, but in fact is owned by a single individual, this qualifies as a fraudulent representation.
It should be noted though that at this stage PNGi has not seen any evidence that Samson Siguyaru himself claims Ebony Wood Limited is a landowner company. The representations that are referenced above come from DAL, SMDDA and Kulawood Limited. As such, the evidence points to either (a) fraud by those bodies representing Ebony Woods as a landowner company, or (b) negligence in repeating these representations without verifying the facts.
Compounding matters, Samson Siguyaru is not even a Woodlark islander, although he is reportedly married to a local women. Mr Siguyaru was born in the Trobriand islands. Coincidentally, this is the electorate represented by Forest Minister Douglas Tomuriesa, although we cannot make any inferences from this fact.
So the whole DAL approval and FCA application for the Woodlark ‘Integrated Tree Farming & Agriculture Development Project’ is based on a false premise. Namely, that the project proponent is a landowner company.
This false premise could though prove very lucrative for Samson Siguyaru. As the designated landowner company, Ebony Woods is set to receive over K5 million in revenue from the logging operation through the mandated K6 per cubic metre ‘landowner company premium’ payable as part of the logging levies.
A nice pay off for someone who has also just received the Queen’s Police Medal in the recent Queen’s birthday honours.
Hopefully local allegiance will not affect the Forestry Minister’s judgement when it come to rejecting the Forest Clearance Authority application!
In a final twist, PNGi can reveal that there is an Ebony Woods Association created by Woodlark islanders that has been a registered organisation since 2011. Apparently this association was set up by landowners from Woodlark to promote sustainable development on the island.
Is it just coincidence that Samson Siguyaru chose the name Ebony Woods for his company when there was already an association of the same name that was related to Woodlark Island?
Was the existence of the association possibly the reason the IPA, when registering Siguyaru’s company name, apparently added the word ‘Investment’ – so as to distinguish the two?
This is just Part 1 of a four-part investigation into the proposed logging operation on Woodlark island. Already there are weighty grounds to suggest the Department of Agriculture approval and the Forest Clearance Authority application are both fatally flawed:
- The company referred to throughout the FCA application and DAL approval as the project proponent is wrongly named;
- In any event the company whose name should appear did not exist when the DAL approval was granted;
- The company granted DAL approval has no declared assets or employees; and
- The company is not, as claimed, a landowner company representing the people of Woodlark island.
In Part 2, PNGi will look in greater detail at the flaws in DAL’s project assessment and approval process and reveal the agriculture project DAL endorsed is completely different to the one set out in the FCA application.