Eddie Tanago | Campaign Manager

ACT NOW is calling on the Prime Minister and regulatory agencies to take urgent action to address the huge discrepancies in log export values revealed in a recent report from the United Nations Office on Drugs and Crime.

The UNODC findings, which are based on official PNG log export monitoring reports and Chinese customs data, shows foreign owned logging companies could be defrauding the PNG government and resource owners out of billions of Kina in revenues.

The report reveals that the value of logs exported from PNG as declared by the logging companies is 50% lower than the value of the same logs as declared in China by the importing companies.

In the period between 2018 and 2022 the difference in value between the prices declared in PNG and in China totalled US$1.5 billion, equivalent to over K6 billion at today’s exchange rate.

By under valuing the logs they export from PNG, logging companies avoid paying export taxes to the government and royalties to local communities and avoid corporate taxes as they don’t declare any profits.

The evidence from the UNODC report echoes comments from the Commissioner of the IRC, Sam Koim, who said in 2021 that logging companies are guilty of “an entrenched level of tax evasion” with “egregious incidents of transfer pricing and under declaration of income”. 

ACT NOW is calling on the Prime Minister to order a full and transparent public inquiry into the log pricing discrepancies as the amounts of money involved are eye watering and the losses to the PNG government and rural communities have been ongoing for decades. 

ACT NOW is also calling for immediate action by regulatory agencies, the commercial sector and diplomatic community, including:

• PNG Forest Authority to stop issuing any further log export permits until a public inquiry is completed; 
• Police fraud squad with the assistance of UNODC and IRC, to open criminal investigations into logging companies suspected of defrauding the State and landowners
• Commercial banks to stop providing financial services to foreign owned logging companies
• Foreign missions, including Japan, EU, France, UK and Australia to support the PNG government in setting up a public inquiry.

The UNODC findings add to the existing extensive and well documented evidence that logging companies are involved in illegal logging including the abuse of Forest Clearing Authorities, tax evasion and fraud, money laundering and human rights abuses.

These same problems were revealed in the Barnet Commission of Inquiry way back in 1989 and have plagued our nation since Independence.

It is time for the PM, government departments, and commercial banks, with the assistance and support of our overseas friends to bring an end to this scandal.

READ THE FULL UNODC FINDINGS
https://actnowpng.org/blog/blog-entry-unodc-report-reveals-us15-billion-hole-png’s-log-export-income

READ THE FULL 2021 STATEMENT FROM SAM KOIM
https://actnowpng.org/blog/blog-entry-irc-adds-more-financial-crimes-logging-companies’-charge-sheet