In February 2014, Global Witness lodged a Policy for Association complaint against Dalhoff Larsen and Horneman (DLH) alleging that DLH had purchased illegal timber harvested under Liberian private use permits, and that this timber was exported to Bangladesh, China, and France.
FSC established a complaints panel which conducted a thorough and detailed investigation to determine whether DLH was in fact involved in illegal logging or the trade in illegal wood or forest products. The panel concluded that there was clear and convincing evidence that in 2012, DLH and its subsidiaries repeatedly purchased timber harvested under private use permits in Liberia, in violation of many forest and other national laws. DLH’s violation of these laws had serious impacts on the rights and livelihoods of land-holding communities in Liberia, and the consequences presented a serious threat to the stability of the country and to the future of globally important forests in the country.
As a result, FSC disassociated from DLH in January 2015, and relayed a set of conditions which, if satisfactorily fulfilled, would end the disassociation.
In October 2015, DLH presented FSC with an action plan describing activities to compensate communities for the income lost as a consequence of illegal logging and timber trade in Liberia.
The compensatory activities included building essential sanitary infrastructure, maternity houses for midwives and doctors, and school buildings to service three Liberian communities. These activities were agreed with the communities through the free, prior, and informed consent process conducted on the ground by the Sustainable Development Institute (SDI), a well-known, credible, and trusted local development organization. Later it was necessary to update the action plan, which DLH consequently did in order to comply with updated Liberian legislation. Ultimately, DLH completed the implementation of the revised action plan and the FSC Board of Directors decided to end their disassociation.
A further consultation is held with affected community members to develop a revised action plan.
A revised action plan is developed by DLH based on the input gathered through the consultation with the communities. FSC approves the revised action plan.
DLH commissions Engineers without Borders to conduct a feasibility study of the approved action plan. The study reveals that the approved action plan is no longer feasible and that revisions to the plan are needed.
DLH presents an action plan to FSC describing the activities that DLH will undertake to compensate three affected communities in Liberia.
FSC Board of Directors takes the final decision to disassociate from the DLH Group, and agrees on the set of conditions that DLH shall fulfill in order to end the disassociation. FSC disassociation from the DLH Group is made public on FSC website.
Public summary and the recommendation of the complaints panel are shared with the parties.
Complaints panel submits its evaluation report and public summary, recommending disassociation from DLH and all its subsidiaries.
Complaints panel is established and investigation begins.
Global Witness files a complaint against DLH with FSC International.
Frequently Asked Questions (FAQs) About the Case
How was DLH involved in illegal timber trade?
A complaints panel was established in July 2014 to conduct an independent evaluation of the complaint, and determine whether DLH had been involved in the trade of illegal timber harvested under the Liberian Private Use Permits.
The complaints panel concluded there was clear and convincing evidence that DLH and its subsidiaries repeatedly purchased illegal timber in Liberia in 2012. The purchase of illegal timber in Liberia by DLH was in violation of a large number of forest, and other laws of the country, and had serious impacts on the rights and livelihoods of landholding communities in Liberia. It posed a serious threat to the stability of the country and to the future of globally important forests. Further, the complaints panel considered that DLH was negligent by failing to carry out an adequate due diligence process.
When the DLH Group first began trading in Liberia, information was available about the growing risks of corruption and illegality in the country. Specifically, information regarding PUPs, issued by the Forestry Development Authority, found that the incorrect issuance of PUPs often leads to illegal activity. At that time, DLH only had a very basic due diligence system in place, lacking key aspects of responsible procurement, and not taking account of the high risk source that Liberia constituted.
Was the timber purchased by DLH in Liberia FSC certified?
No. Timber purchased by DLH in Liberia was not FSC certified.
What were the main social impacts of the incorrect issuance of PUPs in Liberia?
Poor social agreements and lack of proper consultation with local communities...
In many cases – as was found through the investigation by Global Witness, Save My Future Foundation, and Sustainable Development Institute, in 2012 – resident communities and land holders were not provided with sufficient information, nor with sufficient time for proper consideration, to make decisions to allow harvesting on their property. The fact that PUP holders failed to negotiate adequate social agreements deprived the community of potential benefits from their forest resources.
Communities were uninformed about their land rights during the social negotiation process.
Local communities were largely ignorant of their rights in relation to forest land, and were, therefore, easily persuaded to give up these rights to outsiders in exchange for inadequate compensation.
Agreements were signed by individuals who did not have the right to sign on behalf of the land owner, or did so without his/her consent.
In a number of cases individuals claimed rights to land which they were not entitled to. They were either acting ‘on behalf’ of absent relatives, or ‘on behalf’ of communities who had not actually delegated these rights to them. On many occasions, PUPs were issued and activated where the PUP holder was
not the landowner and/or did not have permission from the landowner. Also, individuals who acted as fronts for the PUP owners, received payments on behalf of communities and then failed to pass the payments on.
Which activities were originally identified to remedy past harm?
Initially in October 2015, DLH presented FSC with an action plan including building essential sanitary infrastructure, maternity houses for midwives and doctors, and school buildings to service three Liberian communities.
These activities were agreed with the communities through the free, prior, and informed consent process conducted on the ground by the Sustainable Development Institute (SDI), a well-known, credible, and trusted local development organization.
This action plan was approved by the FSC Board of Directors at their November 2015 meeting, at which the Board also agreed to end the disassociation provided that:
- The full amount of the project budget had been transferred to a trustee such as SDI, and dedicated for the proposed project activities.
- There is a testimonial from SDI about the status and further progress of project activities that demonstrates that project activities are on schedule and can be achieved without major delays.
- The remaining conditions for ending the disassociation – a verified due diligence system, and the reimbursement of FSC costs – are also met.
Did DLH implement the originally identified compensatory activities?
In December 2015, DLH submitted further documentation showing progress towards the original conditions to end disassociation.
However, in June 2016 it was evident that the approved action plan was no longer feasible, with certain agreed activities conflicting with new Liberian legislation regulating the construction of water facilities.
As a result, DLH worked with SDI and Engineers without Borders to develop a revised action plan that would be in compliance with Liberian legislation. SDI and Engineers without Borders visited the affected communities to provide updates on the legislative issues. They also conducted a community consultation on revisions to the plan to ensure that the revised action plan continued to meet community needs.
How did DLH end disassociation with FSC?
After finding that DLH was progressing in completing the identified action items towards remedying past harm, the FSC Board of Directors decided that FSC would end the disassociation from DLH on a probationary basis until the full action plan submitted by DLH to FSC had been fully implemented.
The FSC Board of Directors also requested that DLH submit comprehensive progress updates every three months until completion of the action plan in order to ultimately end the probationary status.
In August 2017, with the construction of two schools and a maternity waiting home, DLH completed the implementation of the revised action plan. All buildings are equipped with water, sanitation and hygiene facilities and communities have received training on use and maintenance of the buildings.
The two schools have now opened for the 2017-18 school year and the maternity waiting home is under the administration of the local health authorities. Evaluation surveys conducted by SDI illustrate a high level of satisfaction among the communities involved.