Suriname
Suriname is a small South American country with a diverse population which has benefited little from its major exports - bauxite/aluminium and gold.

Ten or so years ago, the real and prospective impact of Asian (ultimately chinese) exploitation - primarily through Berjaya, MUSA, Suri-Atlantic - was so negative that the government of Suriname was placed under such pressure by the international community to ensure the withdrawal of those logging enterprises from Suriname. There is now substantial renewed Chinese interest in exploiting the weakly managed forest of Suriname.

Of particular current interest is the prospective sale of logging rights to almost 180,000 hectares of forest concessions, the largest being in Sipaliwini near Apoera. The ownership of those rights is a persistently loss making offshore company by the name of Greenheart Group which in turn is owned inter alia by Sino-Forest and several directors of GEMS, a major Hong Kong-based private equity company whose advisory council includes some very prominent individuals (who might not wish to be associated with their company's interests in Suriname). The executive chairman of GEMS is a director of Sino-Forest (an offshore company operating controversially in China's plantations, forestry and timber sectors) and a number of major businesses particularly in Hong Kong. He is also Asia Chairman of Corporate Finance in Macquarie Bank, one of the three banking groups which arranged the controversial Initial Public Offer of shares in Samling Global, whose subsidiary Barama has recently been found guilty of numerous offences pertaining to the supply of timber in Guyana. One of the owners (/guarantors) of Greenheart appears to be Hong Kong's Honorary Consul to Suriname.

If, as likely, Suriname's law pertaining to the subcontracting of rights by concession holders is similar to that in Guyana, logging rights to more than 50,000 hectares of those concessions (in Nickerie and Sipaliwini) may be illegal.

Omnicorp Limited, a loss-making electrical goods manufacturing company listed on the Hong Kong stock exchange, acquired a 60% ownership stake in Greenheart during late 2007. Omnicorp states that this unrelated overseas diversification "promotes environmental protection and social sustainability" - despite the evidence of recent and contemporary logging by Asian logging enterprises in Suriname and neighbouring Guyana.

There is a risk that Suriname will derive little benefit from the export of timber logged in forest near the Corentyne river - some such timber is allegedly "exported" duty free ostensibly to Guyana but actually for direct export to China by a timber company (which has had discussions with Greenheart) operating in that part of Guyana - export duties payable in Suriname are substantially greater than they are in Guyana.

Sino-forest (which has a significant ownership stake in Omnicorp) acquired 13% of Greenheart during the third quarter of 2007 - for US$6 million. Greenheart has an agreement to sell Sino-forest 34,285 m3 of selected log species for US$6 million (double the declared f.o.b.value) - indicating that these enterprises' trade declarations might warrant scrutiny for transfer pricing fraud. Greenheart plans to selectively log between 200,000m3 and 250,000m3 annually (at rates which would probably exceed the sustainable level of extraction for some if not most of the species logged making the company's sustainable forest management credentials - and particularly its purported aim of achieving FSC certification of its holdings in Suriname by 2010 - dubious). Such a large volume could have a major adverse impact on the local timber industry and would increase the recent level of Suriname's timber exports by a factor ten on a roundwood equivalent volume basis.Greenheart suggests that it will establish two saw mills each with annual output capacity of between 40,000m3 and 50,000m3 (implying a rather poor conversion efficiency). If Greenheart wishes to export timber to North America, Europe and Japan, those markets are likely to demand credible evidence of the legality of that timber - particularly in relation to the company's purported logging rights - and of the sustainability of its management of those concessions. Given that Greenheart's corporate structure seems designed to minimise the payment of taxes, Omnicorp's endorsement of the company's Socially Responsible Corporate policy might seem rather hollow.

Greenheart's 126,825ha concession seems to be in the same locality as a controversial concession (which may have been withdrawn) of the same size attributed to (or at least claimed by) another offshore company - Tacoba - during 1996.

Tacoba, a wholly-owned subsidiary of China International Marine Containers ("CIMC"), was acquired indirectly through offshore companies during 1997 - when CIMC likewise procured two other entities (Topco and Lumbrex) each of which is said to have had logging rights to 150,000ha of forest in Suriname. CIMC claims to have procured 450,000ha of rights in Suriname during 1998 (when it also procured more than 300,000ha in Cambodia through Gold Terrain Assets). Remarkably, CIMC claims that Tacoba had not commenced logging by the end of June 2007, ten years after it had acquired Tacoba. However, Jin Lin from Sarawak (or Ji Shen) is understood to have been logging, with active support from the military, in and around Tacoba's concession at the turn of the last decade. Further, CIMC's annual reports refer to sales from logging and of timber. A CIMC subsidiary, Xinhui, is one of the world's largest manufacturers of flooring for containers - which, depending on the suitability of Suriname's tree species, might help explain CIMC's interest in Suriname.

It would be remarkable if enterprises which have opaque, often offshore, ownership structures (presumably designed to minimise tax liabilties and implicitly deny benefits to the producer country) and/or whose businesses are unrelated to logging (or indeed sustainable forest management) would be eligible to legitimately own logging rights - particularly in the tropics. Further, it may be that a recent policy requiring Chinese companies abroad to "highlight sustainability, biodiversity and the development of local communities" when engaging in the forestry sector might constrain the business plans of Greenheart and its current and future owners.

Zhong Heng Tai Investment Company (from Hong Kong) has sought to clear 40,000 hectares of forest (in Marowijne near Patamacca) ostensibly to expand the palm oil industry in Suriname by 700,000 tonne/year. Its plans, which include the importation of 1,000 Chinese people, are bitterly opposed locally. It is not clear whether that area would be suitable for a palm oil plantation or whether that (otherwise little known) company actually intends to withdraw or declare itself bankrupt once it has profited from the (tax free) sale of logs felled during the clearance of that forest. The cash flow profile of the project would be U-shaped, investment being required after profitable forest clearance and before net profits were earned from palm oil sales. The ability of a"developer" to borrow using its prospective plantation project as collateral would of course substantially reduce once the forest has been cleared.