Pricing scandal?

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Billions of dollars robbed from SI economy through logging

By Gary Hatigeva

THE Solomon Islands economy is believed to have been robbed billions of dollars through exported logs under prefixed prices outside of international market tags.

The government has been asked by Independent Member of Parliament and Public Accounts Committee member, Matthew Wale, on what it is doing to address the issue of transfer pricing amounting to billions of dollars lost, which he said is continuing unrestricted.

Wale further suggested that the determined price mechanism was used as a tool to legalise the transfer of profits offshore, legitimising the theft of government dues, and the robbing of resource-owners.

Wale in parliament claimed that the determined price mechanism provides legal cover for the theft to be conducted in broad daylight, right in front of everyone and that the level of theft of dues rightfully owing to resource owners and the government are in the billions of dollars.

“We must ask, why is the determined price for logs always lower than the market prices published by our own central bank?

“This difference has averaged at around USD100 to USD180 per cubic metre at various times and there have been quarters that the determined price has been reduced when at the same time the market price was actually rising. How can this possibly be?

“There is no reasonable explanation for this phenomenon and why are the people of Solomon Islands being treated with such contempt by their own leaders of government?

“The government has been so beholden to the logging industry that the industry dictates the price to the government. But the reason for this highly irregular decisions must be more sinister,” he stressed.

He said there is only one word that can accurately describe government in this matter – ‘shame’.

“How can the people’s government advance, protect and defend the criminal interests of the loggers against the interests of the people? And not be ashamed of it?

“On rough estimates based on the 2.6 million cubic metres of logs exported in 2017, based on prices published by the central bank, the government has been robbed of SBD936 million and the resource owners were robbed of SBD561 million, just for the one year 2017.

“So in just the one year 2017, the Solomon Islands economy was deprived of a total of SBDSBD1.497 billion,” Wale claimed.

He said the people of this country can be assured that this robbed money was transferred offshore.

Meanwhile, Wale said imagine the effect that $1.5 billion would have had on the Solomon Islands economy and on the capacity and quality of social services in 2017.

“Instead 2017 was a very difficult year in which clinics lacked basic supplies, if they remained open at all, the NRH suffered basic supplies and equipment and staff over-worked, to say nothing of provincial hospitals.”

He however pointed out that if only the country get the rightful dues, Solomon Islands will not need aid donations that makes it become so vulnerable to foreign interests.

“Then we will be truly independent and can have true meaningful sovereignty to be proud of – not sovereignty in words only.

“On the other hand, export in 2016 was slightly higher than 2.6 million cubic metres, we estimate similar amounts were robbed of landowners and the government in 2016.”

So he further suggested that just for the two years 2016 and 2017, the government was robbed of a total of SBD1.9 billion and landowners were robbed of a total of SBD1.1 billion and the Solomon Islands economy was criminally deprived of a total of SBD3 billion.

He claimed that these values ought to be higher but added that it is unfortunate, loggers are exporting premium natural growth forest declared as cheap wood, such as mixed red and mixed white.

He further claimed that there is obviously collusion between forest rangers, customs and the loggers to allow what he described as criminal practices, to carry on for so many years.

“And nothing is being done to stop it? How much are the resource owners and government losing due to this practice?

“We have no way of know, because government is not interested in finding it out because it may then have to do something about it.”

He said the logging sector’s production appetite is not likely to be tamed soon, even if government has said it wants production to fall to 2 million cubic metres for 2018.

He added that more than 80 percent of logging is re-entry/secondary logging and resource owners do not seem able to resist the temptation of quick and easy money that comes from trees they never planted, and therefore the government must take a policy position so that it is able to properly deal with this as an important matter for the sake of the people and the economy.

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