Brasil Business news

High U.S. flooring retailers linked to Brazilian agency probed for corruption

  • New proof uncovered by a yearlong investigation by Mongabay and Earthsight reveals the corrupt offers made by Brazil’s largest flooring exporter, Indusparquet, and its suppliers.
  • The corporate was charged in two corruption lawsuits in Brazil over its use of public officers to achieve entry to timber provides. Mongabay and Earthsight gained entry to dozens of hours of wiretaps and video footage, together with hundreds of pages of courtroom information, revealing how the alleged bribery schemes have been carried out.
  • One of many courtroom instances confirmed the corporate used a neighborhood official to safe the provision of bracatinga, a tree species native to the Atlantic Forest, for an unnamed “U.S. consumer.”
  • We additionally discovered indications that the American consumer was Ground & Decor, America’s largest flooring retail chain, which was beforehand concerned in unlawful timber scandals with Indusparquet, whereas LL Flooring, fined for breaching the Lacey Act in 2013 over its unlawful timber exports, can be an Indusparquet consumer.

A yearlong investigation by Mongabay and Earthsight has uncovered new proof of corrupt offers and unlawful practices utilized by Brazil’s largest flooring exporter, Indusparquet, and its suppliers.

From its headquarters in São Paulo to the Amazon and the Atlantic Forest, Indusparquet has used fixers to safe secret timber offers from suppliers who’ve been fined tens of millions for his or her unlawful sourcing practices, whereas claiming to provide merchandise to high-profile tasks like Las Vegas’ Mirage Resort, the Vatican and Taj Mahal.

The corporate was charged in two bribery lawsuits in Brazil over its use of public officers to achieve entry to timber provides. Following a tip-off from an nameless supply, we obtained entry to dozens of hours of wiretaps and video footage revealing how Jose Antonio Baggio, the corporate’s co-founder and defendant in one of many instances, used a neighborhood official to safe bracatinga (Mimosa scabrella), a tree species native to the Atlantic Forest — probably the most threatened Brazilian biome.

Requests for additional info confirmed that Indusparquet had purchased bracatinga from suppliers named within the courtroom case in opposition to Baggio throughout the identical interval, which the wiretaps present was for an unnamed “U.S. consumer.” Regardless of Indusparquet’s claims that courtroom choices cleared the costs in opposition to Baggio and closed the case, there’s nonetheless room for attraction, because the prosecutors’ workplace confirmed to Mongabay.

The second prosecution we documented was sparked by a serious 2018 raid on Indusparquet’s headquarters, code-named Operation Pátio. A federal prosecutor charged the agency with involvement in a 154.37 million reais ($30 million) timber laundering scheme that used an analyst at IBAMA, the company chargeable for environmental monitoring and enforcement, to falsify origin credit to launch wooden from the nationwide timber accounting database. The official later admitted to receiving bribes from an Indusparquet worker.

Our investigation additionally discovered Indusparquet had sourced wooden from sawmills in Pará state linked to Operation Handroanthus, an enormous timber raid in 2020 that seized 226,760 cubic meters (296,590 cubic yards) of wooden.

Operation Handroanthus had vital political repercussions, as following the then-environment minister Ricardo Salles’ visits to the realm to foyer on behalf of highly effective landowners supplying the sawmills, the Supreme Federal Courtroom launched two investigations that led to his resignation in June 2021.

The Federal Police seized wooden on the border between the states of Amazonas and Pará in March 2021 as a part of Operation Handroanthus. Picture by Federal Police in Amazonas state through Smoke Sign.

Elsewhere in Pará state, we discovered that timber from a threatened Indigenous reserve that’s house to uncontacted peoples had been bought by Indusparquet from suppliers that have been fined $466,198  for falsifying timber origin information. Individually, the homeowners of the land inside the reserve have been fined $2.7 million in 2021 for destroying nearly 1,000 hectares (2,471 acres) of forest and violating restrictions on accessing areas the place uncontacted peoples reside.

Total, a partial evaluation  of Indusparquet’s a whole bunch of suppliers reveals they’ve been fined about $3.7 million between 2015 and 2021 for a variety unlawful logging actions, from falsifying info on official databases to harvesting timber in Indigenous lands and guarded forests.

Regardless of being mired in scandal, Indusparquet stays Brazil’s largest flooring exporter, delivery merchandise price an estimated $250 million to america between January 2017 and August 2022. After being fined for breaching the Lacey Act in 2013 over its unlawful timber exports and being carefully monitored by U.S. companies since then, LL Flooring, a U.S. retailer, has continued to supply timber from the corporate, as produce other main companies.

Picture by Samuel Bono / Earthsight

The deal

The town of União da Vitória in Brazil’s southern Paraná state was a hive of exercise. It was September 2016 and each day rallies across the nation forward of municipal elections the next month have been drawing in energetic crowds. Because the candidates sought to woo voters, courtroom information seen by Mongabay and Earthsight present Indusparquet was additionally busy.

“We have now already agreed. He’ll noticed the wooden, we simply want you to type issues out.” The voice on the road was recognized by the authorities as Baggio, Indusparquet’s co-founder, in a cache of wiretapped conversations hooked up to a category motion lawsuit filed by Paraná’s State Public Ministry. A state prosecutor is accusing Baggio of paying bribes to André Luis Aleixo, the pinnacle of the Paraná Environmental Institute (IAP) in União da Vitória, in trade for entry to 250 cubic meters (327 cubic yards) of bracatinga by Luiz Roberto Granatyr, the proprietor of a neighborhood sawmill.

“There isn’t any doubt that the defendant André Luis Aleixo took benefit of the general public workplace and helped the corporate Indusparquet within the acquisition of bracatinga wooden and within the bureaucratic procedures earlier than the environmental company in trade for an undue benefit [“commission”],” Juliana Mitsue Botomé, the state prosecutor, wrote in a courtroom submitting.

André Aleixo in 2016, when head of IAP regional workplace in União da Vitória. Picture courtesy of Marciel Borges.

These conversations got here to mild solely as a result of state prosecutors in neighboring Guarapuava municipality requested the particular motion group to fight organized crime (Gaeco) accumulate proof of wrongdoing from public servants in licensing environmental processes in Paraná. The wiretaps collected by the state investigators between Sept. 26 and Nov. 8, 2016, reveal intimately how the alleged kickback scheme labored.

Alessandro Faria, the supervisor of Masterpiso, Indusparquet’s subsidiary in Paraná, was the primary level of contact with Aleixo, describing Baggio as “considerably determined” for bracatinga to satisfy an order for a U.S. consumer in a name on Sept. 26. Faria defined the sawn wooden could be transported to Indusparquet’s services, the place it might be transformed into flooring for export.

“Can you work if I can discover the wooden?’’ Aleixo asks Granatyr, who appears to be in the identical room. Aleixo tells Faria that Granatyr prices 700 reais ($135) per cubic meter. “Truly, I used to be going to recommend 700 to see if he [Baggio] paid me a small fee, proper?” Aleixo says. Faria then suggests Aleixo ship a quote of 750-800 reais ($145-155) so his fee will be “assured.”

Aleixo tells each Granatyr and Faria he’ll assist finance Granatyr’s sawmill and work as his companion. “I’ll make a partnership right here with Luiz [Granatyr] and be a part of his firm,” he says to Faria. “See how God does issues proper. [He] introduced the man [Granatyr] to my door right here.”

With the final pointers set, Faria tells Aleixo that Baggio would take the lead on the negotiations. Eighteen minutes later, Baggio calls Aleixo’s cellphone and greets him as “my buddy.”

Alessandro Faria (center) and Indusparquet co-owner Luiz Francisco Uliana (far proper) selling Masterpiso Engineered Ground in an occasion in Curitiba. Picture courtesy of Raquel Lima.

“I requested him [Granatyr] to talk to you,” Baggio tells Aleixo. “We have now already agreed with him to noticed [the wood], you simply [need] to type issues out [arrange the bracatinga logs], proper, then after he leaves we’ll speak to you to rearrange the issues for you too [commission].”

Two days later in a follow-up name, Aleixo tells Baggio that he’ll assist Granatyr discover native bracatinga producers: “Make me earn fee on this.” Baggio replied: “In fact, for positive.”

Baggio was recorded in direct conversations with Aleixo twice and his title was talked about in separate conversations between Aleixo and Granatyr, who grew to become Baggio’s foremost level of contact through the negotiations.

The negotiations superior all through October, with Granatyr indicating that Baggio was eager to shut the deal as quickly as doable. New gamers have been added to the scheme. Alexandre Freiberger Puzyna, who acted as an middleman within the deal on Aleixo’s request, purchased and transported bracatinga from a rural producer to Granatyr’s sawmill, courtroom information present.

“Let’s do the next, even when you discover the man who has the authorization [logging permit], let’s go it on to Puzyna. I desire that every one takes care of 1 line [own duties],” Aleixo tells Granatyr in a Sept. 28 name.

The time period “fee” seems in a number of extracts of the intercepted communications. Whereas discussing the value of wooden with Faria, for instance, Aleixo asks if he could be paid for his service on this extract on Sept. 26:

– Aleixo: Truly, I used to be going to go away it at 700 [reais] to see if he would pay me a small fee, proper [laughs].
– Faria: In fact, it’s a must to ask, ship [a quote of] about 750-800 [reais] to Zé Antonio [Baggio]. … Then get a bit of fee for you.

In a Sep. 28 wiretap, Baggio may also be heard suggesting that Aleixo grow to be his consultant in trade for a “fee.” “Ship my fee proposal too,” Aleixo says within the name. Baggio replies, “In fact, that is logical. You may work as our consultant within the area, as a result of I hope we promote a number of this wooden.”

Along with his place within the scheme apparently secured, by Oct. 25 Aleixo asks his colleagues on the Environmental Institute within the capital Curitiba to expedite the allocation of permits for Granatyr’s sawmill by IBAMA’s system. The permits are issued in November 2016.

The wiretaps present that Aleixo used his workplace on a number of events as a gathering place for negotiations with Puzyna and Granatyr throughout working hours. He additionally helped Granatyr meet bracatinga suppliers and smoothed issues over when a truck transporting the timber was with out the correct paperwork.

As preparations for the deal progress, Baggio continues to use stress to the group. “He wants it as a result of the timber he has there’s not sufficient for him to do what was agreed together with his consumer and he’s fearful,” Granatyr tells Aleixo on Nov. 8, based on one of many wiretaps.

This was one of many final conversations intercepted by investigators, who have been wrapping up their investigation into environmental crimes within the area. Regardless of an absence of particulars about how the deal was concluded, receipts and timber transport permits issued by the provider and transport companies present the logs reached Granatyr’s sawmill on Dec. 2.

Between December 2016 and March 2017, 5 shipments from Granatyr’s yard arrived at Indusparquet’s headquarters in Tietê, in São Paulo state, totaling 35.64 cubic meters (46.62 cubic yards), based on paperwork from IBAMA seen by Mongabay and Earthsight. There isn’t any file of something being traded between these two corporations after that interval.

Indusparquet's headquarters
Indusparquet’s headquarters in Tietê, São Paulo. Picture by Earthsight.

In each the felony and civil lawsuits, Botomé charged Aleixo for “illicit enrichment whereas in public workplace” and Baggio and Indusparquet for providing an “undue benefit” to a public official in return for info on wooden suppliers with the suitable permits. Puzyna, Granatyr and Granatyr’s sawmill firm have been additionally charged for his or her participation within the scheme.

“On the goal degree, it was absolutely confirmed that defendant André Luis Aleixo requested an undue benefit [commission] attributable to his function as IAP’s regional chief and accepted a promise of such benefit, and that defendant José Antonio Baggio provided and promised an undue benefit to defendant André Luis Aleixo, in order that he might present him with details about the beneficiaries of forestry authorizations and assure the provision of wooden to the corporate,” Botomé, the prosecutor, wrote in a courtroom submission.

Lengthy authorized battle

Over the 4 years because the lawsuits have been filed, there have been setbacks, not solely to enlist witnesses requested by the protection, but additionally by defendants denying what was recorded within the intercepted calls, with some even altering their earlier testimonies.

Prosecutor Botomé refuted all of the defendants’ and their witnesses’ arguments, highlighting not solely the content material of the intercepted calls but additionally paperwork and testimonies of witnesses enlisted by the accusation.

In 2017, Baggio claimed that he didn’t bear in mind talking with Granatyr and had by no means heard of Aleixo. Nonetheless, on Nov. 5, 2021, he admitted to calling Aleixo and asking for bracatinga, although he claimed to have reduce off contact with Aleixo just a few days later. He denied understanding that Aleixo was an official on the IAP. “We all know this very properly, we now have handled IBAMA for a very long time. We comply with the principles. A civil servant can by no means do this. However we have been unaware of the actual fact he was a civil servant,” he mentioned.

The prosecution, nevertheless, doubted that Baggio would have been related with Aleixo with out first having run a easy background verify, based on the lawsuit.

Baggio additionally claimed that he didn’t know that Aleixo and Granatyr have been working collectively and mentioned that he negotiated with Granatyr two or three months earlier than he talked to Aleixo. This account differs not solely from the intercepted talks but additionally from origin paperwork and receipts of bracatinga shipped from Granatyr to Indusparquet from December 2016 to March 2017.

“Now, why would defendant José Antonio Baggio inform Luiz Roberto Granatyr to search for defendant André Aleixo if all the things had been organized for Luiz to noticed the wooden?” Botomé wrote in a submission to the courtroom. “Clearly as a result of defendant José Antonio Baggio had full confidence that the defendant André Luis Aleixo had the … mandatory instruments and information to facilitate the acquisition of the wooden, which might solely be justified on the grounds of the general public workplace he held.”

In his courtroom listening to, Aleixo denied he had requested a fee or had labored as a guide for Granatyr. He argued that he reached out to Indusparquet’s subsidiary to get additional particulars about their operations as he was contemplating work within the personal sector after leaving IAP in early 2017, regardless that this was by no means recorded in any dialog. “From my schooling, I do know what the implications are … for failing to adjust to the ideas of public administration,” Aleixo mentioned.

He additionally denied utilizing his place to facilitate the allow allocation for Granatyr’s sawmill, including that he deserted the negotiations after realizing that Baggio was demanding an enormous quantity of wooden to be delivered whereas he was nonetheless in workplace.

Granatyr claimed the deal was moved ahead with out the assistance of Puzyna and Aleixo, opposite to what was recorded by the authorities.

In reality, the testimony of a witness referred to as by prosecutor Botomé confirmed that Puzyna and Aleixo have been concerned within the seek for bracatinga. Antonio Remi Iusviak, who owns the farm from the place the logs have been sourced, mentioned that Puzyna had visited his property along with Granatyr.

In its protection, Indusparquet enlisted workers and three of its suppliers to testify in Baggio’s favor. The witnesses tried to persuade the decide that asking for a “fee” in timber negotiations is widespread observe, in addition to the informality between Baggio and suppliers and, lastly, that the corporate was unaware that Aleixo was the pinnacle of IAP on the time.

There have been curious nuances within the 4 hours of video hearings assessed by Mongabay and Earthsight. The three suppliers, for instance, all repeated the identical narrative, in the identical order, which can be a sign they might have been coached by Indusparquet to discredit the corruption allegations.

Baggio, prosecutor Botomé, Aleixo, and judge Emerson.
Baggio’s listening to. Pictured are (clockwise from high left) Baggio, prosecutor Botomé, Aleixo, and decide Emerson. Picture courtesy of Paraná State Justice.

Controversial courtroom determination

A verdict within the instances was lastly issued earlier this 12 months. The courtroom’s determination in each felony and civil lawsuits absolved all defendants following the expiration of the statute of limitations. The courtroom rulings additionally discovered the funds to Aleixo a non-public matter that have been unrelated to his place as a public servant.

Brazil modified the executive improbity legislation in October 2021, shortening the statute of limitations from eight to 4 years. Key witnesses within the case in opposition to Indusparquet couldn’t be tracked down for greater than two years by courtroom officers.

Throughout his listening to earlier than Decide Emerson Luciano Prado Spak, presiding over the felony case, Baggio mentioned he supposed to open a manufacturing unit in Irati, a municipality in Paraná state, and requested the decide: “It seems to be prefer it’s the physician’s hometown, proper?” The decide nodded. Spak concluded the listening to by congratulating Baggio.

Spak didn’t reply to Mongabay’s and Earthsight’s request for remark.

On Feb. 3, Spak determined that the wiretaps “exhibit greater than sufficient” that Aleixo “actively participated” within the bracatinga negotiations. The “simple” details of the case, he mentioned in his concluding remarks, have been that the fee was not “requested to pay for the observe of an act inherent or materially linked” to Aleixo’s place within the IAP.

Prosecutor Botomé appealed Spak’s determination nevertheless it was upheld by the next courtroom that mentioned there was an absence of proof to show a causal hyperlink between the benefit provided to Aleixo and the privileged info he handed on to Baggio. The prosecutor’s workplace within the second occasion filed a movement for clarification in August. In July, Botomé additionally appealed the sentence for the civil case that absolved all defendants.

In an emailed response to Mongabay and Earthsight, Indusparquet mentioned the felony prices have been dismissed, arguing the courtroom recordings “merely verify a daily negotiation, with widespread language and tone, the place costs, measures and gross sales commissions are mentioned.” The corporate added that Aleixo didn’t determine himself as a public official and that Baggio and Faria solely grew to become conscious of his place subsequently. They referred to as “ridiculous and absurd” insinuations that Baggio’s remarks of opening a manufacturing unit on the decide’s hometown or of the decide having dismissed the case due to proximity to Baggio.

In an emailed assertion, Aleixo denied the accusations, calling the prosecutor’s allegations “unfounded,” including that he was acquitted within the first and second cases within the felony go well with and the motion of administrative improbity was dismissed, with attraction by the State Public Ministry.

In an emailed response, Puzyna additionally denied the accusations. “There was by no means any buy or negotiation made by me, a lot much less the transport of wooden from a rural producer to Luiz Roberto Granatyr’s sawmill,” he mentioned, including that the felony lawsuit is baseless and was “dominated completely unfounded” by courtroom within the first and second cases.

Granatyr and IAP didn’t reply to requests for remark.

Picture by Samuel Bono / Earthsight

Orchestrated bribery scheme to control timber system

In one other case that mirrors carefully the mannequin utilized in Paraná, an alleged bribery scheme was uncovered involving Indusparquet, an official and 6 timber corporations in Bauru metropolis in São Paulo state. In line with courtroom filings, police experiences and intercepted emails, the scheme aimed to control IBAMA’s timber monitoring system to the corporate’s benefit.

IBAMA’s Sisdof/Sinaflor system is used to watch timber buying and selling and logging throughout the nation, allocating digital credit to forest concession holders to permit scrutiny of the species and quantity of wooden licensed to be reduce.

Investigators discovered 988 entries within the Sisdof/Sinaflor system benefiting Indusparquet and the opposite timber corporations between 2014 and 2016. Of this whole, 106 information have been “straight associated” to emails mentioning the fee of bribes, based on a 2017 IBAMA report contained in a lawsuit filed by the Federal Public Ministry (MPF) in Bauru. Additional evaluation revealed “inconsistencies” within the information both attributable to failures within the duly filed documentation or verification of the bodily handle of the enterprise and relevance of IBAMA’s motion, the report provides.

Diagram in a Federal Police doc summarizing timber buying and selling between Indusparquet and the opposite companies named within the federal prosecutor’s lawsuit from 2014 to 2016. Picture courtesy of Federal Police / Federal Prosecutor’s Workplace – São Paulo.

On the heart of those manipulations was Markus Otto Zerza, an IBAMA analyst, courtroom information present. Zerza was allegedly paid kickbacks by Alberto Antonio Cezar, who labored concurrently at Indusparquet’s buying division and as a intermediary expert in resolving bureaucratic and operational points for timber companies.

By legislation, every timber transaction have to be backed by an origin certificates, identified by its Portuguese acronym DOF. Whereas Cezar specialised in resolving “DOF blocks” to permit timber to be bought, Zerza accepted the discharge of seized wooden, authorizing timber shares for commerce and “adjusting” corporations’ credit, filling IBAMA’s database with “false and improper information,” courtroom information present.

Indusparquet was the largest beneficiary of Zerza’s alleged manipulations. Whereas the flooring big was nonetheless ready for brand spanking new working licenses, Zerza reportedly entered “conversion licenses” in Sisdof/Sisflora in June 2014, October 2014 and February 2015, permitting the corporate to transform sawn timber into different merchandise with out the necessity for prior authorization.

These conversions generated to Indusparquet estimated gross sales of 154.37 million reais ($30 million) by the conversion of 19,753 cubic meters (25,836 cubic yards) of timber credit, the MPF calculated.

“These corruption crimes, they’re very tough so that you can detect,” Pedro Antonio de Oliveira Machado, a Bauru-based federal prosecutor, informed Mongabay in a telephone interview. “If there wasn’t this breach of e mail confidentiality, what I might have the ability to determine was that he [Zerza] had made improper entries within the system, however by no means that he had obtained a bribe.”

The primary intercepted e mail reproduced within the lawsuit was a message from Zerza to Cezar on March 29, 2014, revealing how the bribes have been paid.

“See when you write down this handle in your diary …,” Zerza wrote from certainly one of his two private e mail accounts, “you’ll use it lots.”

The “handle” was the banking particulars of his spouse, Marisa dos Santos Zerza. The Federal Police recognized 5 small financial institution transfers totaling 2,900 reais ($560) from Cezar to Zerza’s spouse’s account in 2014 and 2015. Fifteen bigger transfers totalling 173,945 reais ($33,700) from unidentified sources have been additionally present in her account between 2014 and 2017, which investigators mentioned are possible linked to the bribery scheme.

These new revelations are the results of a earlier crackdown on the unlawful timber commerce within the nation: Operation Pátio, a 2016-18 joint investigation by IBAMA and the Federal Police that seized the biggest quantity of “unlawful Amazon timber” in São Paulo state’s historical past on the time. The a whole bunch of pages of information from the Federal Police testifying that Zerza manipulated the Sisdof/Sinaflor credit system have been generated beneath that operation.

Past the seizure of products that IBAMA mentioned lacked the required permits, the operation in Might 2018 included an alleged laundering scheme utilized by Indusparquet to hide 10,740 cubic meters (14,047 cubic yards) of illegally harvested timber amongst authorized shares by counterfeited timber credit. Accused of unlawful practices, the flooring big was fined 995,762 reais ($259,030 on the time), and its foremost warehouse within the metropolis of Tietê was briefly prohibited from buying and selling timber.

As beforehand reported by Mongabay and Earthsight, Indusparquet’s largest nice was lifted and its seized timber returned beneath reportedly suspicious circumstances in June 2019 amid loosening enforcement of environmental legal guidelines within the nation throughout President Jair Bolsonaro’s premiership.

Deforestation in Sao Paulo
Circumstances in São Paulo. Photos by Flávio Reis / Earthsight.

Bribes stream

In March 2021, prosecutor Machado filed a public civil lawsuit in opposition to Indusparquet and 6 different companies concerned within the scheme: Baurupisos, Thais Cristina Teixeira Brasil, Ulimax Esquadrias de Madeira, Indústria Madeireira Uliana, Demarchi & Co, and Faurtil Fábrica de Urnas Tietê (additionally referred to as Jonacir Amorim). He has additionally filed 15 felony lawsuits up to now in opposition to Cezar, Zerza and his spouse, and 30 others concerned within the scheme.

The majority of courtroom paperwork, together with testimonies from key gamers within the scheme and intercepted e mail extracts, present that Zerza manipulated the Sisdof/Sinaflor credit system “in a very unlawful means,” Machado mentioned.

“He [Zerza] requested for a bribe. … It’s very clear. … It’s all documented [in] the emails he exchanged with individuals.”

The a whole bunch of pages of intercepted emails — obtained inside the scope of developments of Operation Pátio — seen by Mongabay and Earthsight additionally point out a constant sample: Cezar despatched paperwork to Zerza, asking him to maneuver ahead with an organization’s request, and Cezar billed the agency for the service.

In an e mail dated Aug. 25, 2014, Cezar forwarded a request from Ulimax’s accounts division to Zerza through which Zerza talked about a spreadsheet described as “the appliance,” along with an agreed switch charge of two,200 reais (about $427).

In the identical month, Zerza “adjusted” Ulimax’s timber credit, eliminating 1,722 cubic meters (2,252 cubic yards) of wooden from its shares, courtroom information present. Two months later, Uliana reportedly had two a great deal of timber excluded from its information, totaling 3,848 cubic meters (5,033 cubic yards) of wooden.

Zerza additionally launched seized timber shares to 4 different companies: 297 cubic meters (388 cubic yards) of wooden price 575,510 reais ($111,800) to Demarchi; Baurupisos profited with estimated advantages of 1.64 million reais ($318,500) by 253,853 cubic meters; Faurtil was granted 119,250 cubic meters of launched timber in February 2014 and February 2015 price 251,747 reais ($46,797); and Thais Cristina Teixeira Brasil, in February 2015, courtroom information present.

IBAMA’s investigation into the scheme reveals that it continued properly into 2017, based on prosecutors.

Ibama officers examine an Indusparquet facility throughout Operation Patio. Picture: Ibama

On Jan. 30, 2015, Cezar forwarded an e mail to Zerza with the topic line “Desbloqueio de pátio” (“Courtyard unblocking”). The physique of the e-mail was left clean, however 4 photographs have been hooked up: three with details about the corporate Thais Cristina Teixeira Brasil and one containing the primary web page of its software to launch the timber shares.

The lawsuits referred to as for the defendants to be charged with corruption, misrepresentation and getting into pretend information right into a authorities database to attempt to acquire “undue benefit.” It additionally asserted that the corruption scheme hindered IBAMA’s capability to implement the legislation.

For a number of corporations, investigators offered emails as proof of kickbacks being paid for Zerza’s actions. Whereas not one of the intercepted conversations offered proof of bribes, the prosecutor spoke of mounting proof in opposition to Indusparquet. Beneath Brazilian anti-corruption legislation, proof that the corporate’s administration knew in regards to the alleged bribery scheme will not be required for the agency to be legally liable.

“To start with, the one who practiced corruption was an worker of [Indusparquet’s] monetary sector,” Machado mentioned. “Secondly, he provided a bribe [on behalf of] corporations that did enterprise with Indusparquet … both as a result of they transferred wooden to Indusparquet, or as a result of Indusparquet transferred wooden to them.”

The third piece of proof within the case was the improper launch of an enormous quantity of wooden to Indusparquet, he added. “For this undue launch, the anti-corruption legislation additionally permits the corporate to be held accountable even when there was no act of corruption,” Machado informed Mongabay. “Why? As a result of it was solely found that there was this undue launch as a result of there was this investigation. And the anti-corruption legislation says that when an organization makes inspection tough, it may also be held accountable by the anti-corruption legislation.”

The lawsuit additionally reveals that Baurupisos, Uliana and Faurtil “maintained partnerships and/or industrial ties” with Indusparquet. In reality, courtroom information from IBAMA present 74 transactions from 2014 to 2016 between Indusparquet and the opposite companies within the lawsuit, totalling 1,245 cubic meters (1,628 cubic yards) of wooden price 3,370,652 reais ($655,000).

Courtroom paperwork level to additional proof that some corporations are beneath Indusparquet’s umbrella: Ulimax and Uliana are owned by members of the Uliana household, the namesake of certainly one of Indusparquet’s homeowners, Luiz Francisco “Kiko” Uliana. An analogous-named firm primarily based in Paraná state, Uliana Pisos e Portas, additionally claims to be an Indusparquet distributor. A 2019 labor lawsuit focused Indusparquet, Uliana and Ulimax; the go well with identifies Uliana and Ulimax as Indusparquet’s subsidiaries.

Indusparquet founders Luiz Francisco “Kiko” Uliana (proper) and Jose Baggio (left). Picture courtesy of Julio Vilela.

Besides Baurupisos and Tais Cristina Teixeira Brasil, all different corporations named within the lawsuit are primarily based in Tietê, together with Indusparquet. Ulimax, Uliana and Faurtil all have registered addresses alongside a brief stretch of highway in Tietê. Demarchi can be primarily based close by, in a distinct a part of city.


When he was arrested in Might 2018, Zerza informed police he had used his spouse’s checking account to obtain bribes to launch timber for Cezar. He additionally confessed to manipulating the Sisdof/Sisflora system lengthy after his entry ought to have been revoked.

His spouse, Marisa, informed the federal police that she thought the cash transferred to her checking account referred to Zerza’s consulting work, an allegation that didn’t persuade the prosecutor. “He’s the one which has to examine and nice in case of any irregularities. However he goes and advises the corporate and prices for it. It’s one thing completely incompatible [with his role],” Machado informed Mongabay. “He violates the duties of loyalty to the administration. One of many duties that public servants have is loyalty to the general public administration.”

In his testimony, Cezar denied paying bribes, claiming that he had deposited cash in Zerza’s spouse’s account as a result of he had requested Zerza to purchase a used cell phone, however the funds weren’t used.

“Cezar denied the fee of bribes and when confronted with the message forwarded by Markus with financial institution particulars of his spouse Marisa dos Santos Zerza, [he] offered a fantastic model that this occurred as a result of he requested Markus to see [buy] a used cell phone within the metropolis of Bauru, however the deal didn’t work out.”

In a problem filed in September 2021, Indusparquet mentioned it “has no relationship with the details narrated within the criticism, having not provided in its title or by any worker or consultant an undue benefit, obtained a bonus from a public servant, a lot much less induced harm to public property, which is a requirement for motion processing,” including that the MPF lawsuit was primarily based on a “chaotic narrative.”

Additional proof got here in Might 2018, when Cezar was taken into custody and contacted Indusparquet’s co-owner Jose Antonio Baggio to search out out if the corporate would appoint a lawyer, based on a Federal Police report.

Photo of Markus Otto Zerza and wife Marisa
Picture of Markus Otto Zerza and spouse Marisa in a Federal Police file obtained by Earthsight and Mongabay. Picture courtesy of Federal Police / Federal Prosecutor’s Workplace – São Paulo.

In an emailed assertion, Indusparquet denied the accusations and any hyperlink between Operation Pátio and the federal prosecutor’s lawsuit. The corporate claimed that the lawsuit lacked any environmental harm attributable to Indusparquet and concerned “mere questions on administrative info offered to IBAMA,” including that it had no unlawful relationship with IBAMA workers.

In an emailed response, Uliana mentioned that it might be accessible to make clear the details as soon as the case had been processed, noting that reporting on the case “might trigger irreparable harm to the corporate.”

In an announcement, Baurupisos offered a generalized response, principally stating that there have been no new details offered by the investigation and the lawsuit was beneath secrecy. Like Uliana, it claimed that “if there’s any publication of data lined by authorized secrecy that in any means is dangerous to the corporate’s picture, its representatives, by their authorized counsel, will take the required authorized measures to be able to maintain the creators of the disclosure in query civilly and criminally liable.”

In an emailed response, Ulimax mentioned it had not but been confirmed that Zerza had acted on behalf of its agency or that it had contracted Zerza’s companies to commit illegal acts. Nonetheless, it didn’t deny that it used Zerza’s companies, claiming that the hiring of the IBAMA worker came about solely “to help the corporate in adjusting the inventory stored within the IBAMA system” and that such changes had not been doable to make attributable to inconsistencies within the system itself. Ulimax additionally questioned the extent of penalties required by the prosecutor, stating that if the penalties concerned have been correctly calculated based on related laws, “the quantity of the nice, if due, falls significantly.”

In an e mail, Cezar denied the accusations, claiming he was “wrongly” included within the investigation and that a few of his messages with Zerza “have been interpreted out of their actual context.” “I’ll have the chance to defend myself and current, on to the decide, the proof and paperwork that may exhibit that I’ve nothing to do with the investigated scheme,” Cezar wrote, including that “neither I nor the corporate I labored for participated on this alleged scheme.”

Indusparquet-flooring-sales in the US
Picture by Earthsight

Zerza and his spouse acknowledged the receipt of requests for remark however did reply inside the deadline; the opposite companies named within the case didn’t reply to requests for remark.

Combating corruption

The federal police inquiry into the bribery scheme continues to be ongoing, because it includes a whole bunch of corporations. The pile of paperwork grows each 90 days, Machado informed Mongabay, when updates on the police probe are despatched to his workplace. He mentioned he has labored by a whole bunch of pages of proof to file as many instances as he might in opposition to the companies, and there was sufficient proof to cost them for corruption. He managed to file 28 fits in opposition to 42 corporations by July this 12 months, when the deadline to keep away from the statute of limitations of 5 years expired.

For the felony prices, the deadline is for much longer: 20 years. Machado informed Mongabay he has filed 15 felony lawsuits concentrating on Zerza and his spouse and 30 others concerned within the scheme. And plenty of extra fits are on the way in which, Machado mentioned, as Operation Pátio is now beneath MPF’s Particular Motion Group to Fight Organized Crime (Gaeco) coordinated by him in São Paulo. “He [Zerza] negotiated with the entire corporations he had contact with. So he negotiated with all of them, receiving bribes from all sides.”

Machado defined that he initially filed the fits aggregating all corporations that benefited from Cezar’s actions. However a June 2021 courtroom determination by Federal Decide Marcelo Freiberger Zandavali ordered he needed to file one go well with for every agency.

“This separation will probably be dangerous for the general public civil motion,” he informed Mongabay. “Why? As a result of there’s a hyperlink between these corporations: The hyperlink is Indusparquet’s worker itself [Cezar] and the hyperlink is the truth that these corporations do enterprise with Indusparquet. There’s a cause why I left all of them in the identical motion.”

The lawsuits have been initially publicly accessible, however the courtroom information have since been sealed.

Though Machado mentioned that IBAMA had been cooperative, he added that the company had sat on proof of crime for years.

Regardless of his confession and the proof in opposition to him, Zerza continued to work as an IBAMA worker for nearly three years, till March 4, 2021, when he was lastly faraway from his place by ministerial decree. IBAMA didn’t reply to requests for remark.

Cezar continues to be working at Indusparquet’s headquarters in Tietê.

Machado, nevertheless, is optimistic about punishments in opposition to the defendants, given the accessible proof. “If the actions are thought of to be legitimate, which I consider they are going to be … [the evidence of corruption] is constant, this alone offers very excessive penalties, each in felony and civil actions of the anti-corruption legislation.”

Beneath the anti-corruption legislation, he defined, the utmost sentence is 12 years. Firms can obtain fines of as much as one-fifth of the businesses’ gross revenues and be compelled to pay damages. Machado additionally requested the businesses’ suspension from actions like buying and selling timber and using IBAMA’s credit system and timber yards for no less than two years, in addition to a possible ban on receiving subsidies or loans from public our bodies of between one and 5 years.

“The legislation needs to stop public brokers from engaged on the idea of receiving benefits or promising benefits,” Machado mentioned. “So, it’s understood that there’s a very nice gravity when this occurs, in order that the penalties for corruption crimes are excessive.”

Picture by Samuel Bono / Earthsight

Political ties within the Amazon

Two years in the past, authorities seized within the Amazon area the biggest batch of unlawful timber in Brazil’s historical past: 226,760 cubic meters (296,591 cubic yards), sufficient to fill 90 Olympic-size swimming swimming pools, price greater than $25 million on the time. The operation, code-named Operation Handroanthus, was carried out by the nation’s Federal Police and IBAMA in late 2020. One 12 months later, the minister of setting was ousted.

As a part of this investigation, we found that Indusparquet was additionally implicated in that fraudulent scheme as a purchaser of wooden from two farms the place unlawful timber was seized as a part of the raid.

Holding a concession in Pará, MDP Transportes had timber seized. The agency went to courtroom to get its logs launched, a transfer adopted by different sawmills. Initially, MDP succeeded, with a decide authorizing the discharge of the timber in Might 2021, however a Supreme Federal Courtroom determination nullified it a month later.

Nonetheless, the Federal Police in Amazonas discovered that MDP’s 31,500 cubic meters (41,200 cubic yards) of seized logs had disappeared or have been bought to corporations focused by the operation between June and August 2021 — when the products have been guarded by Brazil’s Military (which performed a collaborative function in Operation Handroanthus) — based on paperwork obtained by Brazilian journal Carta Capital.

Earthsight’s evaluation of official paperwork seen by Mongabay discovered that MDP bought 550 cubic meters (719 cubic yards) of jatobá logs (Brazilian cherry) in that interval to 2 sawmills, Madeireira Moju and Madeireira Portes In. Comercio e Exportação Eirelli – EPP. Of this whole, 44 cubic meters (57.5 cubic yards) of sawn jatobá entered Indusparquet’s provide chain in October 2021.

Deforestation in Para
Operation Handroanthus in Pará. Photos by Flávio Reis / Earthsight.

The investigation additionally revealed that one of many suppliers had obtained fines totaling practically $200,000 between 2015 and 2019, together with for getting into false info in official timber databases.

The opposite farm that sourced was Francine II, which accounted for 41,202 cubic meters (53,890 cubic yards), or 18%, of the full unlawful timber seized within the crackdown.

An evaluation of timber transport paperwork reveals that Francine II bought 200 cubic meters (261.6 cubic yards) of cumaru, also called Brazilian teak, to RSK sawmill, positioned close to Pará’s capital Belém, 800 kilometers (497 miles)  to the east. Between June and August 2021, RSK sourced 110 cubic meters (144 cubic yards) of sawn cumaru by 11 transactions shipped to the flooring big in São Paulo.

Like Francine II, RSK was additionally beforehand implicated in wrongdoing. Between 2015 and 2018, the lumberyard was fined 12 — about 1.59 million reais ($308,000) — for varied offenses: not having the paperwork required to have the ability to show the authorized origin of its timber; not having the proper storage permits for timber; getting into false info within the official timber databases for Pará state; and for discrepancies within the quantity of wooden the corporate is legally licensed to promote (timber credit) and volumes declared on harvesting permits, IBAMA paperwork present.

Regardless of all of this, RSK is Indusparquet’s largest provider in Pará, promoting over 3,100 cubic meters (4,055 cubic yards) to the agency between 2018 and 2021 — the final 12 months information was accessible — or about 20% of timber the corporate purchased from its 81 suppliers within the state, based on Earthsight’s evaluation of timber transport paperwork.

Indusparquet's website
Indusparquet’s web site advertises its Brazilian Cherry flooring. Picture from Indusparquet.

Political ties

At Francine II’s farm, authorities seized extra unlawful timber than at another location in Operation Handroanthus, based on a letter despatched to the Federal Supreme Courtroom by the ex-police chief of Amazonas state, Alexandre Saraiva, who masterminded the crackdown. Accompanied by a bunch of native politicians, Ricardo Salles, the controversial former setting minister, visited the Francine II farm whereas he was in workplace to foyer for the timber to be launched.

“We checked the tree monitoring system. Tags on the logs point out the precise location the place they got here from,” Salles tweeted on March 31. “We walked into the woods to test it out. The information matched simply nice. Now we’ll verify the DNA take a look at of the samples.”

“There are severe individuals doing the job proper. It isn’t proper to demonize your complete timber sector. It’s essential to determine the criminals and punish them harshly, however with out generalizing.”

Every week later Salles returned to Pará. His journeys to Francine II adopted two conferences in March with a bunch of businessmen — landowners in Pará and timber sellers — and politicians lobbying for the timber to be launched at his workplace in Brazil’s capital, Brasília. One in all them was Rafael Dacroce, the grandson of Walter Dacroce, Francine II’s proprietor.

When questioned by reporters in regards to the reunion, Dacroce mentioned Salles had promised to look into his case and would ask the pinnacle of IBAMA and different politicians to do the identical. “He wished to know, however at no time did he make a pre-judgment, look, oh, you’re proper, so we’ll launch the wooden tomorrow,” he mentioned.

Following Salles’ go to  to Francine II, Dacroce posted on Instagram his pleasure in regards to the official go to “to oversee the legality of the extraction of wooden within the state of Pará, coming from sustainable administration tasks! That is the Brazil we would like.”

Construction of the Belo Monte
Development of the Belo Monte hydroelectric dam. Picture © Greenpeace.

Salles reportedly arrived in an IBAMA helicopter to certainly one of Dacroce’s farms used for the unlawful extraction of no less than 43,000 logs, based on Brazilian journal ISTOÉ.

In his letter to the Supreme Courtroom, Saraiva highlighted the proof of illegality unearthed by the operation, accusing Salles of discrediting police investigations and appearing “like a real advocate for the logging trigger.” Saraiva was faraway from his place and demoted the following day.

Later that very same month, Salles mentioned he had been pressured by a number of politicians to behave to launch the seized logs, based on an interview with the Brazilian radio community CBN.

In Might 2021, courts in Pará and Amazonas states responded to the timber firm’s plea, ruling that the seized logs must be launched. Salles proudly tweeted in regards to the Amazonas decide’s determination. The Pará decide’s ruling was issued the identical week that Salles made one other journey to Pará, that point to oversee IBAMA and police operations.

However a choice from Supreme Federal Courtroom Justice Carmen Lucia suspended each choices in June. Later that month, the conduct of Federal Decide Antonio Campelo, the creator of Pará’s ruling, started to be investigated by the Nationwide Council of Justice (CNJ), a watchdog that screens judicial independence. Campelo was faraway from his place in December, following the probe that discovered that he had didn’t act impartially and precisely by ruling on the case throughout his trip, violating the judiciary’s code of conduct.

In June 2021, Salles was ousted “upon request” after being named in an unrelated felony investigation into alleged unlawful exports of Amazon timber, particularly from Pará. The identical timber foyer group that had approached Salles throughout Operation Handroanthus was additionally named in the identical probe.

Regardless of the entire exercise associated to earlier makes an attempt to launch the seized wooden within the aftermath of the operation, in January 2022, lawyer Frederick Wassef managed to launch a part of the seized wooden of MDP Transportes, one of many timber corporations whose logs had been seized. Wassef can be President Jair Bolsonaro’s lawyer,  together with different high-profile shoppers.

Federal Prosecutor Raquel Branquinho criticized the choice to launch the timber, claiming that it ought to solely have been made as soon as “these precautions of correct identification of the wooden are complied with, as a result of the query of ‘legalization’ or not of those items is exactly the item of the felony investigation.”

Picture by Samuel Bono / Earthsight

 ‘A grotesque land seize’

Spanning greater than 600 hectares (1,482 acres) of dense forest in Santarém municipality, the Francine II farm has over 20 species of tropical bushes, together with ipê, jatobá, angelim, cumaru, tauari — all are extremely favored by the timber business and a few are in decline — based on its authorizations for forest exploitation (AUTEFs) seen by Mongabay and Earthsight.

Past the unlawful logging allegations, Saraiva additionally accused Francine II’s homeowners of land grabbing. “It’s a grotesque, grotesque land seize,” Saraiva informed Mongabay and Earthsight in a video interview. He referred to the means by which the Dacroce household, dubbed “’skilled land grabbers” by Brazilian journal ISTOÉ, had acquired possession of a number of properties in Pará.

Saraiva’s letter to the Supreme Federal Courtroom additionally challenged the legality of the farm’s logging allow, describing a number of flaws in Francine II’s forest administration plan. One in all them was its overlap with protected areas referred to as Everlasting Preservation Areas (APPs), Saraiva mentioned in a session on the Decrease Home of the Congress in April 2021.

In an emailed response, Francine II dismissed the accusations, claiming that generalizing the time period “unlawful” harmed wooden producers, including it had in hand all of the documentation that proved the legality of the exercise. The farm additionally mentioned that it had by no means been notified about IBAMA’s seizure of wooden from the farm within the operation. “We will affirm and show that the woods originated from the Francine II farm are authorized. Assertions of illegality are completely slanderous and tendentiously defamatory, with out due proof and due means of legislation for ascertaining the details.”

Deforestation and fire in the forests of Pará.
Deforestation and hearth within the forests of Pará. Picture © Greenpeace.

The corporate mentioned that its forest administration is developed inside the parameters of sustainability, that there was no deforestation within the property and that the aim of Rafael Dacroce’s assembly with Salles was to attract the eye of the competent authorities to the misguided and maliciously reported info, however that Salles by no means visited the farm itself or the corporate’s yard. In response to our findings that RSK had equipped wooden from Francine II to Indusparquet, they replied: “There’s a Brazilian legislation that prohibits the sale of authorized wooden?”.

Francine additionally denied that solely the Francine farm had authorization within the area.

MDP Transportes, RSK, Madeireira Moju and Madeireira Portes didn’t reply to requests for remark made by Earthsight and Mongabay. Indusparquet didn’t particularly reply to the findings of this part when reached for remark.

Uncontacted Indigenous teams in danger

In one other case of obvious illegality linked to Indusparquet that we found, the corporate has acquired timber that was allegedly illegally harvested from an Indigenous reserve in the course of the Amazon rainforest.

Between January and February 2017, the flooring big bought 137.69 cubic meters (180 cubic yards) of three completely different species of wooden from the Ituna-Itatá Indigenous Reserve in northern Pará state, based on an Earthsight evaluation of official timber buying and selling paperwork issued by the Pará environmental division.

deforestation on Ituna Itatá indigenous land.
Picture nonetheless from Greenpeace footage displaying deforestation on Ituna-Itatá Indigenous land. Picture © Greenpeace.

Overlaying 142,000 hectares (350,000 acres) throughout the municipalities of Altamira and Senador José Porfírio, Ituna-Itatá is house to Indigenous uncontacted teams, together with the Asurini individuals. Brazil is house to the world’s largest variety of uncontacted societies, thought of probably the most weak individuals on the planet.

Indusparquet purchased cumaru, ipê and jatobá — extremely precious logs within the timber market — originating from Morro Alto Farm, a 3,829-hectare (9,461-acre) property overlapping the Indigenous reserve, accounting for two.6% of its space, paperwork present.

Earthsight recognized three shipments, with 96.67 cubic meters (126.44 cubic yards) of cumaru and ipê from Morro Alto, that have been bought to Indusparquet by sawmill MadBrasil Eireli EPP; and 40.94 cubic meters (53.55 cubic yards) of jatobá that have been sourced by Canoer Industria e Comercio Importação e Exportação Eireli EPP. Each lumber yards are positioned in Anapu, a city the place the American missionary Dorothy Stang was murdered in 2005, not removed from Ituna-Itatá.

Harvesting timber and constructing a farm inside an Indigenous reserve are unlawful beneath Brazilian legislation, which protects — or ought to defend — the realm from outsiders. So how might Morro Alto farm be constructed contained in the reserve?

The story goes again a decade, when the federal authorities gave the inexperienced mild to construct the controversial Belo Monte hydroelectric dam — one of many largest infrastructure tasks on the planet — in Pará,prompting outrage from environmentalists and celebrities worldwide.

Amid a courtroom battle to halt the development of Belo Monte, in 2011 the federal authorities created the Ituna-Itatá Indigenous reserve, following research assessing the affect of the dam and proof in regards to the existence of uncontacted teams within the space.

A September 2009 doc from the nation’s Indigenous affairs company Funai acknowledged the presence of uncontacted Asurini individuals within the area because the Seventies. One other Funai doc from July 2009 additionally introduced proof of Indigenous individuals within the north of Koatinemo Indigenous Territory, which borders Ituna-Itatá; traces left behind by the group have been detected inside and out of doors its boundaries and within the headwaters of the Ituna River.

Uncontacted tribe's pot discovered inside Ituna Itatá Indigenous Territory
Uncontacted tribe’s pot found inside Ituna-Itatá Indigenous Territory, August 2021. Picture courtesy of Funai through Survival Worldwide.

The acquisition of Morro Alto by Evandro Carlos de Oliveira and Wilson Paulo da Mota was agreed only one month after Funai’s final report, in October 2009. De Oliveira and da Mota had additionally beforehand claimed possession of two different properties inside Ituna-Itatá: the Sossego and Serra Dourada farms, accounting for six,431 hectares (15,891 acres). Morro Alto lies between them.

To be able to begin logging at Morro Alto, they needed to undergo a prolonged course of to safe timber extraction permits from Para´s environmental secretariat (Semas). However paperwork present that they utilized for these permits months earlier than acquiring the farm’s land title and even employed an agronomist to conduct a georeferencing evaluation to be filed whereas the method was ongoing. The allow was issued by Semas in August 2016, stating that there was “no overlap of the realm with any Indigenous territory,” ignoring Funai’s determination that had denied entry to outsiders since 2011. Timber exploration began quickly after, information present.

In February 2017, whereas Indusparquet was shopping for wooden from Morro Alto, Funai despatched a letter to Semas demanding all extraction permits contained in the reserve be suspended, a request that was immediately fulfilled by native authorities.

Some months later, IBAMA fined sawmill MadBrasil 673,000 reais ($131,500) for offering false details about a whole bunch of cubic meters of timber on its monitoring system. Two of those fines have been issued in April and Might 2017, a interval near when it bought timber to Indusparquet, nevertheless it was unclear whether or not it referred to these shipments.

There was no indication of timber from Morro Alto having been bought to the flooring big since 2017. Nonetheless, MadBrasil is Indusparquet’s fifth largest provider in Pará (of 81 suppliers), promoting 587 cubic meters (767 cubic yards) of wooden to the corporate between 2016 and 2021, paperwork present..

In 2020, MadBrasil and Canoer have been fined once more, that point 1.72 million reais ($336,000) for missing permits and for hiding the true origin of timber in official databases.

Courtroom information additionally reveal that Morro Alto’s homeowners have been fined $2.76 million in 2021 by IBAMA for a number of environmental crimes. One of many violations was clearing nearly 1,000 hectares (2,471 acres) of native forest within the Ituna-Itatá reserve in March 2021 in an space not lined by their license, breaching entry restrictions to an space the place uncontacted Indigenous teams stay. Information additionally present that 388.98 hectares (961 acres) inside Morro Alto was sanctioned by the courts, which positioned a moratorium on its use.

Deforestation in Para
Circumstances in Ituna-Itatá, Pará. Photos by Flávio Reis / Earthsight

Though the license to construct Belo Monte was solely imagined to be accepted after the demarcation of all Indigenous lands affected by the dam, Ituna-Itatá has but to be formally given protected standing. “And the safety measures that have been supposed to come back from [Belo Monte dam] environmental compensation elements by no means received off the bottom,” Ricardo Abad, a geoprocessing analyst at nonprofit Instituto Socioambiental (ISA), informed Mongabay and Earthsight in a video name. “The indemnities, the development of surveillance bases, which have been to be put in, a lot of them didn’t materialize. Most have been nearly like paying alms to some ethnic teams which might be there. However structural actions to clear the areas and promote surveillance and territorial safety weren’t carried out.”

However full safety of the realm must be ensured no matter that bureaucratic step, rights teams say.

“The structure is evident. As quickly because the land is acknowledged as conventional Indigenous land primarily based on a Funai research, all [private] titles over it’s to be thought of void,” Cerqueira de Oliveira, government secretary of the Indigenist Missionary Council (CIMI), an advocacy group affiliated with the Catholic Church, informed Earthsight earlier within the 12 months.

Greater than 220 settlers, together with Evandro Carlos de Oliveira and Wilson Paulo da Motada Mota, have used the Rural Environmental Registry (CAR), a obligatory however self-declaratory registration of rural properties, to assert their land rights over Ituna-Itatá, based on a Greenpeace report that estimates that just about 94% of the Indigenous reserve has now been claimed as personal land.

About 22,000 hectares (54,300 acres) of its forests have been logged since 2011, or 15% of its space, based on a January report by COICA, the Coordination of the Indigenous Organizations of the Brazilian Amazon, an Indigenous umbrella group, and OPI, the Human Rights Observatory for Uncontacted Indigenous Individuals. Earthsight’s evaluation of satellite tv for pc imagery additionally discovered greater than 700 hectares (1,729 acres) cleared inside Morro Alto since 2017, elevating issues over whether or not illegally harvested timber had been extracted from the location.

Satellite tv for pc evaluation by ISA additionally present in March 2019 {that a} highway was constructed illegally within the south of the Indigenous territory, the place remoted Indigenous teams are considered settled. Estimates within the COICA/OPI report recommend 289 kilometers (179 miles) of roads have been laid contained in the reserve, of which 220 kilometers (136.7 miles) have been in-built 2019. Energy strains and lampposts to new homes have been additionally detected within the reserve in December 2021, based on ISA and the Coordination of Indigenous Organizations of the Brazilian Amazon (COIAB).

The Belo Monte hydroelectric dam
The Belo Monte hydroelectric dam on the Xingu River within the state of Pará, Brazil. Picture by Bruno Batista / VPR (CC BY 2.0)

Abad mentioned that ISA has been monitoring the area since 2017, together with flyovers to detect criminal activity within the Indigenous reserve. However he mentioned the nonprofit wasn’t capable of fly over the realm anymore as a result of the one helicopter pilot “kind of” dependable was concerned with land grabbing, which is led for 2 or three completely different teams inside the Ituna-Itatá.

Like different Indigenous areas that aren’t absolutely demarcated, Ituna-Itatá has been protected by short-term measures limiting outsiders’ entry to the realm for simply six months. That interval was attributable to expire in August 2022, however the restriction was prolonged for one more three years.

If squatters have been allowed to stay in Ituna-Itatá, it might set a harmful precedent that might contribute to “the extermination of greater than 100 teams that stay in isolation in different Indigenous lands and beneath the identical situation in Brazil,” Greenpeace mentioned in 2021.

With out denying our findings of wrongdoing in regards to the Pará suppliers, Indusparquet said that it had strict insurance policies for the number of suppliers and doc assortment and that it was devoted to enhancing provider evaluation mechanisms. It mentioned that it was implementing a compliance division to handle and map dangers and was utilizing the assistance of varied companions to supply danger assessments and enhance transparency.

In an emailed assertion, Semas mentioned that greater than 260 Rural Environmental Registry (CARs) within the Ituna-Itatá Indigenous Territory have been suspended, canceled or beneath evaluation. It added that it requested that the nationwide authority accountable for the Nacional System of Rural Environmental Registry (SICAR) modify the system to stop the registration of CARs within the Indigenous territory.

MadBrasil, Canoer, de Oliveira and da Mota didn’t reply to requests for remark.

Deforestation on Ituna-Itatá Indigenous territory. Images by Hugo Loss / IBAMA.

Who’s the U.S. consumer?

Within the Paraná case, the bracatinga search in União da Vitória was triggered by a U.S.-based importer, Baggio mentioned throughout his courtroom listening to in November 2021. “We had performed some enterprise with bracatinga … By request of a consumer in america who favored the wooden, we went after shopping for extra bracatinga.”

So who is that this American consumer?

We discovered proof that the client Baggio was referring to is Ground & Decor, America’s largest flooring retail chain, which was beforehand concerned in unlawful timber scandals with Indusparquet.

Earthsight’s evaluation of delivery information reveal that Ground & Decor bought Brazilian tropical flooring manufactured by Indusparquet between 2015 and 2019 and was the agency’s largest U.S buyer within the interval.

Though courtroom paperwork present that the defendants within the Paraná case ended up supplying Indusparquet with simply 35.64 cubic meters (46.6 cubic yards) of bracatinga, properly under the specified quantity of 250 cubic meters (327 cubic yards), additional analysis revealed that the flooring big managed to get a bigger quantity of wooden for its consumer.

Earthsight additionally discovered that Granatyr, the sawmill proprietor quoted within the calls, additionally bought 10 cubic meters (13 cubic yards) of bracatinga from one other lumber yard that wasn’t probed within the courtroom case. In his testimony, Puzyna, who acted as an middleman within the deal, asserted that the bracatinga could be used to provide picket ground tiles.

Indusparquet exported 27,590 tons of merchandise to the united statesbetween January 2017 and August 2022. By analyzing commerce information, Earthsight discovered that just a few American corporations have been importing wooden tiles and wooden merchandise constituted of all kinds of wooden species produced by Indusparquet in that interval.

Not one of the 2017 shipments to Ground & Decor or any of the U.S. corporations specified the species. There’s additionally no indication that the retailer straight purchased wooden from Indusparquet and its title disappeared from cargo information in late 2019.

Deforestation in Parana
Circumstances in Paraná. Photos by Flávio Reis / Earthsight

Headquartered in Georgia, Ground & Decor is without doubt one of the largest specialist flooring retailers within the U.S., with annual gross sales of $3.4 billion in 2021 and about 90 shops all through the nation. Till being delisted from cargo information, it was additionally Indusparquet’s largest American buyer, solely behind Indusparquet’s subsidiary in Miami, BRW Flooring, which accounted for greater than half of its merchandise traded to the U.S.

Nonetheless, a clue was discovered on the corporate’s web site: an commercial of “bracatinga Merida” distressed engineered hardwood, a flooring product beneath its “Quest Unique Hardwoods” flooring line — the identical product on the heart of a 2018 Earthsight report on the connections between Ground & Decor and Indusparquet. Additional analysis signifies that it might have been one of many solely two U.S. importers that particularly listed a product constituted of bracatinga on the market on its web site.

Cargo information expose extra clues: Masterpiso — Indusparquet’s subsidiary in Paraná — despatched 96 tonnes of bracatinga wooden flooring to the U.S. by no less than 4 shipments to 2 freight forwarding corporations. Though the title of the ultimate consignee wasn’t disclosed, Earthsight discovered that those self same freight corporations had been used as intermediaries by Ground & Decor for its Brazilian imports from Indusparquet.

It additionally discovered the ‘’bracatinga Merida’’ flooring line completely bought by Ground & Decor within the description of the cargo information. There was no proof that the bracatinga processed by Granatyr’s sawmill or that Aleixo had helped to supply was among the many shipments obtained by Ground & Decor.

Though cargo information point out that Ground & Decor stopped shopping for Indusparquet merchandise in November 2019, the bracatinga merida flooring continued to be marketed on the corporate’s web site till September 2022, when Earthsight purchased a field of “bracatinga merida” flooring, manufactured in 2019, in Northern Virginia. After Monbagay and Earthsight reached Ground & Decor for remark, the web page for that product all of a sudden disappeared.

Requested particularly by Mongabay and Earthsight about being the American consumer talked about within the Paraná courtroom case, Ground & Decor mentioned it was dedicated to accountable sourcing practices and that it had not bought any Brazilian-made flooring from Indusparquet and its associates since 2019. The corporate mentioned its final buy of “bracatinga merida” product occurred in 2019, including that that line had since been discontinued. Ground & Decor mentioned the product was now unavailable by looking its web site, including that there was a residual product web page for it to be present in web searches, which they have been making an attempt to resolve.

Made with Flourish

Different patrons

In April 2018, the identical month Indusparquet was focused within the Paraná lawsuits and only a month earlier than Operation Pátio, the primary shipments from the flooring big reached Ground & Decor’s archrival: Lumber Liquidators (now LL Flooring), an organization that paid the very best nice in U.S. historical past ($13 million) for knowingly shopping for unlawful timber.

Regardless of guarantees of compliance commitments in 2016 and its purchases supposedly being watched by unbiased auditors and the U.S. Division of Justice, LL Flooring began buying from Indusparquet in April 2018, Earthsight discovered.

Between Might 2018 and the tip of its probation interval in October 2020, LL Flooring imported no less than 6.3 million sq. meters (7.53 million sq. yards) of Indusparquet’s flooring, with an approximate retail worth of $6 million.

The retailer’s purchases of engineered flooring from Masterpiso, Indusparquet’s subsidiary in Paraná, continued till no less than October 2021, based on the findings. The products included merchandise made with floor layers of Brazilian oak (Tauari) and Brazilian cherry (jatobá), and bought beneath the product line names “Forest Hill,” “Esperanza,” “Bandera” and “Padre.”

Through the years, solely certainly one of 4 audit experiences required within the probe has been made publicly accessible. Authored by legislation agency Grant Thornton, it didn’t point out Brazil for the interval between January 2018 and Might 2018.

LL Flooring didn’t reply to requests for remark.

Timber export to US
Picture by Earthsight

Indusparquet’s flooring exports to the U.S. got here to six,234 tonnes — up 23% from 2020 and seven% from 2019 — with a retail worth of about $50 million. A part of that development got here from Indusparquet’s new shoppers.

In 2019, the corporate began promoting to Bison Revolutionary Merchandise, a Colorado-based agency specialised in exterior decking “tiles,” principally for rooftops. The corporate’s items embody a spread of South American tropical species, together with ipê, cumaru, massaranduba and garapa. Shipments till March 2021 reached 3,571 tonnes, based on Earthsight’s evaluation.

Though Bison’s title disappeared from delivery information after that interval, nearly an equal month-to-month quantity was shipped from Indusparquet to the U.S. till December of that 12 months to an nameless purchaser, with the identical commodity descriptions, and shipped by the identical port.

In an emailed letter, Bison solely acknowledged the receipt of requests for remark, saying that it might evaluation the offered info.

In July 2019, Indusparquet’s U.S. subsidiary BRW Flooring sealed a cope with Dallas-based flooring agency Fuzion to promote its merchandise throughout Texas, Oklahoma, Louisiana, Arkansas, Mississippi and western Tennessee, amongst others. In 2021, Indusparquet signed a distribution settlement with Galleher, one of many largest flooring producers and distributors within the U.S. Neither Fuzion nor Galleher responded to requests for remark.

Moreover, Earthsight’s evaluation discovered indications that Indusparquet was supplying main U.S. DIY chain Menards, which reported $10.7 billion in income in 2020, one of many “huge three” U.S. field shops alongside Lowe’s and House Depot. On Menards’ web site, there’s one tropical species of strong wooden flooring on sale branded by BRW Flooring, constituted of what it calls “Brazilian Pecan,” the widespread U.S. commerce title for the Brazilian tree species Guaiuvira (Patagonula americana), which, like bracatinga, grows within the remaining fragments of the Atlantic Forest.

Earthsight purchased a pattern of that product in September however discovered that it was made in Paraguay, which can be lined by the Atlantic Forest. Menards didn’t reply to a request for remark.


Over a number of years, a variety of experiences have raised purple flags over Brazil’s management system, indicating it couldn’t be trusted to supply proof of legality of wooden contemplating the size of fraud within the sector.

In 2008, it was revealed that IBAMA’s database was hacked by timber corporations, which edited info that allowed them to launder 1.7 million cubic meters (2.2 million cubic yards) of unlawful logs from Pará state, possible the only largest unlawful timber case in historical past.

In 2014 and 2015, systematic fraud inside the nation’s timber monitoring and legality assurance programs have been uncovered in Greenpeace experiences. One of many key case research was additionally in Pará, the place a single licensed forest was used to launder an estimated $7 million of ipê by frauds within the DOF system. In 2018, one other Greenpeace report confirmed the inadequacy of official documentation as a assure of the authorized origin of Amazon timber.”

This 12 months, some 10 million cubic meters (13 million cubic yards) of Amazon timber manufacturing was tracked for the primary time, based on a latest report launched by nonprofit Imazon. Pará is the biggest producer of processed timber, accounting for 47% of the Amazon’s exported logs. The state additionally leads unlawful logging within the biome.

Via a system referred to as Simex, which cross-references official timber manufacturing paperwork with satellite tv for pc photographs, Imazon estimated that about 70% of timber extracted from Pará between 2008 and 2020 was inconsistent with official information, Dalton Cardoso, a researcher at Imazon informed Mongabay and Earthsight in a video name.

Among the many inconsistencies, Cardoso defined, the commonest are overestimation of species of excessive industrial worth, licensed areas in areas already exploited up to now, and logging that begins earlier than the licenses are issued.

When Imazon’s evaluation was accomplished, the info have been despatched to Pará’s environmental division (Semas), nevertheless it typically didn’t reply, Cardoso mentioned. “We have now identified the place there are indications of irregularities since 2008, however till as we speak we nonetheless observe the recurrence of inconsistencies.”

Semad didn’t reply to a request for remark in regards to the inconsistencies.

Consultants defined how these frauds have been widespread within the timber business.

“Illegality happens in a number of hyperlinks within the chain,” Leonardo Martin Sobral, forest supervisor at Imaflora, a nonprofit targeted on sustainable administration, informed Mongabay and Earthsight in a video name.

Within the case of overestimation of species, he defined, it was principally used to launder timber extracted from protected areas, together with Indigenous lands. “With regards to Indigenous land, it’s all unlawful as a result of they don’t have authorization to do forest administration on Indigenous land.”

He criticized the dearth of knowledge and transparency from the vast majority of states, which hampers traceability of the provision chain and facilitates flaws within the IBAMA system. “The system isn’t dangerous. … It’s topic to this type of irregularity,” he mentioned. “However rather more than a greater system … What’s missing most is the sector operation. It’s to confront the documentation that’s being issued with the truth on the bottom.”

One of many points that made it harder to trace the origin of the timber, he added, was when the provision chain included a number of suppliers, making traceability very complicated. “If one buys from a provider, however that provider’s chain is gigantic, complicated, this can make due diligence work rather more tough.”

Within the final six years, Indusparquet has obtained wooden from 416 completely different sawmills, based on our analysis. That determine solely contains suppliers in 4 Brazilian states for which it was doable to acquire information. And the databases of Pará and Mato Grosso states — the nation’s largest wooden producers — should not built-in with the central system, rising the danger of fraud.

That’s why Renato Morgado, program supervisor at nonprofit Transparency Worldwide in Brazil, was calling on patrons to conduct due diligence on their suppliers. “Along with the requirement for all authorized documentation [a company should have] a minimal system of verification of its suppliers,” he mentioned. “That is necessary to have, to make sure or no less than to have larger safety in relation to the origin of that wooden.”

“I wished to strengthen this message for corporations shopping for wooden. And never simply corporations. We as ultimate customers do too. We have now to fret about its origin. It’s not simply going there and accepting any doc, any salesperson’s speech and going out to purchase,” mentioned Sobral. “Particularly for corporations that purchase a bigger quantity, it will be significant for them to remember that it’s a complicated chain. It’s a chain that has dangers. And that it must take actions to reduce that danger.”

Satellite footage of Ituna Itatá Indigenous land
Satellite tv for pc footage of Ituna Itatá Indigenous land taken December 2016, when the land is usually forested, and December 2020, when vital deforestation has taken place. Picture by Landsat / Copernicus.

Corruption-led fraud

Corruption is often a key aspect behind fraud within the timber sector, consultants say, particularly as a result of it usually includes authorities officers who don’t conduct correct oversight and permit wrongdoing in trade for the fee of bribes.

Within the Paraná case, the state “misplaced whole management” over environmental enforcement, Mario Mantovani, who led the nonprofit SOS Mata Atlântica for 30 years, informed Mongabay in a telephone interview. “Paraná is now in favor of environmental crime,” he mentioned. He defined that the area round União da Vitória had the very best deforestation fee within the state. “And what they did was dismantle the environmental company. … No extra supervision. There’s nothing else.”

There was “on the very least, a battle of curiosity,” mentioned Morgado of Transparency Worldwide. “It’s anticipated that there will probably be [at least] an investigation on the administrative degree to find out … if there was the use, abuse of the place for personal achieve.”

Paraná’s Environmental Institute (IAP) didn’t reply to a request for remark.

Acquittals in corruption instances and up to date adjustments within the Brazilian authorized framework have emboldened corrupt actors within the sector, consultants say.

“What we are literally experiencing is a time of setbacks within the authorized and institutional anti-corruption framework. That is occurring in a short time,” Morgado mentioned, referring to latest adjustments within the administrative improbity legislation, amongst others. “These setbacks clearly give a sign that corruption will probably be tolerated and never punished. … This makes personal and public brokers extra prepared to commit acts of corruption.”

In August, the Supreme Federal Courtroom determined that the brand new statute of limitations offered by the brand new administrative improbity legislation was not retroactive for ongoing instances, which was seen by consultants as a constructive transfer that might doubtlessly change the standing of ongoing instances through which the brand new legislation was utilized.

“Contemplating that the STF has understood that the brand new statute of limitations will not be retroactive, choices within the first and second cases that determined in any other case could also be questioned and finally reviewed,” Morgado informed Mongabay.

Corruption was a “very frequent” observe in no less than three steps of the method within the timber sector, Morgado mentioned: collusion between loggers and public officers to difficulty fraudulent licenses, non-issuance of fines or leakage of details about inspecting operations, and altering environmental legal guidelines and rules to make environmental crimes extra viable.

Machado, the prosecutor appearing within the Bauru case, additionally highlighted obstacles created by the just lately handed abuse of authority legislation. “You’re all the time fearful if what you’re doing may be [classified as] abuse of authority,” he mentioned. “If you happen to put the authorities that struggle corruption in a state of affairs of vulnerability, you make the corruptor stronger.”

Machado famous the significance of making use of the anti-corruption legislation to struggle impunity and make firms accountable as “it is sufficient to show that there was an act of corruption that benefited it [the company].” The one means that the corporate might escape penalties, he defined, was if it proved “it didn’t know and, what’s extra, that it took all doable steps to stop somebody from committing an act of corruption in its title.”

He additionally emphasised the accountability of importers, given worldwide consciousness relating to corruption, particularly for corporations listed within the U.S. inventory trade. “This additionally means for corporations the scale of Indusparquet and larger than Indusparquet, that these corporations additionally must be involved if the businesses they work with commit acts of corruption.”

Banner picture by Samuel Bono / Earthsight.

Karla Mendess is a workers contributing editor for Mongabay in Brazil. Discover her on Twitter: @karlamendes

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Enterprise, Conservation, Crime, Deforestation, Setting, Environmental Crime, Environmental Legislation, Environmental Politics, Forests, Governance, Unlawful Logging, Unlawful Timber Commerce, Unlawful Commerce, Business, Legislation, Logging, Mongabay investigation, Organized Crime, Protected Areas, Rainforest Deforestation, Rainforest Destruction, Particular Reporting Initiatives, Threats To Rainforests, Timber, Timber Legal guidelines, Bushes

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