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DISCOVERY OF ILLEGAL WOOD EXPORTS HIGHLIGHTS PROBLEMS OF FORESTRY TRANSFORMATION

State foresters under fire

THE ALREADY acrimonious dispute between Slovakia's foresters and wood processors over the transformation of the country's forestry sector has heated up with the appointment of a new boss of state forestry company Lesy SR, a lawsuit by Lesy's former boss against the agriculture minister, and a startling find that wood processors say proves their claims that non-transparent and illegal business dealings are corrupting Slovak timber.
In early April, Slovak police and customs officers inspected 120 railway wagons full of wood for export at the western Trnava and southern Nové Zámky railway stations. Police say that in nearly half the cases, the declared quality and quantity of the wood did not match what was on the cars, and that at least six wagons were full of wood that had not been marked for harvest, meaning that the trees had been illegally cut.
An Agriculture Ministry spokesman said the wood in question came from Lesy, which controls around half of Slovakia's commercial forests.

THE ALREADY acrimonious dispute between Slovakia's foresters and wood processors over the transformation of the country's forestry sector has heated up with the appointment of a new boss of state forestry company Lesy SR, a lawsuit by Lesy's former boss against the agriculture minister, and a startling find that wood processors say proves their claims that non-transparent and illegal business dealings are corrupting Slovak timber.

In early April, Slovak police and customs officers inspected 120 railway wagons full of wood for export at the western Trnava and southern Nové Zámky railway stations. Police say that in nearly half the cases, the declared quality and quantity of the wood did not match what was on the cars, and that at least six wagons were full of wood that had not been marked for harvest, meaning that the trees had been illegally cut.

An Agriculture Ministry spokesman said the wood in question came from Lesy, which controls around half of Slovakia's commercial forests.

Agriculture minister Zsolt Simon has already filed two criminal complaints connected to the find, saying that Lesy is burdened by cronyism and ineffective management, and that only state subsidies have averted its collapse.

Since coming to office in October, Simon has made a priority of transforming Lesy from a state enterprise into a state-owned joint-stock company. His plan, based on a similar transformation model pioneered in Austria in the mid 1990s, has the strong backing of the Association of Wood Processors (ZSD), which says Lesy has long sold wood at different prices and under different conditions to foreign and domestic buyers.

"We need to be able to get wood at market prices and under the same conditions as, for example, Austrian buyers. Foreigners do, in fact, pay less for [Slovak] wood than we do," said ZSD president Peter Lispuch.

The transformation, say the plan's backers, should enable Lesy to be taken out of the Agriculture Ministry's budget and spun off as a public company owned by the state but subject to financial and managerial auditing that guarantee its functioning. The stock company would be profitable without state subsidies, and would eliminate the non-transparency and clientelism at the heart of the complaints, they say.

"Forestry, and the wood industry as a whole, is simply a mess. The result is the situation that we are seeing right now," said Karol Vinš, who assumed the directorship of Lesy in late March following his appointment by Simon to oversee the transformation.

"Lesy has had no interest in transparently presenting its economic management," he said.

According to Simon, Lesy has not been honestly reporting its economic performance, has closed disadvantageous contracts on timber deliveries, and last year awarded nearly Sk50 million (1.2 million euro) in salary bonuses - 10 times its reported profit from 2002.

"Lesy consciously influenced accounting results by creating provisions and write-offs of unused tangible investment assets at a volume of over Sk1 billion (24 million euro)," said Simon in late February.

"In reality, Lesy closed the year with an Sk180 million (4.4 million euro) loss, not with their declared profit of Sk5.1 million (124,000 euro)," he said.

In early March, however, former Lesy boss Blažej Možucha filed a suit against Simon that he said was "in the interest of [protecting] the good name of the workers of Lesy." Možucha, who was forced from his post at the end of 2002, has repeatedly denied charges of wrongdoing.

"From the perspective of forestry economics, the deciding fact has been that the [Slovak] wood-processing sector today doesn't know how to work with a wide range of wood types," said Možucha, in an interview with the Národná Obroda daily.

"We only exported materials that the domestic market doesn't know what to do with," he said.

Wood processors dispute the claim, and say that they are capable of processing all wood harvested in Slovakia.

Možucha also denies that Lesy officials or employees are involved in illegally cutting or shipping wood, and that these problems have only come up since his departure.

"Before this, there were similar [investigative] activities at customs, but nothing like this was ever found," said Možucha.

His claims, however, are disputed by both wood processors and organisations dedicated to protecting Slovakia's forests.

"In the last two years, we have complained in dozens of cases where there was evidence of theft or where there were violations of different forestry regulations," said Juraj Lukáč, head of the VLK forest protection group.

"There are indications that in these examples of theft there are organised groups under the supervision of managers from the state forestry company," he said.

Despite the pending legal actions, Simon says he is confident that the transformation of Lesy can be completed by this summer, and that Vinš is capable of getting the job done.

"I hope the new management eliminates all the insufficiencies and turns Lesy into an economically functional organisation," said Simon.

"The new director has not worked in forestry or in the wood-processing industry, and is not even a hunter. This gives me a guarantee of his neutrality in decision making because he is not connected with any group and will only look after the prosperity of the firm," he said.

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