follow the money
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THINKING beyond the canopy
"Follow the money"
Anna C. Sinaga, Sofi Mardiah
Wollongong, February 23, 2010
An integrated law enforcement approach to combat Illegal logging in Indonesia
THINKING beyond the canopy
Summary
Impacts of illegal logging The current law enforcement approach Proposed law enforcement approach: Follow the money Recommendations
THINKING beyond the canopy
Impacts of illegal logging High deforestation rate
During 2003 – 2006, the deforestation rate was 1.17 million ha/year, a total of 3.53 million (Indonesian MoF, 2008)
Deforestation Rates, 2000-2005• Total forest loss since 2000 : 5.447.800
haAnnual deforestation rate: 1.089.560 ha
Sources : Ministry of Forestry
Deforestation Rates, 2000-2005
Annual change in forest cover: 1,871,400 haAnnual deforestation rate: 2.0%Change in defor. rate since '90s: 19.1%Total forest loss since 1990: 28,072,000 haTotal forest loss since 1990: 24.1%
Sources : FAO (world forest 2007)
THINKING beyond the canopy
The lost of forest revenue amounted to an estimated US$ 3.3 billion yearly (Indonesian MoF, 2006)
• Between 2003 and 2006, an average of US$2 billion was lost annually to illegal logging (Human Rights Watch)
• This loss were equal to the state’s entire spending on health (Human Rights Watch)
Impacts of illegal logging
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Current law enforcement approach
Mostly catches small players
Perpetrators Total PercentageHigh level(police officers, prosecutors, forestry officers, contractors)
49 23.90 %
Low level(operators, drivers, farmers)
156 76.10 %
Total 205 100 %Source : ICW, 2008
THINKING beyond the canopy
Current law enforcement approach
Does not fully recover the state loss of forest revenue
- maximum fine is US$ 1 million Fails to address corruption associated with illegal logging
Jakarta, June 5 (ANTARA): Forestry Minister MS Kaban said judicial officials should treat illegal logging cases as corruption cases because the practice causes losses to the state. "I hope illegal logging will be classified as corruption because it causes losses to the state. So far, judges always link illegal logging to technical and administrative matters. This is not right because illegal logging causes losses to the state”. (2008)
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Integrated law enforcement approach
Research question:- In what way can non-forestry
legal instruments contribute to appropriate deployment of sanctions to combat illegal logging?
THINKING beyond the canopy
Integrated law enforcement approach
Follow the money :
- integrates instruments other than forestry law
- targets the proceeds of crime
leads to the masterminds
- returns the proceeds of crime to the state
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Examples
•The use of Anti Corruption law in both cases•The state recovered US$ 35.4 million
H. Suwarna Abdul FatahGovernor of East Kalimantan(2005)• Issued a permit for an oil palm
plantation in Berau, East Kalimantan for 1 million ha, beyond the allowable amount.
• Received 4-year prison sentence• Fined of US$ 20,000
MarthiasPresident Director of Surya Dumai
Group (2005)• Received a timber utilization
permit for an oil palm plantation• Neglected to plant oil palm after
land clearing• Received 18-month sentence
THINKING beyond the canopy
Examples
Tengku Azmun Jaafar (District Head of Pelalawan, Riau) • Issued 15 logging permits in Pelalawan
regency during 2001-2006 to 15 companies in Riau
• Seven of the companies were established by Jaafar’s relatives and did not meet the criteria necessary for forestry enterprises
• Jaafar received an 11.5 years imprisonment and was fined of US$ 54,000
• Restitution to the state amounted US$128 million
THINKING beyond the canopy
Corruption & money launderingIllegal logging
Gatherinformation
Investigation
Indictment
Prosecution
Ruling
• the size of the illegal logging • the volume of the illegal logs • the location
•Collect evidence on illegal logging
• identify the perpetrator
Build a case
Imprisonment
• Suspicious transaction report (STR)
• Estimation of state loss
• Identify STR• Trace assets• Asset freezing
•Trace assets•Asset freezing
Asset freezing
Asset recovery
STEPS
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Information/data
Coordination
Investigation
Forestry agency
Civil society
Financial institutions
Law enforcement
Auditor agency
Financial intelligence unit
Law enforcement : Police, Attorney general, KPK, Forestry department investigator
ILEA scheme and actors
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Information/Data
coordination
investigation
Forestry agency
Civil society
Financial Institutions
Law Enforcement
Auditor agency
Financial Intelligence Unit
ILEA scheme and actors
Law enforcement : Police, Attorney general, KPK, Forestry department investigator
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Constraints
Conventional paradigm in tackling illegal logging problem
Little history of cooperation among relevant actors
Lack of capacity in using the “follow the money” approach
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Opportunities
Regulatory frameworks are available
Relevant institutional structures are available
- e.g. The anti-corruption commission (KPK), the financial intelligence unit
Existing international agreements could facilitate joint enforcement to address transnational crimes
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Achievement
- Central Bank of Indonesia adopted our recommendations in Circulation Letter Number No.11/31/DPNP on Implementing Anti Money Laundering Program:
Types of forestry documents required from customers
The use of GIS analysis in conducting Customer Due Diligence
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Recommendations
Enhance cooperation between law enforcement agencies, financial intelligence unit, financial institutions, forestry agencies, and audit agencies
Build international cooperation with countries with similar problems
Build capacity to use “follow the money” instruments
THINKING beyond the canopy
Thank youTerima kasihThank you
Terima kasih
www.cifor.cgiar.orgwww.cifor.cgiar.org
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