Introduction

The Covid-19 pandemic hit Peru hard – particularly its indigenous communities in the Peruvian Amazon. In May 2020, in the middle of the crisis, officials from the Specialized Prosecutors for Environmental Matters (FEMA), supported by the police, confiscated 34 cubic metres of timber that was being transported by truck from the district of Manantay (Ucayali) with a final destination of Lima.

The shipment drew the attention of FEMA officials because, as a result of the Covid-19 lockdown, the public offices in charge of verifying the legality of timber had been closed since mid-March 2020. Despite this, the timber appeared to have all the required formal documents. FEMA decided to open an inquiry and they discovered, among other things, that the forest transport permits showed by the truck driver were false. The same false permits were used in at least three other timber loads intercepted within the space of a few weeks (in Huánuco, Lima, and Ucayali).

This is not an isolated case. Corruption of forest transport permits is one of the main mechanisms used in Peru for laundering wood from prohibited areas. However, it is a concern that these permits were actually part of a package of measures implemented to strengthen the institutional response to illegal logging. Moreover, the case occurred in Ucayali, which is one of the first regions to take control of its forest resources with a range of programmes aimed at strengthening the regional government’s capacity to fight illegal logging. Despite these efforts and many positive developments towards strengthening forest management institutions in Peru, these reforms seem to be unable to fully prevent illegal logging.

The case of Ucayali shows that effective forest governance requires corruption to be addressed, and that to address corruption in the conservation space requires consideration of the political and informal factors that shape individual and collective behaviours. The first section presents data on deforestation trends in Ucayali. The second introduces the main policies and strategies implemented to combat illegal logging and corruption in Peru’s forest sector (focusing on USAID-supported efforts).e3b643323f6f The third section analyses the problems of Ucayali forest governance, describing the networks, actors, powers, and interests that interact with wider governance conditions. The fourth section offers conclusions and suggestions.

Deforestation and illegal logging in Ucayali: How big is the problem?

Peru is one of the top five countries in terms of forest area, with 68 million hectares of forests accounting for nearly 60% of the country’s territory.facfaa9fc701 This significant area contributes to the Amazon region’s vast biological diversity, with Peru among the world’s 17 most ‘megadiverse’ countries. Indeed, the natural forests of the Peruvian Amazon are home to more than 3,000 species of trees, including shihuahuaco, mahogany, and cedar.

Also, Peru is currently home to one of the world’s highest rates of deforestation, ranking fifth in the world and third in the Americas in terms of tropical primary rainforest loss.2d661acd17bd This finding is supported by the national registry of the Ministry of Agriculture and Irrigation, which recorded a loss of 2,284,890 hectares of tropical Amazon rainforest between 2001 and 2019 alone – an average annual loss of 125,301 hectares. In 2020, approximately 190,000 hectares were deforested in Peru. While this is a reduction from the previous year, it is also the country’s fourth-highest annual total on record.

With 9,336,773 hectares of Amazon rainforest, Ucayali is the second largest rainforest region in Peru. Despite some positive developments, the region also has one of the highest deforestation rates in the country according to the most recent reliable accountsa0ecf4ae943a (See Graph 1 and Table 1.) The main drivers of deforestation in the region include oil palm and cattle grazing. Corruption, including land trafficking and falsification of resource management plans for forest concessions, and illegal logging are also reported in the region and further contribute to deforestation. For example, complaints made by indigenous communities and subsequent investigations exposed land grabbing and illegal deforestation by palm oil companies, and revealed a corrupt network in the regional government.

What has been done to tackle corruption, deforestation, and illegal logging?

Peru is a country deeply affected by administrative, political, and systematic corruption.16e5374aa8d3 Peruvians perceive corruption as one of the biggest national problems after crime,8b5308b20987 and view corrupt practices as being diffused among the different layers of the state. Various reports show that the forest sector is no exception to such practices.

USAID-supported initiatives to address deforestation and illegal logging did not directly set out to tackle corruption. However, indirectly, they involved activities that could have had an impact on corrupt practices in the forest sector. These activities fall into three broad categories: institutional and legal reform alongside the United States–Peru Free Trade Agreement (PTPA); decentralisation; and civic engagement and dialogue around forest exploitation.

Institution-building and the PTPA

In 2009, the signing of the PTPA led to a new era in Peruvian forestry institutions’ efforts against deforestation (see Box 1). This agreement spurred a slow and gradual change in Peruvian environmental management, which had begun in the 1990s,ee2702501034 replacing a highly fragmented environmental governance framework with a stronger cross-sectoral approach aimed at ensuring the effective regulation and control of environmental and forest crimes. As part of that gradual change, various agencies were created:

• The Agency for the Supervision of Forest and Wildlife Resources (known in Spanish as OSINFOR): responsible for monitoring forest concession-holders and administering sanctions to those who violate the terms of their contracts
• The Ministry of the Environment
• The National Forest and Wildlife Service (known in Spanish as SERFOR): the main agency charged with regulating and promoting the sustainable use and management of forest and wildlife resources in Peru, symbolising a commitment to sustainable forest management (even though the agency only began operating in 2014, three years after it was created – an indication of the overall weak institutional context into which it was born)61a706d94684

The PTPA also committed the Peruvian state to carry out institutional strengthening initiatives and activities, including the development of an anti-corruption plan for the forest sector. These activities took place primarily through large inter-institutional programmes with USAID, and centred on the transformation of forest management with the intention of eradicating illegal logging and corruption. Article 18.3.4 of the Annex on Forest Sector Governance in the PTPA underscored the level of attention placed on forest-related corruption, and called for the implementation of an anti-corruption plan aimed at improving the governance of Peru’s forests and wildlife.

The desired institutional reform centred not only on preserving forests but also on strengthening the oversight and control system for crimes connected to illegal logging in the Amazon.9c9ada9a3c8c For example, Article 18.4 of the Annex on Forest Sector Governance in the PTPA called for sanctions or remedies for violations of environmental laws. This was a milestone that prompted the reform of the Peruvian Criminal Code and the creation of FEMA. In the case of illegal logging, specific articles of the Code include penalties for the illegal trafficking of timber forest products, as well as the obstruction or hindering of investigation, verification, supervision, or auditing related to the harvest, transport, processing, sale, export, re-export, or import of flora and/or fauna wildlife (procedural obstruction).

Decentralisation

Shortly after its return to democracy in 2000, the Peruvian state introduced constitutional reforms intended to promote decentralisation and modify electoral rules. Among the measures gradually implemented were a quota requiring 15% of candidates for elections at the subnational level to be from indigenous communities and the transference of state-related functions to regional governments. In 2009 – the same time that the PTPA entered into force – forest-related functions began to be transferred to nascent regional governments4650b7b77e8b2cb6826a8473

As a result, through regional environmental authorities,a0e83974a0b6 certain regional governments progressively acquired powers to govern the natural resources under their jurisdiction. Although this process of decentralisation is still underway, the first five regional governments empowered with these new forest-related functions were those belonging to the Amazon region, making up 78% of the Peruvian Amazon and 90% of the country’s permanent production forest40008f9ddd7c4eaf095aa1d8 They also have the largest number of direct interventions by USAID forestry programmes.

The decentralisation of forest governance has been important for Peru’s new environmental institutional framework for two reasons. First, it has sought to promote compliance with the country’s new forest policy. Second, it has aimed to manage and monitor the protected areas created within each regional jurisdiction. Both of these initiatives have been powered by bilateral aid cooperation.1f9db68d4cdd However, as has been described in other countries (eg Indonesia), decentralisation of forest governance has brought with it many implementation challenges.

One challenge is a lack of political commitment to build up subnational capacity and guarantee resources to adequately perform the tasks delegated to them. As a result, reports by non-governmental organisations (such as Global Witness and EIA) show how decentralisation of oversight in logging regions such as Ucayali and Amazonas has actually seen the expansion of illegal logging through more sophisticated networks.

Civic engagement and dialogue

Important initiatives towards building agreement on the exploitation of timber have been implemented at the regional level. These include promoting dialogue among different actors involved in forest management and commercialisation, the formation of community forest oversight committees (veedurías forestales), and the development of resource management plans for the forest at community level. Regional authorities have also been stakeholders in key political spaces encouraged by the national executive, which bring together the public and private sectors to jointly promote development of the forestry sector.

OSINFOR has been an institutional actor in many of these initiatives. It has worked to establish relationships with the communities most affected by deforestation and build the capacity of the oversight committees. For example, one element of its capacity building is timber measurement (cubicación), which measures both standing trees and logs accurately. As a result, communities are paid adequately and not left with legal problems or fraudulent documents. Such capacity building is designed to help communities become less vulnerable to corruption.

Overall, these initiatives likely contributed to the downward trend in the deforestation rate between 2014 and 2018 (see Graph 1). However, as demonstrated by the example of false forest transport permits in 2020, they have not been successful in fully preventing either illegal logging or the illegal timber trade. Between 2011 and 2014, the Regional Sectoral Agriculture Directorate of Ucayali (DRAU) granted more than 3,500 certificates of land ownership, with many of these overlapping with indigenous peoples’ territory. Aftermedia reports on these problems, between 2014 and 2018 the DRAU issued fewer certificates. Other interventions, such as Operation Amazonas (see Box 2), have uncovered major corruption vulnerabilities in the legal forestry sector, and analysis of Forest Management Plans supervised by OSINFOR show that most of the forestry products backed by forest transport permits and transferred in the Ucayali region were illegally sourced.

The drivers of corruption in Ucayali’s forest sector

To fully understand deforestation trends in the region, and the still-limited effectiveness of institutional reforms, one must recognise the underlying drivers of corruption in the sector. Corruption (‘the abuse of entrusted power for private gain’) is a well‐known means for circumventing laws, rules, regulations, and policies aimed at limiting or preventing environmental harms. Three interrelated factors have made corruption particularly persistent in Ucayali’s forest sector: the overlapping interests of those entrusted with power; the informality that continues to characterise the sector; and the lack of representation of those most affected.

Overlapping interests

In the example of Ucayali, timber barons were involved in the political and administrative management of the region’s forests, and Operation Amazonas revealed these overlapping interests. FEMA’s powers to seize, confiscate, or destroy timber and equipment associated with illegal logging (forest interdiction) led to two bills (proposed by Carlos Tubino from Ucayali and Amado Romero from Madre de Dios) to curb them. Congressman Carlos Tubino publicly criticised timber confiscation but was re-elected as Ucayali’s congressman and served in the position between 2016 and 2019.

At the regional level, issues from these overlapping interests have emerged within several different administrations in Ucayali. These cases usually concern false forest transport permits, one of the main mechanisms of corruption linked to illegal forestry. Indeed, the first Ucayali administration to take control of the forest sector following decentralisation ended with its governor, Jorge Velásquez, and vice governor, timber baron Carlos Henderson, facing prosecution for forging signatures and authorisations on these forest transport permits and other official permits in order to allow illegal logging. During the same administration, the then forest director Miguel Dávila Henderson was accused by OSINFOR of having personally signed off on 106 timber projects authorizing the harvest of 6,044 non-existent trees. As a result, he was charged with corruption and barred from public office. Henderson’s successor, Marcial Pezo Armas, subsequently approved plans to cut 7,798 non-existent trees.

In 2018, timber trafficking’s influence on regional governments rose to the surface once again when two timber barons competed against each other in elections for governor: Edwin Vásquez and Francisco Pezo. Francisco Pezo won the elections and re-appointed Marcial Pezo Armas as the head of the Ucayali Forestry Executive Directorate. Marcial Pezo Armas then re-appointed some public servants who had been criticised for their role in the trafficking of illegal timber during his previous term.

One of these officials was Roy Pinedo Lopez who, in 2013, had provided verbal authorisation over the phone to unload a shipment of illegal timber without verifying its origin. The case was denounced by the indigenous leader Edwin Chota, who was threatened by the owner of the shipment. Edwin Chota and three other indigenous leaders from Saweto were killed by illegal loggers in 2014. Despite the seriousness of this case, the administrative sanctions taken at the regional government level against those public servants who were involved are, to date, unclear. Roy Pinedo Lopez was the public servant who signed the false forest transport permits of the timber that was intercepted by the police and FEMA in May 2020.

Informal relations

Deep-rooted informal practices among actors, and power arrangements between them, persist over time despite formal reforms, thus maintaining corruption in the forest sector. These practices take place at different levels (local and national) and among different actors (logging companies, public officials, and residents). The result is a complex and thick tapestry of informal relations that sustain illegal logging operations in the Peruvian Amazon.

The collapse of political parties in Perud58de35ef8f2 reshaped the relationship between politicians and their constituencies, giving rise to a so-called ‘democracy without parties’ebcaeb750eb5 characterised by the emergence of coalitions of independent politicians at local, regional and national levels.ec3729a8b72b Peruvian politicians have, in theory, become free agents recruited by parties, based on their own financial resources and capacity to attract votes. In other words, political parties select candidates who have the capacity to win, and identification with the party ‘ideology’ is not a decisive factor in the parties’ support of those candidates.d8ba35733f4a This has contributed to the emergence of parties rooted in economic enterprises, as well as the overlapping of interests.

Lack of representation

Indigenous quotas (for a percentage of slots on ballots), as the main tool to guarantee descriptive and substantive political representation of indigenous peoples, have demonstrated major limitations. In contrast to the cases of Colombia or Bolivia, Peruvian indigenous quotas are focused on the subnational level and are not linked with reserved seats in the national parliament, thus constraining the ability to promote indigenous peoples’ representation nationally. Furthermore, they do not include a clear and systematic procedure for listing candidates’ names – a placement mandate – on the ballot. Consequently, indigenous candidates’ names generally appear last on election ballots,022083e83008 which undermines their capacity to been elected at the subnational level.

Since the indigenous quotas were adopted in 2006, there has been only one Amazonian indigenous congressman in the national parliament. Parties do not necessarily seek indigenous representation; they reluctantly comply with the quota. Due to the lack of a placement mandate for ordering the candidates on the ballot, indigenous candidates – in many cases – end up serving as ‘filler’ candidates.39634c93e0eb

In Ucayali, this situation contributes to the undermining of the new institutional framework’s regulatory capacity. The region’s mainly urban population (81%) does not belong to indigenous groups – only 11% has an Amazonian indigenous language as a mother tongue. Since illegal logging occurs in rural areas and land grabbing mostly affects rural and indigenous communities, regional and national authorities tend not to represent those groups most impacted by it and forest-related corruption.

In sum, loose environmental enforcement, and the weakness of forest protection systems, result from existing power arrangements and the interests of national – and regional – political and economic elites, with political and economic arrangements not challenged by indigenous quotas. Together, this undermines the basic aims of institutional reforms in the governance of forests and manifests itself in weak enforcement powers exercised by the state in combating illegal logging, and in corruption cases in the forest sector. This ultimately helps understand recent deforestation trends in Peru.

Broadening the perception of forest-related corruption

The persistence of weak institutions in the forest sector is a social and historical outcome, which has arisen as a result of business and state actors operating through power arrangements that uphold the current balance of benefits provided by forest resources. The limited impacts of institutional reforms aimed at combating illegal logging in the Peruvian Amazon can be explained by the power arrangements that persist among elite timber barons with important economic and social capital – elites who are embedded within the public sector, and high-level public officials in ministries and congress who determine the margins for manoeuvre that reform proponents in this sector have.

A broader perception of the problem of forest-related corruption in Peru should be embraced: one that encompasses political and informal factors, uneven power relations, and patronage networks. While international donors have recognised that corruption pervades all levels of government, initiatives promoted by these agencies have focused on strengthening institutional capacities; the improvement of transparency in key policy areas; the dissemination of information at community level; and the power of the market to promote local development and discourage illegal logging and deforestation.

Some of these activities can be framed as indirect attempts to counter corruption within the forest sector. However, these activities have been designed as ‘technical’ responses to the problem of deforestation that have tended to be somewhat blind to local contestations around the forest sector and to the heterogeneity of Peruvian state capacity.

Mechanisms that undermine institutional change against corruption in the forest sector operate within both a formal administrative-legal dimension and an informal dimension of deep-rooted practices among actors in the sector. Both dimensions must be considered if we hope to understand why forest-related institutional reforms have had limited success.

Any future analysis of forest sector corruption in Peru should consider how interactions between different interests with different powers affect the regulatory and oversight capacity of institutional frameworks for the environment. There should also be an understanding that such interactions take place at different levels and in different networks, resulting in unique contextual conditions.

The lessons that can be learned from the case in Peru are as follows:

• It is important to recognise and acknowledge the reform of the criminal code, and the creation and strengthening of FEMA. However, the heavy caseload of environmental prosecutors and the typical length of the criminal process in Peru affect FEMA’s potential impact. The lack of effective sanctions is, in turn, undermining its capacity to deter illegal loggers.
• Deficiencies in relation to decentralisation, including a lack of human resources, low salaries, and poor working conditions at the regional forest offices, further weaken the implementation of forest governance measures. This can benefit regional political and economic elites.
• There do not appear to be effective administrative sanctions for public officials at the Forest and Agriculture Directorates who facilitate or engage in corruption (eg being linked to land grabbing, delaying land titling processes for indigenous communities, issuing false forest transport permits, and failing to verify the origin of timber). As has been promoted in other Peruvian state bodies, such as the National Justice Board, regional governments should be required to make public those administrative measures that have been taken against officials.
• Donors should encourage additional oversight measures, such as special independent committees, every time a shipment with illegal timber is discovered. Such committees would analyse all the steps of the value chain since the timber was harvested, to identify where illegality or corruption occurred and who was involved. After their review, regional authorities would be obligated to propose measures to improve processes and to send follow-up reports. This type of practice could be introduced as a recommendation for good forest governance practice for national and regional authorities.