An alleged cocaine trafficker, a trail of fake paperwork, and a cluster of criminals: inside the Amazon rainforest’s illicit timber trade.
Reporters traced how endangered Ipê from Brazil’s most deforested state was used in a $7.2-million fraud scheme.
The timber was disguised using fake permits created by a man who allegedly transported cocaine for Brazilian gangs, and sold by companies with a long track record of environmental crimes.
Nonetheless, the fraudulent paperwork gave the illicit wood a semblance of legality, allowing it to be exported to at least one wholesaler in the U.S.
The investigation shows how illicit wood from the Amazon rainforest — where deforestation is at a 15-year high — is able to slip into the international supply chain largely unnoticed.
The Ipê wood that made its way from Brazil to a U.S. wholesaler in May 2019 seemed like any other timber. The seller was J. Gibson McIlvain’s top supplier, and had sent many cargoes of wood to its Maryland headquarters over the years.
But this timber was not what it seemed. Disguised by false paperwork, the yellow Ipê was part of a $7.2 million fraud scheme run by criminals and an alleged cocaine trafficker, OCCRP and its partner, Brazilian magazine piauí, have learned.
Yellow Ipê, a Latin American wood prized for its strength, durability, and the smooth contours of its veins is one of the most expensive woods in Brazil, selling in some U.S. stores for up to $6,400 per cubic meter. Its popularity has also made the endangered species a gold mine for criminals.
Using permit data, documents from an investigation by the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA), interviews, and on-the-ground reporting from the Amazon rainforest, reporters traced how the 2019 scheme laundered illicit wood to disguise its origins, then exported it to the United States at a massive markup.
These findings shed light on how Brazil’s corrupt timber trade is undermining efforts to protect the Amazon, where deforestation reached its highest rate in 15 years in 2020-21. Despite attempts to police imports, Ipê of unknown origin is able to slip into the U.S. supply chain unremarked.
Logs being transported from the Amazon rainforest.
At the center of the fraud was Brazil’s forestry credits system, which was used to disguise the origin of the timber, leaked documents reveal. Shipping permits show the laundered wood was then sold to J. Gibson McIlvain — one of more than three dozen U.S. companies that Greenpeace named as trading in problematic Ipê the year before the fraud scheme.
“Credits are … used to ‘cook the books’ of sawmills that are processing trees illegally logged from forests on indigenous lands, protected areas or public lands,”
Greenpeace wrote in a 2018 report on what the environmental organization described as “the Brazilian Amazon’s flawed system of timber custody.”
This case may be only the tip of the iceberg.
An analysis of exports between 2007 and 2019 by IBAMA found Ipê is the species most commonly exported by Brazil’s largest timber companies. Data from the International Tropical Timber Organization, analyzed by the International Union for Conservation of Nature and wildlife trade monitoring network TRAFFIC, showed that 93 percent of sawn Ipê wood imported by the U.S. between 2008 and 2017 came from Brazil.
Efforts to protect Brazil’s endangered Ipê have been hampered by President Jair Bolsonaro’s government. OCCRP found that, at the time of the illegal exports, in mid-2019, the head of IBAMA and the then-environment minister successfully lobbied to ensure the precious timber was excluded from species protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
“The timber [supply] chain in Brazil today is full of fraud,” said Laura Waisbich, a senior researcher for the Climate and Security program at the Igarapé Institute, a Rio de Janeiro-based think tank.
There is no evidence that J. Gibson McIlvain — which boasts of its sustainable supply chain on its website — knew the Ipê it bought was illicit. The company did not reply to requests for comment. Neither did the head of IBAMA, or Brazil’s former environment minister.
Land cleared of trees inside a protected reserve in the Amazon rainforest.
A Brazilian Bureaucrat Branches Out
Nothing seemed remarkable about Victor André Holanda Pessoa when he joined the environmental secretariat of Pará, a northern Brazilian state, to oversee its timber permit system in January 2019.
But it turned out he was under investigation for transporting cocaine for a vast international drug trafficking operation. The previous year, Brazilian federal police had launched Operation Além Mar to investigate how organized crime groups were smuggling cocaine from Paraguay through Brazil to Europe, and Pessoa was in their sights.
Law enforcement sources allege he moved drugs for the First Capital Command, Brazil’s largest organized crime group, buying at least six aircraft in just a few years. In one operation in 2018, police seized more than 500 kilograms of cocaine paste they said was about to be flown to one of Pessoa’s hangars in São Paulo state, then north to Pará.
Pessoa was among 33 arrested in August 2020 over the alleged drug ring, and he is now awaiting trial. Police estimate that during the course of their two-year investigation, some 11 tons of cocaine belonging to the traffickers were seized in Brazil and Europe.
Besides his alleged involvement in drugs, Pessoa was allegedly helping grease the wheels of another illegal trade.
Within weeks of starting his new job, a document obtained by OCCRP shows Pessoa started entering false data in the timber permit system. The fake entries stated that two companies had bought wood that had been seized by IBAMA — including 74 truckloads of Ipê — at auctions held by municipal governments in the south of Pará. They meant that the timber companies, JMS Alexandre Serraria and Promil Comércio de Madeiras Eireli, could sell the wood with the semblance of legality.
Diego Cajado Neves, the attorney general of one of the municipalities, Itaituba, denied the auction had taken place. “We never sold any Ipê and we wouldn’t” if we had it, he said. “We really need wood to build bridges and stilts.”
Suely Mara Vaz Guimarães de Araújo, the former president of IBAMA, said local authorities are not permitted to sell seized wood at all. “If the city had received a donation of wood [from IBAMA or police], it could not have sold it … Something is wrong.”
🔗A Tale of Two Illegal Trades
Brazil’s northern Pará state is known as a hotspot for the illicit timber trade. Experts say this environmental crime is also increasingly being used by criminal gangs involved in another black-market trade: drugs.
“It is common for wood smugglers to simulate high profits in the purchase and sale [of wood] to justify the inflow of money from drugs or corruption,” said Ubiratan Cazetta, a federal prosecutor. “It’s a typical method of washing funds.”
Wood is also used to help with the practicalities of drug smuggling. An analysis of media and government reports by Brazilian media outlet Agência Pública found that
at least 16 major cocaine seizures between 2017 and 2021, totalling nearly nine tons, were concealed in shipments of timber destined for Europe.
“Wood has at least two great uses for drug trafficking: it serves to launder money from the activity and also to hide the drug itself on ships heading to Europe and the United States,” said Aiala Colares de Oliveira Couto, a professor at the State University of Pará, which investigates organized crime in Brazil’s Northern Region.
Pessoa’s lawyers did not address questions about the alleged fraud or the drug trafficking allegations when contacted by reporters, saying only that they “are at the full disposal of the competent authorities to provide any clarifications that may be necessary.”
Pará’s environmental secretariat said it had opened an internal investigation into the allegations in 2019, whose findings were reported to the state’s anti-corruption directorate. It defended the state’s wood trading permit system, however, saying any fraud was due to “the presentation of false documents.”
On paper, the two timber companies that obtained the wood, JMS and Promil, are both owned by a 28-year-old Brazilian bricklayer, João Marcos da Silva Alexandre. It’s unclear who truly owns them, however: JMS’s general manager admitted to IBAMA that the bricklayer had merely “lent his name” to the company. Reporters couldn’t reach da Silva Alexandre, JMS, or Promil for comment.
Using the false timber permits, JMS and Promil began trading the illicit wood with other companies to further disguise its origins. It eventually made its way to 18 Brazilian states, with the largest stockpiles found in Sergipe and Ceará in the northeast.
“All [the] transactions … are contaminated by fraud, given that the input of all these credits is fraudulent and has the objective of backing wood without legal origin,” said the IBAMA report.
OCCRP and piauí traced the path of the wood across Brazil using permit data contained in the IBAMA documents.
JMS sold 53 cubic meters of this Ipê wood to Canaã do Norte Madeiras for 50,000 reais ($13,300). Thirteen days later, it was re-sold to Coexpa Comércio e Exportação de Produtos da Amazônia (COEXPA) for almost nine times as much. COEXPA then transported the wood to the port of Barcarena, in the lower Amazon region, where shipping data shows it was sent via Panama to the U.S., reaching J.Gibson McIlvain’s headquarters in May 2019.
Three of the companies involved identified by IBAMA — JMS, Canaã do Norte, and COEXPA — have a track record of trading in illegal timber and submitting false information to environmental agencies, together racking up more than 2.4 million Brazilian reais in fines between 2016 and 2020. The owner of COEXPA, Bruno Atayde Leão, is currently facing two criminal cases for crimes against the environment.
In total, IBAMA investigators estimated the fraud scheme that Pessoa is suspected of enabling yielded around 27 million reais in profit, worth around $7.2 million at the time.
COEXPA said it performs a “strict internal analysis” of its products and suppliers, including checking environmental licenses and proof of the origin of products. Asked about the Pessoa case, the company said it had provided “full clarification of the facts to the competent environmental agencies,” but did not give further details.
Other companies involved in the scheme were harder to track down.
Piles of logs in Vila Isol, where JMS and Canaã do Norte are registered.
Sawmills and Paper Trails
Vila Isol, where JMS and Canaã do Norte are registered, is a dusty village of dirt tracks and wooden houses in Pará’s rainforest. Huge piles of logs litter the area, while nearby sawmills fill the air with the smell of sawdust and the incessant roar of metal slicing through wood.
When a reporter visited Canaã do Norte’s address in October, there was nothing there. None of the nine residents he approached said they knew anything about the supposed timber company or its owner.
But Canaã do Norte’s owner, Antonio Carlos Rodrigues de Oliveira, has his own paper trail. In 2012, IBAMA sued him for giving false timber trading data, and he is also facing four civil cases over accusations he illegally deforested swathes of protected forest in the south of Pará.
Oliveira declined to be interviewed when contacted by reporters. “Sorry, friend, I don’t have information about these matters,” he wrote on WhatsApp, before blocking the journalist from reaching him again.
The Center for Climate Crime Analysis (CCCA) analyzed data from the federal government’s Rural Environmental Registry and found that Oliveira has become one of the largest grabbers of public land in Pará, registering a claim for over 5,745 hectares of what should be protected land in 2016.
🔗A Forest Protection System Gone Wrong
Created in 2012, the Rural Environmental Registry (CAR) was intended to help protect the rainforest but has ended up enabling large-scale land grabbing, critics say.
Anyone who owns land is expected to enter its location in the system, including any native forest that must be preserved. In reality, the system has become a way for land grabbers to formally take possession of indigenous and protected land, particularly in the Amazon rainforest.
Land-grabbers often claim they own land through the CAR, then clear it of trees to create pastures for cattle. Brenda Brito, a researcher at Imazon, an environmental nonprofit focused on the Amazon, said claims made in the system are meant to be verified by authorities, but estimated that 90 percent of them are not.
“In theory, the CAR should not be used as proof of ownership. But in practice, unfortunately, this is not what happens,” she said.
Satellite images from the National Institute for Space Research show at least half the land claimed by Oliveira has been illegally cleared since then. CCCA estimates that at least 80,000 cubic meters of wood have been extracted, 95 percent of it in 2019. A reporter who tried to visit the land in October saw only a few yellow Ipê saplings lining the dirt track that winds deep into the forest, before the way was blocked by a padlocked barrier.
The land Oliveira claims is in the Jamanxim National Forest, a park covering 1.3 million hectares of Amazon rainforest. Created in 2006 by Brazil’s then-President Luiz Inácio Lula da Silva, it was intended to prevent deforestation around the BR-163 highway, the main route for transporting soybeans from Mato Grosso to the ports of Pará.
A statue of a prospector sits at the intersection of Novo Progresso’s two main avenues.
Allan de Abreu
The plan has failed: According to satellite images, Jamanxim is the second-most-deforested protected area in the Amazon. Since it was created, over 10 percent of the park has been cleared.
To the south, down the BR-163, lies Novo Progresso. The first inhabitants settled there in 1979, when Brazil’s military dictatorship built a highway through the rainforest, and the town’s population grew rapidly after the discovery of gold deposits nearby.
Since then, environmental destruction has been one of the municipality’s main sources of income. The devastation breeds violence. According to data from the Brazilian Public Security Forum, Novo Progresso recorded 100 violent deaths per 100,000 inhabitants in 2020, almost four times the overall national rate that year.
The lawlessness reaches all the way to the top. The mayor of Novo Progresso, Gelson Luiz Dill, is an unapologetic land-grabber whose farm on the banks of the Carapuça River occupies 784 hectares of Jamanxim National Park.
“It was not rural producers who invaded, but the federal government, at the time of the PT,” he told piauí, referring to the park created by the left-wing party of former president Lula.
“If anyone has been wronged in this story, it’s the farmer.”
Support for Bolsonaro ran deep in the city, where more than 78 percent of voters backed him in the 2018 presidential election. Since winning power, the president has swept away environmental protections, driving a surge in deforestation. In 2020 to 2021, some 13,200 square kilometers of the Amazon were destroyed, a third on public land, according to INPE.
“The consequences of this political agenda for the environment are stark,” environmental and human rights non profit Global Witness wrote in
a commentary on a series of anti-indigenous bills proposed in the Brazilian Congress.
Cleared land at a farm in Novo Progresso, near Jamanxim National Park.
Lack of Control
As environmental protections have been swept away inside Brazil, international efforts to regulate the trade in endangered Ipê have also faltered.
OCCRP and piauí’s reporting shows that at around the time of the permit fraud scheme in 2019, the Association of Wood Exporting Industries of the State of Pará was lobbying to ensure that yellow Ipê was not included on the CITES list of endangered species.
“There is no justification for establishing procedures that go against the measures adopted by the government of President Jair Bolsonaro, to deregulate unnecessary control procedures,” the president of the association, which counts Coexpa as a member, wrote to IBAMA in January 2019.
The Association of Wood Exporting Industries denied it had lobbied to stop Ipê being included on the CITES list, adding that it operates in “a transparent, democratic, reputable and public manner” in order “to defend clear and stable rules and norms.”
The move was backed by the president of IBAMA, Eduardo Bim, and former Environment Minister Ricardo Salles, who curbed IBAMA’s powers during his time in office. In May 2021, both men were placed under investigation for facilitating the smuggling of illegally sourced wood from the Amazon.
Butterflies gather on the ground at a farm in Novo Progresso.
According to the Federal Police, Sales and Bim worked with another senior IBAMA official to launder more than 153,000 cubic meters of Ipê and Jatobá wood that had been illegally extracted in Pará, which was then seized in the U.S.
Shortly after the police investigation came to light, Salles stepped down as minister. Bim was removed from the presidency of IBAMA for 90 days, then returned to his post in August. The investigation into him remains open.
An IBAMA official, who asked not to be named out of fear of retaliation, said the $7.2-million fraud case from 2019 has now been handed to the Public Ministry of Pará, due to the dismantling of the agency’s intelligence unit.
“We were close to pulling this thread when everything went down the drain,” he said.