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Romanian authorities are investigating employees of the local subsidiary of Austria’s HS Timber Group for allegedly failing to pay $8 million in taxes on sales of undeclared lumber, according to a prosecution document provided to OCCRP’s member center, Rise.
HS Timber Production Romania said it was cooperating with the Directorate for Investigating Organized Crime and Terrorism (DIICOT).
“The company has always been fully cooperating with the authorities to ensure comprehensive and transparent fact finding processes,” HS Timber Production Romania said in an emailed response to questions.
The company added that it “has always operated in compliance with all applicable national and international legal requirements.”
The DIICOT investigation is ongoing and no charges have been filed.
The prosecution ordinance that DIICOT provided to Rise backs up findings of a 2022 OCCRP investigation, which found that HS Timber Production Romania received from suppliers more wood than it officially recorded. The extra wood was known as “overlength.”
The prosecution ordinance also alleges that employees of HS Timber Production Romania failed to declare more than $30-million worth of lumber between 2010 and 2017. That would amount to nearly 580,000 cubic meters of “overlength” wood — the equivalent of almost 14,000 truckloads. The company later sold the lumber, and allegedly avoided paying taxes on it.
Prosecutors further allege that HS Timber Production Romania employees hid the money by recording fake expenses through service contracts with the subsidiary's parent company, headquartered in Vienna. The services were never delivered, according to the document.
The contracts were signed with SPB Beteiligungsverwaltung GmbH, which rebranded itself as HS Timber Group GmbH in 2019. The Romanian subsidiary was previously known as Holzindustrie Schweighofer.Â
OCCRP previously reported that Romanian prosecutors and forestry bodies had conducted at least five probes into the local subsidiary since 2011 for allegedly under-declaring how much wood it received.
However, most were closed after the statute of limitations expired. A single case about the company’s practices regarding overlength is still under investigation by DIICOT.Â
HS Timber Romania said in its recent response to questions that it “has undertaken extensive efforts to promote sustainability and transparency in the timber industry and developed and implemented a comprehensive action plan” to accurately track wood deliveries and measurement.
