The revelations mirror Deforestation Inc. findings from around the world, which showed how auditing firms hired as environmental verifiers often ignore or fail to identify serious transgressions by their clients.
Audit firms in Finland, Indonesia, Chile, India, and Germany are also mentioned.
According to the World Bank, illegal logging in Chile’s native forests destroyed 11,368 hectares of land between 2013 and 2019 and generated 1.2 million m3 of illegally harvested timber – causing deforestation, loss of biodiversity, environmental degradation, and increasing violence. The southern regions of the country, such as La Araucanía and Biobío, are among those most affected by illegal logging activities. In May 2022, the government declared a state of emergency in the region of La Araucanía and in the provinces of Arauco and Biobío within the Biobío region.
This article will address illicit activities in Chile’s timber sector and identify associated financial risks. Ultimately, the article will discuss the current regulatory measures to combat illicit financial flows (IFF) stemming from environmental crimes.
Some 60 percent of the world’s lithium reserves can be found in the so-called lithium triangle, a region that encompasses Chile, Argentina, and Bolivia. It’s not just lithium either: Peru and Chile are the world’s two largest copper producers, while Brazil is home to 17 percent of all nickel reserves.
That has sparked a global scramble to tap the region’s wealth—one in which Chinese companies have an edge. Beyond lithium, Beijing has also struck deals for solar, wind, and hydroelectric projects across the region, pouring hundreds of millions of dollars into solar parks in Argentina and Brazil as well as signing contracts for hydroelectric projects in Bolivia and Argentina.
Part of the allure of partnering with Beijing, experts say, is the very nature of Chinese deals. China has boasted about its no-strings-attached financing, with fewer economic and political conditions than Western lenders. “[Governments] know that they’re not going to get the same level of quality by partnering with Chinese companies, but they also will get fewer headaches, fewer regulations, fewer lessons on the environment, fewer complaints from [nongovernmental organizations],” Berg said.
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