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No publicly owned land covered by forest vegetation can be subject to concession: concession of forest resources is not a practice in Ukraine.
For both sources described in this report (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities), the regulation related to management and harvesting planning is the same.
According to Forest Code (No.3852-XII), the right to forest management shall be exercised on permanent and temporary forest management conditions. Simultaneously, Forest Code lays down framework conditions on the ages of stand maturation and norms of forest resource use. Resolution Nº 761 determines the use of forest resources within the final harvesting. It prioritizes harvesting allocation, limits the total volume within the Annual Available Cut, provides the harvesting plot allocation procedures, deadlines for the resources use, provisions for inspecting the harvesting plots. Instruction on the Procedure for Endorsement and Approval of Allowed Cuts No 38 establishes the procedure for endorsement and approval of Allowed Cuts and their updating and defines responsible bodies, their functions and cooperation mechanisms. Methodological Guidelines for Allotment and Mensuration of Logging Plots, Issuance of Forest Logging Tickets and Inspection of Timber Harvesting Areas in Forests of the State Agency of Forest Resources of Ukraine No 9 establish relevant technical requirements. The Rules for Restoration of Forests, among others, require reforestation of harvested areas within one to two years.
According to Forest Code, forest inventory is conducted in all forests of Ukraine. There are three types of forest inventory and monitoring activities:
At the national level in Ukraine, the last full forest survey was conducted in 1996. Experimental and production work on the preparation of the national forest inventory began in 2006. During 2008-2015, the Center of National Forest Inventory of Ukrderzhlisproekt conducted a sample-statistical inventory of forests of Sumy region and Ivano-Frankivsk region on a total area of about 1 million hectares;
At FME level – Continuous Forest Management Planning;
At FME level – Basic Forest Management Planning used to develop FMP.
A forest management plan provides a legal framework and comprehensive information on the current state of forests, forest resources, qualitative and quantitative changes in the forest fund. The content of the document support foresters in decision making and defines a set of measures for the reforestation, protection, and conservation of forest.
At the FME level, all activities developed in a specific area are based on Forest Management Plan, a mandatory technical document. According to law, forest area is divided into four types (1- forests with conservation, scientific, historical and cultural functions; 2 - forests for recreation and health; 3 - protection forests; 4 - production forests), based on different aspects, such as, e.g.: function, environmental importance, the main purpose.
During the development of basic forest management plan specialists from one of the Forest Management Expeditions (belongs to the Ukrderzhlisproect), study the forests and develop all the necessary forest management materials for the next ten years. According to the procedure, basic forest management can be divided into the following stages:
At the first stage, the "first forest management meeting" takes place. As part of this event, appraisers, forest user representatives, and other stakeholders (including representatives of local communities or environmental organizations) discuss future forest management work and all aspects that need to be considered. In the second stage, field and in-house works take place. During this stage, surveyors conduct field surveys of forest user forests and develop a forest management materials draft project. In the third stage, the draft forest management materials are discussed at the “second forest management meeting” and the involvement of stakeholders. If the meeting results approve the forest management materials, they are sent for approval to the governing state bodies, including the Ministry of Environmental Protection. In general, the basic forest management procedure can take more than a year.
However, many events may require changes in forest management plans (forest fires, finding rare species or habitats, establishing nature reserve fund (NRF) objects, etc.). According to the Forest Code of Ukraine, forest management plan changes should be approved by the State Agency of Forest Resources of Ukraine (SFRA) in agreement with the Ministry of Ecology and Natural Resources of Ukraine. SFRA delegated the functions of approving continuous forest management plans to its Regional Forestry and Hunting Departments.
As a result, FMEs themselves propose updates to FMP in a "continuous forest management" procedure." Most FMEs propose updates every year. Continuous Forest Management Planning is the process conducted each year to assess data on the distribution of forest plots and update information related to harvesting activities (forest type, species, age).
Forest Management Plans are developed by one of the Forest Management Planning Department (expeditions) of the Ukrderzhlisproect, with support from FME. The FME has the right to choose compartments that will be harvested during the next decade. In this process, they need to consider technical setup defined by the legislation: The bodies of the State Forestry Agency have the right to replace, with the consent of the permanent forest user, the loggers transferred for logging use of the main use, including those started by felling, taken in healthy stands, to loggers in stands damaged by elements, diseases, and forest pests. The term of connection of felling’s (excluding the year of felling) for coniferous forests - 4 years, oak and beech -3, other hardwood and deciduous - 2 years. In one-quarter, several notches are allowed at the same time. The distance between one-year-old loggers in one or adjacent quarters must be at least twice their width. If, due to the peculiarities of the terrain, it is not possible to divert the rectangular loggers, their boundaries are set along clearly defined demarcation lines on the ground. Loggers with viable undergrowth that provide reforestation and loggers designed for sprouting are developed mainly from 1 October to 1 April.
The Instruction on the Procedure for Endorsement and Approval of Annual Allowable Cuts (No 38) specifies the key role (approve right) of the Ministry of Environment Protection and Natural resources in the process.
The forest management plan shall include planned sanitary cuttings, which can be allowed under special circumstances. This cutting aims to maintain forest health and prevent the spreading of outbreaks of forest pests and diseases. Still, they also generate an amount of timber of economic value. Sanitary cuts are not included in the Annual Allowable Cut calculation.
According to the Forest Code of Ukraine, the allowable cut is "an annual scientific volume of commercial harvesting, which is approved for each owner, by groups of species (e.g., broadleaf; coniferous), based on the principles of continuity of forest cover and standing stock volume." This felling is determined by appraisers (forest biometry experts of the "Ukrderzhlisproekt") based on "Instructions on the procedure for approval and approval of estimated felling" (Asi-Assurance, 2018) and approved by the Ministry of Environment and Natural Resources of Ukraine. This is the maximum annual amount of wood that the FME can fall. The felling is calculated based on many indicators, mainly the stock of mature wood available for felling within the FME. Maturity age is determined separately for each plot following the "Procedure for dividing forests into categories and allocating specially protected forest plots" and forest management instructions". The intermediate and sanitary cutting are estimated annually by the FME based on basic and continuous forest management planning materials.
According to the Forest Code of Ukraine, forest management planning materials are approved by the State Agency of Forest Resources of Ukraine (SFRA) in agreement with the Ministry of Environment Protection and Natural Resources of Ukraine (Ministry of Environment). SFRA delegated the functions of approving the materials of continuous forest management planning to its Regional Administration on Forestry and Hunting.
The forest management plan is valid for ten years, and the Forest management Enterprise shall ensure continuity of management (no activities can be conducted without FMP). From January 1, 2019, the allowable cut of standing stock is restricted to 25 million cubic meters a year.
Check the record of species and volumes on Technological map
Check the record of species and volumes on harvesting permit (Logging Ticket)
For both sources described in this report (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities), the risk profile is similar.
Harvest without the necessary permits
A scenario that could happen is wood harvested without the Forest Management Representative's authorization and, therefore, without harvesting permits. (Cutting more trees in each area than permitted in the forest management plan or cutting in the area not planned for harvest).
Issue of harvest permits
According to governmental sources, tampering of Logging Tickets (Permits) is rare and related to human error (Resolution № 76599257, 13.09.2018, Zhytomyr Administrative Court of Appeal). However, according to non-governmental information, the process of obtaining permit documents for cuts, especially sanitary cuts, is often accompanied by law violations and corruption (Texty, 2020; WWF, 2020).
There are substantial discrepancies between the official statistics and other information sources concerning illegal (particularly unauthorized) cuts. In 2019, the official volume of illegal logging in Ukraine amounted to 118 thousand m3, (about 0.5% of the total logging). However, the figure should be many times higher by the opinion of some environmental NGOs, given that FMEs themselves carry out illegal logging. These are felling without approved FMP, sanitary felling during the "silence season" (the period of mass reproduction of several fauna species, lasts from April 1 to June 15), sanitary felling of a healthy forest, continuous felling without environmental impact assessment (EIA), etc. However, the SFRA does not record these felling as illegal, arguing that they have all the necessary permits (for example, logging tickets issued by the territorial bodies SFRA). Therefore, the volume of these categories of illegal logging is not recorded anywhere (EPL).
Issuance of harvest permits with incorrect data
There are indications of the cases of abuses by the Regional Administrations of the State Agency of Forest Resources at the issuance of harvest permits and harvest limits for objects of the Nature Reserve Fund, resulting in exceeding the limits of authorized harvest or harvest without the necessary permits. There is a risk that a harvest permit is issued based on wrong data.
At the same time, there are cases when the species are not correctly identified in the harvesting permit (high-value species classified as low-value species)
Auction
Another type of violations done by FME is related to the sale of wood under direct contracts when it is indeed required to sell all wood through auctions. This may carry risks of corruption, including understating grades and volumes of timber.
In 2020, in addition to the electronic auctions system, a new electronic system was developed – so-called “reductions” (APS Forest). The intend of this project is to create a transparent mechanism for the sale of raw wood.
In the opinion of some representatives of the wood business, there were cases when the forestry enterprises of one of the regions sold large volumes of the forest through the newly created commodity exchange in December 2020 at starting prices. Although such bidding is also called auction there was no competitive bidding; buyers bought the product at the original prices without bids and healthy competition. Moreover, the same companies are suspiciously often given unimpeded access to forest resources. Exchanges provide these legal entities with a comfortable pricing policy, lack of competition due to concealment of the place and time of trading, and lots exhibited from bona fide participants in the timber market. In the opinion of those representatives of the wood business, because of all these "tricks" of foresters and unscrupulous wood processors, society loses revenues to the budgets at different levels. The prices on timber products for the 1st quarter of 2021 on "closed” auctions and accessible, open to all exchanges sometimes differ from 500-1000 hryvnias per cubic meter (Misyura, Alexander, 2020).
Additional findings for Auction - A. Forest owned by the state and managed by SFRA
Logging Tickets (Permits) issued for A. Forest owned and managed by the state are available in the Open Register of Permits for Logging on the website of SE "LIAC" (The register is available at: https://lk.ukrforest.com/forest-tickets/). There are risks that harvesting takes place without a permit. Still, the Register of Permits for Logging makes it easy to check permits' availability and confirm that carbon copies are genuine.
Additional findings for Auction - B. Forest managed by other entities
Related to the auction system, usually FMEs of different agencies subordination and communal enterprises often sell wood without a contract for sale or with the understatement of grades and volumes.
Logging Tickets (Permits) issued for many communal FME are not in the Open Register of Permits for Logging on the website of SE "LIAC" (The register is available at: https://lk.ukrforest.com/forest-tickets/). And in the forest cutting tickets for communal FME, which are available in the Open Register, sometimes there is no information about the allotments or even the quarters where felling is planned. The lack of maps and registers of Logging Tickets (Permits) for several communal FME significantly weakens the possibilities of public control over their activities. Consequently, the risk of abuse by officials of these FMEs, including illegal logging, is increasing (EPL 2020).
Unauthorized logging activities
A. Forest owned by the state and managed by SFRA
There is a risk of unauthorized logging activities conducted in the forest without rights (N8) or in national parks and protected areas (Galinfo, 2019; Lesovod). SFRA controls these illegal activities in the FMEs, with the support of the State Forest Guard, State Ecological Inspectorate, and National Police. To ensure the prevention of illegal timber trafficking and combating illegal logging, the Lviv Regional Department of Forestry and Hunting and the Main Directorate of the National Police in the Lviv region signed “Joint measures to prevent and combat illegal logging, prevent theft of forest products and other violations in the field of forest resources protection, "which provide for joint raid work, streamlining of sawmills and systematic work in the media to cover compliance with forest legislation (Borlis, 2021).
B. Forest managed by other entities
In addition, unauthorized logging activities are more likely to happen in forests managed by other entities than SFRA. These risks relate to a lack of evidence of land tenure and management rights, and there are cases of occupation of forest land for other activities. Unclear management rights increase the risk of cases when management for communal entities is done without rights/permits.
According to the information sources, issuance of Logging Tickets (Permits) may be accompanied by corrupt practice and violation of Law in the following for both sources (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities). At the same time, there are cases of incorrect assessment of volumes/size/quality characteristics of wood during allotment, incorrect mensuration of standing stock, and issues related to the use of the auction system.
One disadvantage of the fee for special use of forest resources is the type of payment. Currently, it’s charged per cubic meter of harvested wood and increases from year to year without considering the market value of the wood itself. The last increase has led to the fact that for some species and categories, the tax value of commercial timber is close to the market price of wood (beech and some other species). This situation encourages FMEs to underestimate the yield of commercial timber. It does not promote high-yielding and high-quality forests because higher wood quality equals a higher amount of taxes.
Another disadvantage of the tax on forest lands introduced in 2018 is double taxation of forestry, and its calculation is based on the monetary assessment of arable land. This method to calculate the taxes is not appropriate for forest land, and in practice, these taxes could create financial issues on the FME budget (Zhezhkun, I. N., 2019). According to the amendments to the Tax Code from 2019, local councils independently decide on introducing a land tax for forest lands, as the land tax for such lands is not mandatory for the introduction. The following tax rates have been set for forest lands: for land plots, the normative monetary valuation of which has been carried out - not more than 0.1 percent of their normative monetary valuation; for plots, the normative monetary valuation of which has not been carried out - not more than 0.1 percent of the normative monetary valuation of arable land in the region. Because of the changes in the law since 2019, the tax level decreased and today is not a financial burden for FMEs. At this point, there is low risk identified for this process.
According to official sources, the rent determined by FMEs in tax declarations is paid regularly. However, unofficial sources show that its amount is often understated due to abuses during allotment and mensuration of harvest areas and illegal logging (State Ecological Inspectorate of the Carpathian District, 2021; Ecopolitic, 2021). Sometimes the requirements of the Tax Code regarding the necessary recalculations of rent are not fulfilled (Zaxid Lviv, 2018).
There are rare cases of delays of payment of rent for special use forest resources, but the State Tax Service always follows such cases.
There are cases of incorrect assessment of volumes, species composition and size-quality characteristics of wood during allotment and mensuration of harvest areas, and illegal logging. Consequently, the tax amount is not paid based on the real classification of quantities and qualities of wood.
According to official sources, it is impossible not to pay the assessed tax. However, the introduction of electronic timber accounting to forestry enterprises of the State Agency of forest resources of Ukraine does not fully protect from abuses. There are cases of understatement of tax due to illegal sale of wood or sale with misstating of wood category, grade, and volume.
Quite often, abuses are highlighted by different sources (Vitatv, 2021; Ukrainian Crisis Media Center, 2020), which are associated with understating grade and volume of wood during sales by forestry enterprises and illegal sales of timber.
Revenues of forestry enterprise are primarily generated from wood sales, so understating grade and volume or illegal sales (which are often seen) affect the amount of profit. The profit is affected as the understating of grades and volumes allows a company to only declare the income that would have been generated from the sale of lower grade/lower volumes, and thus not declaring the actual income to the authorities.
There is a risk of incorrectly assessing volumes, species composition and size-quality characteristics of wood during allotment and mensuration of harvest areas, and illegal logging. Consequently, income and profit taxes are not paid based on the actual quantities and qualities of wood. Abuses also happen at the stages of recalculation according to results of actual harvest and surcharges in prolongation of harvest or tree hauling after the expiry of the forest felling ticket.
Legislative regulations related to harvesting practices are often violated, confirmed in official inspection documents (acts) performed by ecological and nature protective authorities. There are violations of organizational and technical elements of logging (minimum period and distance between logging sites, maximum area of harvest, calculation method of adjacency of harvest areas, orientation of harvesting site shape, season of harvest) and poor quality of planning and organization of technological processes of logging operations (preparatory activities, cutting area preparation process, methods of logging, order of felling, and determination of environmental requirements, damage of standing stock, excessive soil damage). Despite this, violations are not always identified (intentionally or not intentionally) by the State Ecological Inspectorate inspections (Proternopil.te.ua, 2020; Hromadske.ua, 2018). Abuses also happen at the stage after harvesting, such as prolonging harvest or tree hauling after the expiry of the forest felling ticket.
The risk profile for this category is like A. Forest, owned by the state and managed by SFRA. However, the risk is increased for source type B, as State FMEs develop no applied procedures, and each FME may choose how to follow the legal requirements, as there is no guidance.
According to the information sources, harvesting practices are often violated in both source types (A. Forest owned by the state and managed by SFRA and B. Forest managed by other entities). At the same time, logging maps are not prepared in the field, and therefore proposed measures are not used in practice.
For areas without NRFs:
In most cases, the requirement to “not cut and damage trees and shrubs, listed in the Red Book of Ukraine or other biodiversity trees” is met. However, consultation with experts shows cases when the habitats of “Red Book species” are destroyed. In some cases, the reason is that the staff is not aware of “Red Book species” identified in the FME area or how to identify species (Tyestov, Petro, 2018).
The logging cases in areas where the Red Book species grow have been identified by public organizations and in FSC-certified forestry. According to the public organizations, the identification of such sites with the subsequent introduction of the appropriate management regime, with the rejection of continuous felling in areas of habitat of Red Book species and selective felling in the off-season, will allow the forestry, on the one hand, to properly protect rare plant species, on the other hand, continue forest management (Tyestov, Petro, 2018).
For establishing NRF:
The cases of absence or improper development of passports and protection obligations are rare and not systematic. FMEs are not bound to identify or establish protection zones in the managed area.
For species listed in the Red Book, nature reserve fund objects at the national level are created very slowly, only 1-3 per year, their organization's process lasts for decades, and to preserve rare species at such a slow pace is almost impossible. Therefore, many scientists and experts of nature conservation have long expressed the idea of including Red Book species identified in the field to nature reserve fund at the regional level in a simple way. At this point, the process takes more than 2 years (Itd.rada.gov.ua, 2021).
Related to the last step of the process – Register in the State Land Cadaster, there are different approaches of changing the purpose of the land with the entry into the State Land Cadaster: even before the approval of the land management project for the allocation of land, or after approval. State Geo-cadaster publication (official letter) indicates that registration is not possible until the land-use plan is developed and approved (Itd.rada.gov.ua, 2021).
In two years, the regional council has declared 34 virgin forest monuments as objects of the nature reserve fund in the Transcarpathia region. This is more than 5.4 thousand hectares of valuable, almost untouched forests in different parts of the region. Despite this, deputies (from Regional Council) refuse to approve part of the virgin forests for the third session in a row, including near Borzhava. More than 3.9 thousand hectares are currently waiting for the final decision and remain without official protection status. Although the law already prohibits activities that could harm nature (N9).
For established NRFs:
There are multiple protected areas established in the forest land. The network of protected areas is more developed and better coordinated for the first source type (A. Forest owned by the state and managed by SFRA), as for the second source type (B. Forest managed by other entities), the area is more fragmented.
Violations are related to insufficient efforts to enforce the protection regime (lack of signage, cases of illegal (including unauthorized) logging. The use and purpose of sanitary felling in protected and protective forests are significantly limited, which has often caused concern among conservationists and the public (Bogomaz, Mikhaylo, 2021; Tyestov, Petro, 2018). In some cases, the allowed logging (selective, pre-commercial [intermediate] cutting) leads to the transformation of forest ecosystems and consequently affects the condition of protected species of plants and animals. Deforestation and unsustainable forest management are among the main threats to biodiversity (Bogomaz, Mikhaylo, 2021). A particular concern is sanitary felling, which in theory is designed to rehabilitate the forest and protect it from pests. Sanitary felling is often used in practice as a replacement for planned felling of the commercial (main) use in those forests where they are prohibited and a way to increase felling beyond scientific grounds. From an environmental point of view, such abuses lead to the destruction of protected forest ecosystems (EPL, 2018).
Often information on restrictions (encumbrances) of land use rights on NRF lands is not correctly described in the State Land Cadastre (UNGG, 2020).
A group of NGOs explains that the NRF objects should have a management plan to reflect the zoning, restrictions, and other technical requirements for the protection to be effective. However, it is not mandatory to establish a management plan at this point (UNGG, 2020). According to the sources, the network of protected areas is more developed and better coordinated in the forests of state property. However, insufficient efforts to enforce the protection regime are identified for both types of sources.
For both source types described in this report (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities), the risk profile is similar. Environmental requirements are better enforced for the first type (A. Forest owned by the state and managed by SFRA), as for the second type (B. Forest managed by other entities) the area is more fragmented, which makes work a bit more difficult.
Prohibition of some types of felling in Carpathian’s region (Zakon.rada.gov.ua, 2020). forests above 1,100 meters above sea level) is followed in many cases, but at the same time, there are cases when FMEs are using different names of felling. Sometimes the name is “gradual forest restoration cutting” instead of prohibited “forest restoration clear-cutting” or allowed “cutting for the cleaning of continuous windbreaks, as well as stand completely affected by pests and diseases" to avoid the prohibition of sanitary felling. In fact, in practice, it is sanitary clear-cutting (EPL, 2020).
Related to the “trees that perform important environmental functions”, in general, they are protected and shown on the logging maps. However, a case reported in mass media shows that during sanitary cuttings in the National Park Cavity “Hutsulshchyna,” the cavity trees were harvested (Znaj.ua, 2017).
Environmental Impact Assessment (EIA)
The potential of the EIA procedure is not fully achieved. It is carried out in many cases on paper by the developers of the EIA reports and potential negative impacts are ignored in the field. Experts including scientists, NGOs, local communities, and other related stakeholders are not involved in the procedure. The issuance of conclusions on EIA is carried out by the Ministry formally and, for the most part, does not consider the quality of the conducted research or public comments. The established environmental conditions generally do not help to minimize, eliminate or compensate for the negative impact of logging on the environment (EPL, 2020).
Often, logging area maps do not contain environmental requirements or are not met in practice. According to information, there are cases of neglect and/or systematic violation of nature conservation requirements during logging. These activities could endanger environmental values (CBD; Bryhynets О., 2014; Protsenko L., 2014). According to the information sources, logging maps often do not include environmental requirements, and there are cases of harvesting activities developed sites with environmental value.
Forest visits shall verify:
For both Source Types described in this report (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities), the risk profile is similar.
Usually, all appropriate documents are prepared and processed following the applicable law, except for permits for high-risk tasks.
Missing health and safety equipment occurs due to low production standards, corporate culture, and labor organization. They cannot be considered isolated. Workers are not always provided with clothing, footwear; in practice, they neglect using helmets and reflective vests and do not follow logging area harvest plans. The periodical cases of injury that occur when performing logging operations include fatalities.
The presence of many hazardous production factors in the forest industry leads to occupational risks that must be considered when employing various occupations (forest technicians, loggers, foresters, slingers, drivers). There are risks that safety measures are not followed and cause injuries. Most accidents in forestry occur because of falling trees, branches, logs on workers during harvesting, sorting, or loading of timber. Additionally, there are cases of a worker falling from a dangerous height, such as from the car body, while measuring loaded timber (Lviv.dsp.gov.ua, 2019).
We have no evidence of risk raised related to radioactive contamination; however, there could be cases when the harvesting team works without a dosimeter or in the forest with a high level of soil contamination with Cesium-137.
The information on medical checks on the FMEs websites is placed quite rarely (Storozhynets FME Pres-service, 2021). According to the sources, conducting preliminary medical checks (during the hiring employee) and periodic medical checks is not always provided by the FMEs, which is a violation of Annex 5 paragraph 3 of the Procedure for medical examinations of employees of specific categories, Law of Ukraine “On Labor Protection,” 2694-XII, 1992-10-14, Art.5 (Inspection Portal, 2021).
For both source types described in this report (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities), the risk profile is similar.
There are cases of violation of labor legislation due to a lack of state funding for forest management operations. Workers who perform logging are sometimes not officially employed and/or do not receive salaries timely or at rates lower than state guarantees. Consequently, there is a risk that Health and Safety practices are not followed; workers are without social security; not all salaries are paid officially, leading to underpayment of the unified social tax.
During the inspection of the FME in the Kharkiv region, labor inspectors found 101 people who worked without an employment contract. They performed various silvicultural works (soil preparation, sowing and planting of forests, tending of forest crops, work in nurseries; forest protection and fire-fighting works - control of pests and diseases of the forest, laying of mineralized strips, duty on fire towers). Some of this work relates to the increased risk for health and specific qualification is requested. In court, the FME stated that civil law contracts had been entered into with those individuals. But according to the results of the state control measure, a decision was made to impose a fine for UAH 12,644,190.00. Due to lack of budget funding, wage arrears have occurred in some enterprises in the southern region and payment of wages below the state-guaranteed minimum and unpaid leave in violation of legislation (Golovbukh, 2021).
Employees are free to join trade unions and to conclude collective agreements. Cases of violation of regulations are rare and immediately dealt with.
Qualification for forest workers is in place for employees. According to government sources (Ck.dsp.gov.ua) and interviews, the qualification is in place for employees. However, qualifications could miss in case that forest workers are not formally employed.
The risk of customary rights is negligible for both sources (A. Forest owned by the state and managed by SFRA; B. Forest managed by other entities). There is no information about risks related to this category.
The risk of significant corruption-related violations at the assessment of quantitative and qualitative parameters of wood exists because of incorrect assessment of quantities and qualities of wood before the harvesting activities are started. Because there are cases of incorrect assessment of volumes and size-quality characteristics of standing stock, there are also risks of incorrect classification of Roundwood sold to sawmills and factories. Abuses also happen at the stages of recalculation of the results of actual harvest and surcharges in prolongation of harvest or tree hauling after the expiry of the forest felling ticket.
The State Agency of Forest Resources of Ukraine and the State Enterprise "Forestry Innovation and Analytical Center" continue to inform the public and the press about introducing innovations in monitoring and controlling the wood volumes in harvesting, transport, and trade. Thus, in implementing the E-accounting system of harvested timber, the authorities and the public can obtain information on the balance of harvested and sold timber for all FMEs. In 2019 alone, 159 FMEs out of 553 existing (all forms of ownership) were connected to the E-accounting system - https://www.ukrforest.com/eod. Currently, the E-accounting system is also under the implementation stage at the communal FMEs. This, in turn, made it possible to increase the transparency of the timber supply chain. Because of applying this mechanism, according to experts (Dklg.kmu.gov.ua), it is possible to remove more than 12% of harvested wood from the shade market every year.
According to sources, timber trade by all forest users is often accompanied by corruption abuses. Numerous violations were recorded related to timber transport by road without any logistics documents or using the same documents several times:
1. Entries in the documents are made correctly, but after unloading the wood transport, invoices and invoices are returned with the driver to the warehouse and used for the next batch of timber. There may be several such trips a day. This is a method of legalization of illegally harvested forest products.
2. Entries in the documents are made correctly, but after unloading, the wood transport invoices and invoices are destroyed, and new ones are issued following documents coming from logging. The numbering is then corrected.
3. Delivery of illegally harvested timber products for processing by short-distance transport without truck registration numbers and documents.
4. Mixing/Replacing legal wood with illegally harvested wood (illegal wood with better quality) (Karabchuk D.Yu., Vycega R.R, Pavelko A.V, Golub M.G, Popovich V.D., 2018, page 42-43).
The Earthsight Report “Complicit in Corruption” presents cases when the letterbox firms among the largest traders of Ukrainian timber to the EU were named in the Ukrainian criminal corruption investigations.
The Bureau of Investigative Journalism "Detectives" from Lviv made the film “Kings of Forest” about the illegal export of timber and control of the timber market in the EU by Ukrainian organized criminal groups. Well-known Volynians are involved in the investigation. In particular, the former head of the Volyn police, and later the prosecutor's office and the former head of the State Forest Agency, a deputy of the Volyn regional council. The investigation describes illegal logging in Ukraine, bypassing not only national legislation but also EU regulations. Fictitious letter-box firms buy timber from state-owned forestry enterprises at discounted prices and resell it in Europe at market prices. The difference is used to bribe officials and law enforcement (The Power of Truth, 2020).
Law enforcement bodies detect frequent illegal export of wood, including facilitation by corrupt forestry officials and customs officers.
A significant number of violations are associated with understating grades and volumes of timber at the time of sale. After the official ban on the export of round wood, such high-value wood grades are massively exported under the guise of fuelwood or timber for technological needs (e.g., particleboard production). Numerous publications call this a major corruption scheme of wood sales. In 2017, almost 0.5 million tons of Ukrainian timber left Ukraine as firewood and arrived in the EU as Roundwood timber. And the scheme continued to operate in 2018. Forestry specialists point out that a similar difference in statistics could exist due to different wood classifications in Ukraine and the EU. In particular, the old Soviet standard on wood quality was in force in Ukraine (Angel, Eugeniy, Andriy Butin, 2019). However, it is hard to believe that such a shortcoming could not be used for abuse. From January 1, 2019, new national wood quality standards have been introduced in Ukraine, which will help reduce the opportunities for such illegal schemes.
Ukrainian Classification of goods in foreign trade distinguishes two codes for untreated wood: 4401 – fuelwood and 4403 – untreated timber (untreated industrial wood or timber). At the same time, the standards for quality assessment provide fuelwood, fuelwood for technological purposes, and round wood. Untreated timber (code 4403) is temporarily prohibited for export. In the guise of wood allowed for export (fuelwood), banned round timber is exported through corrupt means. It occurs that low-grade merchantable wood is exported as fuelwood, which is not subject to the export ban (Ukraine. Legality Profile, 2020).
According to the information sources (Zhytomyr, 2016; Lesovod; Pravda; Transkarpatia, 2016; Timber Trade Portal, 2020) there are many official investigations by police and the security service of illegal export schemes, including custom violations.
Roundwood timber (code 4403) (fuelwood is exempt). The following valuable and rare tree species; Acacia (акація), Sorbus torminalis (берека), cherry tree (вишня), pear (груша), walnut (горіх), chestnut (каштан), yew (тис ягідний), bird-cherry (черешня), sycamore (явір) and juniper (ялівець)
On the territory of Ukraine, there are no tree species listed in the CITES Appendixes. This is confirmed by the "Classifier of tree species" used during forest measurement, inventory, and monitoring. This classifier provides a comprehensive list of all species of trees that grow in Ukraine, and among them, there are no CITES species. A full version of the classifier is included in a forest inventory database, which is not publicly available (FSC, 2019).
As there are no tree species in Ukraine listed in the CITES appendix, the risk of violating CITES legislation through harvesting, trade, and transport of wood and wooden products is low.
Consulting companies have appeared in the country, which can register companies in just 2 hours. The registration period does not depend on the form of business. As the process is easier quicker, the incentive to operate illegally has been reduced.
There are small sawmills that are not registered and typically source wood of illegal origin. According to the information sources, there is a risk that small sawmills are not legally registered.
The Ministry of Environment Protection and Natural Resources of Ukraine is responsible for conducting Environmental Impact Assessment (EIA) and providing a conclusion (decision). Ecological Inspectorate is checking the existence of EIA during the state control and if information from EIA complies with field observation.
The environmental impact assessments indicate that the pollution of the environment woodworking enterprises is a problem, and only the implementation of qualified, environmental, sanitary and hygienic and legislative measures can reduce the impact of their harmful effects on the environment. According to the source, there are cases when EIA is not supported by stakeholders (local population, environmental NGOs). One example of EIA that the stakeholders do not support is when the activists of the public organization "Ecoclub" consider the conclusions about the safety of the concentration of future emissions of the processing facility is untrue. They submitted their calculations to the Department of Ecology. According to the protesters, the calculation methods were violated during the environmental impact assessment. All comments received from the public (both those provided in writing and during the consultation) are considered by the Ministry of Environment. The Ministry has the power to accept or reject comments received from stakeholders. Therefore, the risk of not following the legislation related to this process is low.
The list of economic activities required to conduct an EIA and obtain an opinion and the whole process of preparing a report on the EIA are described on the Ministry of Environment and Natural Resources (Ministry of Environment Protection, 2018) website.
As confirmed by the reports of the Inspections of the State Service of Ukraine on the Works Issues (the results published online), there are cases when the occupational safety and health requirements on wood-processing enterprises are violated.
There are also known facts when the Office of the State Service specialists on the Work Issues find inaccurate technical specifications about the operation of technological equipment of the woodworking enterprises for which the permit was issued .
There is a risk that the employer has not properly formalized its employment relationship with certain employees and has not notified the State Fiscal Service. A financial liability is provided for the use of undeclared work, for the registration of part-time employees in the case of actual full-time work, and for the payment of wages from outside of the company (payment in “an envelope,” without declaring the transaction in the company accounting system).
To facilitate the transition to declared work from September 1, 2020, inspectors of the State Service on Work Issues conducted an inspection campaign to identify undeclared workers, with the participation and assistance of other bodies (State Tax Service, Pension Fund, employment centers, local authority’s self-government, the National Police, etc.). During 534 visits, inspectors found 2,202 undeclared employees, and more than half (1,130 employees) were employed (by the visited organization) during the inspection. In total, 92% of the total number of completed visits ended with detecting undeclared work. The average number of undeclared people who were found during the inspection visit is about 4 employees.
During a search by the investigators of the Obukhiv Police Department together with the Security Service of Ukraine, a wood without relevant documents on its origin and Chinese citizens with temporary residence permits in Ukraine were found at one of the woodworking enterprises. Investigative actions are underway to establish the origin of the specified wood and the legality of employment of these citizens is being checked (Glavcom, 2019). This is still under investigation as of October of 2021.