Fiji: Timber's Role in Coup

As the political crisis in Fiji twisted and turned on an almost daily basis following the seizure of the Prime Minister and a group of other hostages, a pre-coup controversy over millions of dollars' worth of mahogany was forgotten. A Gemini News Service correspondent looks at a timber dispute that is not yet over.

A controversy over lucrative mahogany timber lurks behind the Fiji Islands hostage crisis.

Rebel leader George Speight, the failed pyramid businessman who led renegade military gunmen to seize parliament and hold the Fiji Labour Party-led coalition government prisoner, claimed his insurrection was designed to abrogate the multiracial 1997 constitution which had hoped to blur the country's racial divide, and to restore indigenous Fijian paramountcy.

About 48 per cent of the country's 800,000 population is indigenous Fijian and 44 per cent Indo-Fijian. However, Speight himself is a mixed-race Fijian with a European name, the fourth generation descendant of a white colonist.

The 45-year-old shaven-headed entrepreneur had a personal grudge against captured Prime Minister Mahendra Chaudhry, the country's first Indo-Fijian head of government: Speight had been ousted as chief executive of Fiji Hardwood Corporation and as chairman of the state-owned Fiji Pine board.

That is why Speight's insurrection provoked another leading businessman, Jim Ah Koy, an opposition MP and a former finance minister, to pay for a full-page advertisement in the daily newspapers and go on television to deny any involvement in the coup.

He was Speight's mentor and it had been widely reported that he had given Speight the timber post and directorships on Fiji Pine and other concerns.

Admitting that he had close family ties stretching back over 30 years, Ah Koy said: "What the dissident group did was unconstitutional and therefore illegal. But I can understand fully their frustrations and anger against the Chaudhry government and the person of the Prime Minister for not listening to the sensitivities of the indigenous Fijians."

While Speight was at the helm of Fiji Hardwood Corporation he was seen as the most influential man in the country's timber industry.

Forestry contributes about 1.5 per cent of gross domestic product, and forest products are the fifth most important export commodity, mainly in the form of pine chips and sawn timber.

The Trade and Investment Bureau says that the forestry sector "is about to enter a period of rapid growth. The focus is on processing, marketing and exporting, as opposed to the planting and forest development operations of the early 1980s."

One of the most important developments in the sector has been the planting of mahogany, which the Trade and Investment Bureau believes could become "the flagship of Fiji's forest industry."

There are 45,000 hectares of mahogany, and the plan is to plant 4,500 ha a year. The target is 85,000 ha, at which point it could provide a major source of export dollars that would eclipse pine as the timber industry's top product. (There are around 40,000 ha of pine plantations.)

Before his attempted coup, Speight had been under scrutiny as a result of a mahagony industry controversy. (He had also appeared in court a week before the coup on unrelated exchange control and extortion charges, which he denied.) Speight had to issue a statement to the Fiji Sun denying that he had been "on the take" over a deal that involved plans to harvest part of the maturing mahogany forests, claimed to be the largest in the world and worth billions of dollars. Opposition groups claimed the government was selling a lucrative resource at an under-valued price.

The Chaudhry government said it would allow 100,000 cubic metres of the timber to be processed in the first 10 years and a further 178,000 cubic metres over the next 20 years.

It set out to find a partner for harvesting and processing. Intensive international bidding by seven international companies followed. After protracted negotiations the bidders were reduced to two.

The government subsequently claimed there were "fundamental shortcomings" in the proposal by one of the two short-listed groups -- Timber Resource Management (TRM), a United States consortium - that made it unacceptable "to any right-thinking government".

A full-page government advertisement headlined "The Real Facts About the Mahogany Deal" claimed TRM planned to set up a shelf company in the Cayman Islands.

This allegedly would be used to raise funding from bonds which were to be issued abroad and the company was said to be unwilling to put any money upfront.

"Fiji's mahogany forest was to be secured to this company so that in the event of default of repayment of the bonds, they take over the forest and do what they want with it without the Fiji government or the landowners having any say at all," claimed the state advertisement.

TRM has filed a $25 million defamation lawsuit against the Chaudhry government and the Fiji Sun over the advertisement.

The government's decision left the field to the British government-owned Commonwealth Development Corporation (CDC).

But the deal is on hold, pending a solution to the political crisis sparked by Speight. A CDC representative was scheduled to visit Fiji on 22 May, but was unable to do so because of the coup.

"I think it will depend on when things settle down in Fiji," said CDC timber section specialist Peter Massey. "It will be difficult to take any commercial decisions right now. We'll have to wait and see." -- GEMINI NEWS

David Robie is a New Zealand journalist and media educator living in the Fiji Islands.

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