fraud

Fraud

28/10/2020

The main problems faced by public entities in the timber sector are three: enforcing the regulatory framework, controlling volumes and traceability of extracted wood, preventing and detecting fraud and the difficulty in undertaking inspection processes, which affects the inspector’s productivity. Countries normally do not have digitized systems to verify regulatory compliance. Especially in the current situation caused by the COVID-19 the digital transformation is a necessity. The inspector cannot perform the on-site inspections
Despite being heavily regulated, the timber industry is often plagued by criminal acts and fraud. In most cases, the difficulty of tracing and monitoring the movements of wood, and failures in the control of the chain of custody open the door to the creation of false invoices, being able to exceed the maximum volume of exploitation and several formulas of regulatory violation.

Famous was the case, in 2018, in which 20 companies of the wood sector in Galicia (Spain) were accused of rigging false invoices worth several million euros, between 2012 and 2015, which then delivered to a sawmill to defraud taxes, the only buyer, which used millionaire invoices of fictitious sales. Woodcutters and firewood sellers were investigated for an alleged crime of false documentation.
Non-compliance with regulations is accompanied by fines and even prison sentences. There have been several cases in the US that have resulted in heavy fines and seizure of shipments. The worst is that the reputation of the companies is affected and it takes a long time to recuperate what has taken years to build.

In the case of non-conformities during an FSC or PEFC audit, it can lead to the suspension of the certificate, stopping the possibility of marketing wood with the corresponding seal until they are corrected. Depending on the size of the company, losses can be as high as millions.
The Forestchain4P Platform, under development, is a solution designed for government control. Apart from the ease of inspections, real time and in remote, it offers functionalities to be able to perform cross-checks to ensure, among other things, that a supplier cannot exceed its limit, that it does not market illegal wood, or from a non-permitted origin.

 

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