Subject Evaluation for the Forest Certification FSC of Forest

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Subject Evaluation for the Forest Certification FSC of Forest

    Subject: Evaluation of the Forest Management of ENDESA S.A. and Other

    Lumber Companies of the Peña Durini Group in Ecuador, for Forest Certification

    by FSC.

    Evaluation of the Forest Management of ENDESA S.A., Quito Ecuador

    Block: Information Related to the Evaluation

    Soliciting Company ENDESA - Enchapes Decorativos S.A.

    Founded in 1975, member of the Peña Durini Group

    Avenue Morán Valverde s/n, Panamericana Sur. Km. 9 1/2,


    Tel: 02-267-6700 / 267-7980, Fax. 02-267-4016


    BOTROSA Tropical Forests S.A., founded in 1989 Related Companies /

    Whimper 199 y Orellana, Quito Organizations

    Teléfonos: +593-2-222-3553 / 4 / 5; Fax. +593-2-222-3455


    CONSORCIO SETRAFOR Forest Services & Projects

    Cía. Ltda., founded in 1991

    Avenue Morán Valverde s/n, Panamericana Sur Km. 9 ?

    Quito, Ecuador

    Tel.: +593-2-267-1630 / 267-2514; Fax. +593-2-267-5906


    Fundación Forestal Juan Manuel Durini - FJMD

    Ing. Fernando Montenegro S.

    Avenue Morán Valverde s/n, Panam. Sur Km. 9 1/2, Quito

    Teléfonos: 02-267-0631 / 268-3104; Fax. 02-267-0631


    GFA Terra Systems, Alemania, / RNT, Costa Rica Certifying Company

    Addresses 1. GFA Earth Systems GmbH

    Carsten Huljus, M.Sc. International Forest Management

    Certification Department

    Eulenkrugstrasse 82

    D-22359 Hamburg, Germany

    Tel.: +49 40 603 06 140; Fax: +49 40 603 06 -149


    2. Recursos Naturales Tropicales SA. - RNT

    Apartado Postal 991-1007, Costa Rica

    Mr. Héctor A. Martínez

    Tel.: +506 221 8652; Fax: +506 221 7368


Lead Auditor Mr. Héctor A. Martínez


    Dates of Evaluation

    Field Evaluation February 2005

    Type of Operation Mixed, plantation and natural forest

    Localization Estate dominado River Pitzará, regions of Pedro Vicente

    Maldonado and Puerto Quito, Province of Pichincha; and

    region Quinindé, Province of Esmereldas

    Surface Evaluation 5.406 hectares of plantation

    (according to the e-mail 820 hectares of natural forest

    of Martínez)

    A. Complaints in relation to the execution of the evaluation of GFA/RNT

    The consultation of persons and key entities (stakeholders) is an essential part of the evaluation for forest certification. The evaluation of ENDESA-BOTROSA is invalid for the following reasons:

    1. They did not consult any local indigenous community and/or their

    corresponding organizations, for example the Federation of Centers Chachi of

    Ecuador (la Federación de Centros Chachi del Ecuador (FECCHE)), and the

    Federation of Centers Awà of Ecuador (la Federación de Centros Awá del

    Ecuador (FCAE)), where ENDESA-BOTROSA is extracting wood.

    ENDESA-BOTROSA extracts at least 70% of the raw material of natural forests in

    the Provinces of Esmeraldas and Pichincha, that are the property, or in possession of,

    local farming and indigenous communities. For example, in 1994 ENDESA-

    BOTROSA managed to sign contracts with four communities, Chachi Hoja Blanca,

    Pichiyacu, Gualpí and Capulí, for the industrial use of more than 25,000 hectares of

    natural forest (of the ancestral indigenous territory) of this town.

    2. They did not consult Acción Ecológica, an NGO with an office in Quito which

    for more than 10 years has been investigating and monitoring the activities of

    the Peña Durini Group. Acción Ecológica published the results in numerous

    documents, among those in their monthly bulletin Alerta Verde. Part of the

    information is available in the organization?s web-site,

    ENDESA-BOTROSA also initiated various judgements against members of Acción

    Ecológica and of the communities of El Pambilar, Golondrinas and the Association

    of Farmers of Free Ecuador (Asociación de Campesinos Ecuador Libre) for what

    was interposed during the Constitutional Tribunal un Recurso of Amparo in 2003.

    3. GFA/RNT contacted the ―stakeholders‖ via the sending of one electronic mail

    message (e-mail).

    We consider that the sending of only one e-mail is insufficient, in that electronic

    mail is an informal means of communication and, moreover, that it sometimes fails

    (see below). When there is the real desire to make a consultation, you utilize normal

    mail, letters with the option to receive confirmation that they have been received,

    telephone calls, fax and above all personal visits.

     The previous is also evidence that various people indicated in the ―List of people

    and entities consulted for the evaluation of E&B‖ provided by GFA/RNT were in

    reality not contacted or did not receive the sent emails, such as the case of, for

    example, Jaime Levy, director of Fundación Altrópico and director of the CEFOVE.

    Ing. Armando Chamorro, School of Forest Engineers; and finally Mrs. Martha

    Núñez, Fundación Ambiente and Sociedad who did not respond to the questionnaire

    out of conflict of interest.

B. Complaints in relation to the forest activities of ENDESA S.A..

0. Introduction:

    The Peña Durini Group is the main lumber group of Ecuador and the main wood exporter of the country. ENDESA-BOTROSA produces 80,000 m3 of wood boards per year, of which they export 80%. The companies ENDESA S.A. and BOTROSA S.A. belong to the industrial Peña Durini Group. Both companies are supplied with an important part of their raw material by SETRAFOR Ci'a. Ltda., also of the Peñn Durini Group. By the very narrow relation between those companies and their form to work jointly, one considers them a sole company and cannot differentiate between them.

    The Peña Durini Group has approx. 20,000 hectares of plantations and 25,000 hectares of designated native forest. Nevertheless, they do not manage to supply their factories with the necessary raw material, approximately 135,000 m3 per year, of which

    ENDESA-BOTROSA extracts 70% from communitarian natural forests of the indigenous towns of Chachi, Awá, Épera, Afroecuadorian communities and of farmers in Esmeraldas and Pichincha. The majority of the complaints that are described next refer to the exploitation of natural forests - appropriated and not appropriated to the company and of property, or in possession of, farmers and the local as well as indigenous communities.

    It is important to note that that, to supply itself with raw material, ENDESA-BOTROSA and SETRAFOR always work with the same subcontractors and lumber intermediaries, to which they habitually give credits (money in cash) and machines (tractors, skidder, etc.) so that they can achieve the extraction and sale of the trees to the lumber Group. The company has, therefore, a direct responsibility for the activities of its subcontractors and lumber intermediaries.

    For several years the Peña Durini Group has been seeking the certification of forests under the control of the company, like a means to maintain and accede new markets and to improve their public image. To date, it has had two principal evaluations, but has not managed to become certified. The company has never changed its manner of forest extraction, that has devastated and destroyed large extensions of natural forest of the

    Ecuadorian coast and seriously harmed the farming and indigenous communities within the zone. Given that the forests on the coast are nearing complete consumption, the company began to exploit the forests of the Ecuadorian Amazon, e.g. in the northern zone of Sucumbíos on the border of Colombia, where it continues working in the same manner: destructive.

    At present, the process of certification of the company has counted on the support of GTZ, German cooperation that instead of supporting the affected parties in a direct way, has chosen the Botrosa company to be its beneficiary, in spite of being perfectly informed into the antecedents of the lumber dealer.

     The Durini group, from several fronts, has continuously sabotaged and corrupted any attempt on the part of the Ecuadorian State to establish forest control over the exploitation of wood.

Principles and Criteria of the FSC Not Fulfilled by ENDESA BOTROSA



    Forest management will respect all national laws, international treaties and agreements of which the country is a signatory, and should comply with all principles and criteria of the FSC.

    1.1 Forest management should respect all national and local laws as well as all of the required administrative requirements.

    Uncontrolled Wood: extraction of wood without management plans and legal permits.

    The majority of the extraction and transport of wood in Ecuador is done both without permits for the use of the forest and mobilization guides. Management plans and false or altered mobilization guides are frequently sold. Nevertheless, due to the lack of forest control it is not possible to verify, without an exhaustive investigation, how much wood from ENDESA-BOTROSA comes from uncontrolled sources.

    Moreover, to this lack of control needs to be added the general corruption in the forest and lumber sectors as well as in the Ministry of the Environment.

     1In 2000 SETRAFOR started to illegally destroy and extract trees without the

    permission of the Federation of the Centers of Awá of Ecuador (Federación de Centros Awá del Ecuador (FCAE)) in the forest of the Awà community of Balsareño, located in the province of Esmeraldas, San Lorenzo region, parroquia Ricaurte. The FCAE is comprised by 22 Awá communal centers which share 121,000 hectares of ancestral communal land in the Provinces of Esmereldas, Carchi and Imbabura, legally recognized as Ethnobotanic Reserves by the Ecuadorian state. The community initiated

     1 Lumber company from the Peña Durini group, intimately related to Endesa-Botrosa

    a Penal Judement against Mr. Ricardo Fernández, intermediary of SETRAFOR, and Mr. Andrés Guarderas, manager of SETRAFOR, followed by the Balsareño center in the Sixth Judge of the Penal of San Lorenzo, December 11 2000. May 15, 2001, the accused entered the community in order to solve the ―problem,‖ and paid something as well as asked for the case file.

    Another example is the forest of the Awá La Union community, where Mr. Ricardo Fernández, intermediary of SETRAFOR, pressured the community, since 2004, to sell trees. The company illegally cut down seven trees inside of the Awá territory, until the community discovered and thereafter stopped the activity.

Illegal Construction of Access Roads

    The construction of illegal access roads, both without permits from the environmental authority and the corresponding Environmental Impact Studies for the zones of native forests, has violated the Law of Environmental Management, the Law of Forests and Conservation of Natural Areas and Wildlife.

    In the case of the Awá, the SETRAFOR company of the Peña Durini Group, which supplies ENDESA-BOTROSA with raw material, has constructed at least two access roads which reach the border of, or near to, Awá territory, without the corresponding permits and studies:

Province of Esmeraldas

    1. Access road of 10 kms constructed approximately 1990: part of the Ibarra


     San Lorenzo and reaches up to La Sirena, passing by the Chachi la Ceiba center.

Province of Carchi

    2. Access road of 5 kms between Miravalle and Rio Verde in order to exploit primary

    forests of the Cerro la Golondrinas zone, with an extension of approximately 220,000 hectares. (Fuente: CCCC, 2001)

    1.5 The areas of forest management should be protected from the illegal activities of harvesting, settlements and other unauthorized activities.

    Endesa-Botrosa is the company who realized the illegal and illegitimate activities of wood exploitation; as such it would be bad to hope that it would be the same company to maintain control over the same resources

    1.6 Those responsible for forest management should demonstrate a long term commitment of adhesion to the Principles and Criteria of FSC.

    According to the e-mail of Héctor Martinez, lead auditor of GFA Earth Systems, Germany, / RNT, Costa Rica, criterion 1.6 establishes that ―the

    administrator/responsible party of a forest operation should commit themselves to the

     2 Civic Commission of Control of Corruption (CCCC)

    fulfilment of the p&c (principles and criteria) of FSC no only in the operation under certification, but in all of their operations.‖

    ENDESA-BOTROSA does not comply with the Principles and Criteria of FSC in the majority of its operations

    ENDESA-BOTROSA obtains 70% of its raw material from community natural forests in the provinces of Esmeraldas and Pichincha that do not belong to the company and for which do not exist agreements or contracts regarding means of extraction or term length 3(according to personal communication of Fernando Montenegro).

    ENDESA-BOTROSA, SETRAFOR, its subcontractors and intermediaries, since they arrived in Esmeraldas, have not, and do not manage these forests according to the principles and criteria of FSC. They have not changed their practices.

    The majority of community or individual forests exploited by ENDESA-BOTROSA are relatively small, with surface areas between less than 100 hectares to those of thousands of hectares. In these forests the company does not normally extract parcels of wood annually, they do not cut wood from a defined parcel according to the established annual cycle; rather, the company extracts the wood from the forest all at once. In this manner the forests are destroyed in a very short period of time (depending on the size of the forest, in weeks, months or in the best case scenario a few years), which is illegal

    and seriously harms the local communities. After, the company abandons the area completely in order to move to another forest, therein leaving the communities, for many consecutive years, without the ability to be able to take advantage of the wood and therefore without income. This strategy is known world-wide as ―cut, cash and


    The above, for example, is the case of the forest of the La Sirena community and the forest of the Rodríguez family, Esmereldas province in the San Lorenzo region, Ricaurte. The SETRAFOR company (with the help of their intermediary, Ricardo Fernández) carried out its first industrial exploitation in 1995 and BOTROSA a second industrial exploitation between 1998-2003. The forest was completely devastated and degraded. The forest standard of Ecuador establishes that the minimum cutting cycle for exploitation with mechanized hauling is 15 years.



    The management and rights of the long-term use of land and forest resources should be clearly defined, documented and legally established.

Illegal Adjudication of Land

     3 Director Ejecutivo de Fundación Forestal Juan Manuel Durini

    ENDESA-BOTROSA has, by various means, obtained from the National Institute of Agrarian Development INDA, the illegal adjudication of land within the Patrimonio Forest of the State, and, other lands outside of this forest.

    These adjudications of land are marked by corruption, violation of penal laws and contravene article 27 of the Forest Law and article 39 of the Law of Agrarian Development.

    The Commission of Civic Control of Corruption (CCCC), came to this conclusion in its 2001 report. The CCCC indicated signs of perpetration of crimes by engineer Duran Delgado, ex- executive director of INDA, outlined in articles 249 and 254 of the Penal Code relative to the violation of duties and excessive attributions when giving adjudications to ENDESA-BOTROSA; this according to that which is analysed in paragraphs 412 and 413. The Controller of the State came to similar conclusions in its October 2003 report.

    ; Illegal Adjudication in the Forest of the State

    According to Ecuadorian law, the Forest of the State is governed by the Ministry of

    Environment, which is the only institution that can determine the management of

    these forests. ENDESA-BOTROSA has more than 18,202 hectares (from 1997 to

    2000) of illegal adjudications given by the National Institute of Agrarian

    Development (INDA), according to the Civic Control Commission of Corruption

    (CCCC). The General Controller of the State indicated more than 10 illegal

    adjudications given by INDA.

    ; According to the Constitutional Tribunal of Ecuador, in the resolution of case

    number 184-RA, resolved October 22, 2002, the ENDESA-BOTROSA

    company violated the following laws of the Republic of Ecuador in the illegal

    adjudication of land in the Forest of the State.

    - Law of Environmental Management, articles 3 and 6.

    - Law of Forest Conservation and Natural Areas and Wildlife, articles 1, 2, 4,

    37, 71 and 74.

    - Executive Decree 5-05, published in the Official Register 118, January 28,

    1999, article 4.

    In 2003, the communities of Pambilar and Golondrinas and the Association of Farmers Free Ecuador (la Asociación de Campesinos Ecuador Libre) interposed a Protection of Resources in the Constitutional Tribunal.

    This protection was gained in benefit of the local populations and the Court demanded the reversion of earth illegally adjudged by INDA to ENDESA-BOTROSA.

    The land conflict which ENDESA-BOTROSA has with the local population is also documented in numerous articles published in the newspapers El Comercio <> and La Hora <> which are the among

    the most widely circulated and distributed newspapers at the state-wide level.

    2.3 They should employ appropriate mechanisms in order to resolve the disputes in regards to management and rights of use. The circumstances and the state of whichever pending dispute should be considered explicitly during the certification evaluation. Disputes of substantial magnitude that involve numerous interests and significances, normally declassify the certification of an operation.

    Apart from the illegal adjudications of land, ENDESA-BOTROSA also does not apply appropriate mechanisms in order to resolve the disputes in regard to reclamation for management and rights to use of land, but, rather, tries to resolve these conflicts by force, thus violating human rights and diverse penal as well as civil laws.



    The legal rights and customs of indigenous communities to posses, use, and manage their land, territory and resources, should be recognized and respected.

Violation of the rights of indigenous communities

    The common rights of the four indigenous communities, Chachi, Awá, Epera and Afro-Ecuadorian have been violated by ENDESA-BOTROSA. In order to exploit these forests, according to accusations by indigenous leaders, ENDESA-BOTROSA resorts to false promises of construction of roads, schools, health centers, sports fields etc., corrupting community leaders and individual farmers so that, illegally, they sell their trees and communitarian forests. As such, the legal rights of indigenous towns, and the fact that ancestral territories are indivisible and inalienable, are unrecognized.

    The following were violated: of the Political Constitution of the State, article 84, chapter 5; of Collective Rights, sections 1, 2, 6, 7, 8, 10, 12, and article 85 referring to the black and Afro-Ecuadorian communities; and Agreement 169 of the International Labor Organization (regarding Indigenous communities and Tribes in independent countries); among others, articles 4, 5, 6, 7, 12, 13, 14, 15, 16, 18.

    Signature of detrimental contracts and non-compliance regarding existing contracts with indigenous communities

    In the case of the Chachi, ENDESA-BOTROSA has signed clearly detrimental agreements with the following indigenous communities: clearly Chachis of Hoja Blanca, Capulí, Guapli and Pichiyaku. Van Dam reached these results in 2004, in a field study realized by GTZ, wherein it shows a series of evidence related to the company?s noncompliance and of the severe environmental, as well as cultural, impacts to which the Chachis were exposed.

    In the case of the contract between ENDESA-BOTROSA and the center of Chachi Capulí, in 1994, it is stipulated that the company ―would elaborate on a Plan of Management, would construct a street and would take advantage of the forest. In exchange, the Chachis would receive an annual canon per hectare to maintain the forest without intervention, as well as a canon for the extracted wood. None of the canons were paid, the last one because the wood was never extracted‖ and the Plan of

    Management was never approved by the competent authority (cited from Van Dam, 2004).



    Forest management should maintain or elevate the long-term societal and economic welfare of the forest workers as well as of the local communities.

    Overexploitation and degradation of the exploited forests harms local communities

    ENDESA-BOTROSA overexploits and degrades the natural communitarian forests, which strongly diminishes the use of natural resources other than wood, such as hunting, fishing, harvesting of fruits, fibers, medicinal plants, honey from bees (bees generally make their hives in Sande trees, which is the wood of highest demand for lumber) which are an important source for the basic maintenance of life for local populations. The previous is especially important in the case of indigenous communities like the Chachi, who have a strong bond with the forests and depend on them like hunters-and-gatherers.

    In consequence, the local population sells many of the local communitarian forests exploited by the company to agroindustrial companies, such as, for example, the Palm-culture companies in the San Lorenzo zone, which completely destroy the forests and convert the land into extensive plantations of African palm or palm heart. Without forests and land for local farmers to cultivate and seed, these individuals will be left without their traditional sustenance of life, thus they are in the habit of invading zones where forests still remain. The last, for example, is the case in the Ricaurte zone in the San Lorenzo region, where for years the farmers have been trying to invade the Awá Ethnobotanical Reserve, which has provoked violent confrontations and many damages to the Awá and the Federation of Awá Centers of Ecuador (la Federación de Centros Awá del Ecuador).

ENDESA-BOTROSA corrupts the coexistence of communities

    The strategy of ENDESA-BOTROSA is to relate itself with persons and/or directives of the community or to favor certain families and not the community as a whole. In the case of the Chachi, the majority of the negotiations have occurred in Quito, Borbón or Esmereldas, to which member of the directorate went and have personally benefited in the form of ―donations‖ for the community. This attitude of the leaders should be analysed in the light of the material poverty of the Chachi, such as they are an ancestral community, and from a generalized culture of corruption that crosses into many parts of Ecuadorian society.

It acquires wood via means of false promises and noncompliance

    ENDESA-BOTROSA buys raw material from SETRAFOR and/or subcontractors and intermediary lumber companies, that informally work and convince property owners,

    individual possessors, or communities with forests to sell their trees by offering money (in cash) and/or promising the construction of roads, schools, health centers, delivery of material and equipment, payment for professors, etc. These promises are rarely fulfilled, such as illustrates the example of the Chachi, as mentioned in principle #3.

    Also, in the areas where the company supposedly established long-term relations, the lack of a promise with the local population from the company, and the lack of the socialization of the Plan of Management in the communities, resulted in the total destruction of the forests.

    This is, for example, the case of the indigenous communities Chachi of Pichiyacu, where, after the failed attempt of BOTROSA to certify the community’s forest, the

    process of deforestation accelerated and the forest has practically disappeared, including the extraction of wood from areas stipulated as reserve (Van Dam, 2004), and in Gualpí, where the company ―constructed a street, but the company-community relations

    terminated poorly and the community decided to permit the entrance of other lumber companies which offered a superior price for the wood‖ (Van Dam, 2004).

    In the Chachi of Capulí community, ENDESA-BOTROSA signed a contract with the community in 1994, which is very questionable and that, moreover, was never executed by the company. Recently, in 1997, the company elaborated a Management Plan for Capulí, which was never approved by the appropriate competent authority. The street which the company promised to construct was never installed. In 1999 the community decided that the contract would not be for all of the territory, but, rather, only for 6,000 hectares.

Repression and violation of the rights of local communities

    In the El Pambilar zone the forest exploitation that ENDESA-BOTROSA is Performing, is damaging the population of this community, which has organized in the ―Free Ecuador‖ Association (Asociación ―Ecuador Libre‖) and whom during many years have denounced, on various occasions to the state, the repeated violations of their civil and human rights by the security personnel of the company.

    The communities of Pambilar and Golondrinas have not received any social or economic benefit from the Peña-Durini group, but on the contrary have seen effects on their physical and psychological integrity via the repeated attacks by the security personnel of the company. ENDESA-BOTROSA has contracted private guards who act violently against the local population. The methods used by the company, and the contracted persons by the company, are among others; corruption of leaders, intimidation, impeding free transit throughout the zone and the burning of private property such as houses, cultivated land and domestic animals, shooting of houses and people, kidnapping, torture, false accusations/charges of terrorism brought forth in penal courts against simple farmers.

    These acts can be seen plainly registered in the form of testimonies, photographs, accusations brought forth to the police, who curiously do not act in defense of the affected parties and whom also have been corrupted by ENDESA-BOTROSA, the same as the judges and fiscal authorities. Free Ecuador (Ecuador Libre) their leader

    Floresmilo Villata, who has on various occasions been abused by the guards and

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