Superyacht builders look away at illegal teak trade

“We’re through!” That is the first thing Arthur van der Veen says when he calls his friend and business partner Roelof Dirk Brouwer from the Czech Republic on Monday morning, 14 October 2019. The container filled with teakwood from Myanmar has passed Czech customs, the men have succeeded in getting the consignment into Europe. “Very nice, Arthur,” says Brouwer. “That’s just nice.”

The relief is great. Shortly before the phone call from the Czech Republic, Brouwer had been under stress for weeks. Customs had detained several containers of wood. Eventually they were released again, but the scare is there. The 60-year-old Brouwer has been importing Myanmese teak – the most sought-after type of wood for exclusive yachts because of its strength and appearance – for more than a decade.

Over the years, his work has become more difficult. The Dutch regulator NVWA has been chasing Brouwer and his business partners since 2015. They are suspected of importing illegal timber. To evade Dutch controls, the men defected to the Czech Republic in 2018.

Via that route, they manage to get the timber from Myanmar into Europe, because the Czech regulator does approve the batches of timber. Still, it eventually has to go to the Netherlands: it is destined for one of the world’s most luxurious yachts, according to NRC‘s investigation as part of the International Consortium of Investigative Journalists’ (ICIJ) international research project Deforestation Inc. The traders purchased the teak for a yacht from Dutch superyacht builder Oceanco in Alblasserdam, according to invoices, bills of lading, correspondence and transcripts of intercepted conversations accessed by NRC.

At the time, Oceanco was building a small number of superyachts, including one for the American film director Steven Spielberg and one for Jeff Bezos, co-founder of Amazon. For Spielberg, Oceanco is working on the Seven Seas, a 109-metre yacht named after his seven children. The showpiece, however, is the Koru for Jeff Bezos. It is the largest and probably most expensive sailing yacht ever built in the Netherlands: 127 metres long and with an estimated price of half a billion euros.

Behind luxury yacht building is a world of shady timber traders that is becoming increasingly inaccessible and criminal. The world’s best teak is scarce and comes from Myanmar. Teak is grown on plantations in numerous tropical countries, but that quality does not match the wood from Myanmar’s natural teak forests. And those who pay hundreds of millions of euros for a ship expect the very best.

But Myanmar suffers from fierce corruption, resulting in more logging than the government officially allows. Moreover, some of the proceeds from teak sales go to the military, which has been accused of serious human rights violations for decades, including by the United Nations. For instance, the military is held responsible for mass murder of the Rohingya and oppression of other minorities. Since the military coup in 2021, the military has been waging war against civilians demanding restoration of democracy. According to the US Treasury Department, the teak trade is a major source of revenue for the junta.

Weaknesses in supervision

To combat global deforestation, the European Union Timber Regulation has been in force since 2013. It bans the import of illegally harvested timber, and requires traders to make every effort to rule out that the timber they bring into the European Union has been illegally harvested. Timber from Myanmar is looked at particularly strictly because it is very difficult to find out exactly where in the country it is cut. That information is often missing or incorrect.

Since 2017, it has been “impossible” to reduce the risk of teak from Myanmar being illegally harvested to a negligible level, European Commission experts judge. According to the Dutch Food and Consumer Product Safety Authority (NVWA), which monitors compliance with the timber regulation, this means in practice that legal imports of teak from Myanmar are impossible.

Myanmar is struggling with heavy deforestation. Between 2000 and 2020, it lost over 16,000 square kilometres of tropical forest

And so traders create detours to get the hardwood into the European market. They look for the member state that interprets European rules most leniently. The Netherlands, for example, has incorporated the European rules into its Penal Code, allowing offenders to face up to six years in prison. But in the Czech Republic and Croatia, penalties are limited to an administrative fine. Traders looking to get teak into the European market know exactly where the rules are weakest or enforcement is laxest.

In May 2019, Roelof Brouwer walks around northeast Yangon, Myanmar’s largest city with seven million inhabitants. On a street otherwise mostly occupied by sewing workshops, there are two large teak sawmills. Brouwer goes there several times a year, often with his business partner Enno P., director of timber trading company DMPT. Buyers from Dutch yacht builders, such as Royal Van Lent and De Vries Scheepsbouw, also often accompany him. Brouwer has good contacts with timber traders in Myanmar and Enno P. has those with yacht builders in the Netherlands. The pair represents the Dutch superyacht builders’ access to the best timber in the world. NRC was given access to the criminal file against them and Van der Veen and was thus able to meticulously describe the illegal teak trade.

Ideal for superyachts

In spring 2019, Brouwer is travelling with an employee of Teakdecking Systems, a US company commissioned to supply a ship deck to Oceanco. The two have to gather wood of the best quality for a mega order.

The men walk around the sawmills with the specifications for the superyacht exactly in their minds. They check the logs that have been cut down shortly before and rolled out of the forest by elephants with their trunks, or dragged out with chains attached to their bodies. Every board goes through their hands. That lath goes into the container, that one doesn’t. The thickness has to be just right. The sawing angle has to be right so that the grain runs exactly straight. There must be no knots. Everything has to match the ship’s construction drawings down to the last millimetre.

Tectona grandis wood from Myanmar is also known as the Rolls-Royce among woods. It is the absolute number one choice for the deck – or often the four or five decks – of luxury yachts. The soil in Myanmar contains a lot of the mineral silica, so the wood growing there is oily and hardly ever moulds or rots. It is non-slippery and it doesn’t get hot easily, so you can walk barefoot on the deck even in tropical temperatures.

Logs in a natural forest also grow more slowly than on a plantation, so the annual rings are closer together and the wood is stronger. And wild trees grow taller than plantation trees, allowing to cut longer planks. On a very large deck, that looks sleek.

But Myanmar is struggling with heavy deforestation. Between 2000 and 2020, it lost an area the size of half the Netherlands (over 16,000 square kilometres) of tropical forest, figures from Global Forest Watch show. Scientific research shows that the quality of the remaining forest is deteriorating in regions where a lot of teak is extracted.

Moreover, illegal logging often brings insecurity for civilians. The country is home to numerous ethnic groups, some of which have been fighting with the army, the Tatmadaw, for decades. In the process, serious human rights violations take place, including civilian deaths. According to NGOs, both local army units and rebel groups are involved in illegal logging. They earn money from it, which they use to fund the fighting.

Brouwer, for example, bought teak from Myanmar Rice Trading Company, a company that, according to the British NGO Environmental Investigation Agency, made donations to the Tatmadaw during the period when it launched a massive attack on the Rohingya.

An elephant pulls a teak log through the jungle in Myanmar’s Arakan Mountains. Photo ANP/Redux Pictures

Supervisor sidelined

To import teak to Europe, entrepreneurs must keep extensive records. They must be able to trace each log back to a stump in Myanmar’s forests.

Brouwer has commissioned thick volumes of paper work on the origin of the wood from Double Helix, a Singapore-based company that inspects teak from Myanmar. Double Helix has prepared a report of over two hundred pages to prove that the timber was harvested legally. It contains extensive spreadsheets of purchases, maps of logging areas, photos of sawmills and forest inspections, and several Myanmar government documents, handwritten in Burmese script.

But it is not enough. Ever since 2017, Brouwer has been getting inspections and the NVWA says imports from Myanmar are not compliant. Logging documents are missing and the various transport documents do not match. Brouwer, in short, cannot prove that the timber was harvested legally. He received several warnings, a penalty payment of up to €800,000 was imposed on him, and the regulator threatened to confiscate and report him to the police. In a response, Brouwer states that after each warning, he has improved his administration and further optimised his trade.

But he does not stop there. Brouwer and Enno P. no longer have their batches of teak shipped to Rotterdam, but arrange for them to go via the port of Koper (Slovenia) to the Czech Republic, and then on to the Netherlands. In this way, they sideline the Dutch regulator.

So it goes with the container of teak for Oceanco. Three months after Brouwer visited the sawmill in Yangon, the container with the precious wood leaves Yangon harbour. Actually, the container should go to Sarasota, Florida, where Teakdecking Systems is based and will build a deck from it. But employees of the US company have become nervous about the Dutch regulator, which has already seized batches of teak from Myanmar several times. They fear the teak deck will be confiscated if they export it to Europe from the United States, reports of tapped conversations show.

Therefore, Teakdecking Systems demands that Dutch timber traders ship the batch of teak to Europe first. If the wood has already been to Europe once, the risk of seizure is much lower. “If it’s not right, we’ll just blow the whole thing off,” an employee of Teakdecking Systems tells Enno P. “I won’t take that risk.”

Officers at the breakfast table

The Dutch timber traders thus bear the risk: they transport the container to the Netherlands through the Czech company Fairwind, which Arthur van der Veen founded especially for the timber trade. The container is only in the Netherlands for a few days when it is transported back to the US. Yet the purchase order for Teakdecking Systems reads: “Sourced from stock in the Netherlands”. It is a ploy to reduce the risks for the decking company.

On 3 December 2019, while the container of teak is somewhere on the Atlantic Ocean, Brouwer is having breakfast at a hotel in the northern Dutch town Coevorden. He stayed overnight there because he had to check batches of timber at a sawmill nearby the day before. Suddenly, two policemen stand at his breakfast table. They tell him that he is suspected of illegally importing teak. Brouwer has to hand in everything: his phone, his car, all records.

That same day, police conduct raids at his home, Enno P.’s home, Arthur van der Veen’s home in the Czech Republic and at the timber storage. The Justice department seizes over 65,000 kilos of teak. The container of teak for Oceanco, worth some 200,000 euros, has left the country just in time. The Americans are proven right: importing Myanmar teak to the Netherlands has become too risky.

Myanmar teak wood is piled up in Kolkata harbour. The wood is considered the best teak in the world.Photo Sanjit Das/Bloomberg

Whether the wood eventually ended up on an Oceanco yacht cannot be verified. Within luxury yacht building, the privacy of wealthy clients is well protected. After the container sailed to Teakdecking Systems in Florida, the paper trail stops. It is impossible to tell from the documents which yacht the wood was destined for and whether it was eventually put on it. Several sources involved in the construction of the yachts confirmed to NRC that Oceanco purchased teak decks from Teakdecking Systems.

Oceanco replies that due to its confidential relationship with its customers, it cannot respond to questions about specific yachts. A spokesperson writes that the company has checked its records and cannot find in them that Oceanco bought timber directly or indirectly from DMPT or the Czech company Fairwind. Teakdecking Systems did not respond to questions from NRC after more than a week.

‘Sustainable and legal’

Two months after the raid, agents are demanding all purchase invoices for teak from two other yacht builders, Koninklijke Van Lent in Kaag and De Vries Scheepsbouw in Makkum. The two major shipyards bought teak from Enno P. in 2018 and 2019 for 2.5 million and 1.8 million euros respectively, records of his company DMPT show. During that period, De Vries built the Moonrise for Jan Koum, co-founder of WhatsApp. It is unknown whether there is teak from Myanmar on that ship. Van Lent built a superyacht for Bernard Arnault a few years earlier. He is the richest man in the world and has owned Royal Van Lent through luxury group LVMH since 2008.

In December 2022, Roelof Brouwer and Arthur van der Veen were sentenced to 240 and 90 hours of community service respectively. The two appealed. Enno P. was acquitted because, according to the court, his company was not responsible for the import, but only resold the timber to yacht builders. The prosecution has appealed against that acquittal.

Brokers are caught, yacht builders – multi-million dollar companies with the richest customers in the world – go free

The yacht builders who end up using the teak will not be penalized. Under the European Union Timber Regulation, only the importer who first brings the timber onto the European market is responsible for verifying that it has been legally harvested. Anyone who buys the wood after that can basically assume that it is OK. The middlemen – in this case sole traders with little leeway – are caught. The yacht builders – multi-million dollar companies with the richest customers in the world – go free.

“The company importing teak is responsible for obtaining the wood legally,” a spokesperson on behalf of Van Lent and De Vries wrote in a comment. The two yards claim that they only use sustainable and legally sourced teak.

Roelof Dirk Brouwer states he and his business partners “have done everything doable and possible to respect laws and regulations – including those of Myanmar – and international treaties”.

Brouwer wanted to seek a solution with the NVWA, but it was not open to dialogue, he said. “So we had no choice but to shift our imports to the Czech Republic to secure ongoing investments.” Brouwer argues that the court has not sufficiently considered his evidence in its decision.

Enno P. replies that he has always intended to do the right thing. “We have always been maximally transparent,” he says. “If there was a clear ban, I would never have done it.”

P. stresses that he is “completely unsettled by the lawsuit. All my possessions have been seized for years, so I can barely pay a lawyer and therefore cannot possibly defend myself. I am on a leash, while I see that all my European competitors continue to offer teak from Myanmar on the Dutch market.”

Active tracking

Compared to other European countries, the Netherlands is very active in detecting illegally imported timber. The case against the three traders is the first European criminal case since the Timber Regulation was introduced in 2013. A new criminal case is currently pending against Royal Boogaerdt, a large timber trader that has been in existence for almost three hundred years. Whether this also reduces the amount of timber entering Europe illegally remains to be seen. In practice, European rules appear to give too much leeway to continue the timber trade with Myanmar.

Responding to questions by ICIJ, the European Commission acknowledges that there are large differences in enforcement among member states. In a new legislative proposal aimed at further reducing deforestation, the Commission sets minimum requirements for such enforcement.

In 2016, the Netherlands was still the main European importer of tropical hardwood from Myanmar. Meanwhile, Italy has more than taken over that position. Dutch imports have fallen to almost zero. Leaked Myanmar tax authority data that came into ICIJ’s hands via the NGO Justice for Myanmar shows that cargoes of Myanmar teak entered Europe mainly via Italy in 2020 and 2021.

Because of its large yacht industry, the Netherlands remains an important destination for teak. The yacht builders have the dirty work done by small middlemen who find detours to get the teak imported into Europe. In this way, the yacht builders try to minimise their risks. At the same time, yacht builders contribute to keeping the trade and smuggling going. They keep promising their customers that they can get a teak deck and pass on the specifications that timber traders use to look for the right teak. In this way, they encourage crime.

Committed to climate

On Jeff Bezos’ yacht, there is no sign of the shadowy back end of yacht building. On Monday morning, 13 February, the largest Dutch-made sailing yacht sails out of the Botlek. Everything looks spic-and-span. The ship with its gleaming dark blue bow and red stripe just above the water line cuts through the fog past the Second Maasvlakte. Some four years were spent building the three-master. Today, the ship goes out to sea for the first time.

In January this year, it was announced that Bezos has named his ship Koru, Maori for “new beginning”, like a still-coiled fern leaf. Bezos says he is committed to climate and biodiversity. In 2020, he established the Bezos Earth Fund, a $10 billion (€9.4 billion) fund to combat climate change and protect nature. Bezos had the Koru equipped with innovative techniques to convert energy from sea waves into green power.

But he would not say anything about the teak on his yacht. Bezos did not respond to questions from NRC. Neither did Steven Spielberg.

Jeff Bezos’ 127-metre sailing yacht, built by Dutch yacht builder Oceanco.Photo Eric Brinkhorst