On Queen’s Birthday weekend 2018, a massive storm hit the Tairāwhiti, one of a number punishing the region in recent years leading up to Cyclone Gabrielle. It left behind a trail of destruction, destroying roads, bridges and property and dumping silt and forestry rubbish on the beaches, in the waterways and in the ocean, particularly around the Tolaga Bay.

Shortly after the storm a Gisborne District Council ecologist tried to access the Uawa Forest to assess the effects of forestry slash.

The owner of the forest, Ernslaw Ltd, would not let the ecologist in. Instead, the council ended up getting a search warrant so staff could carry out an assessment of the streams in the Uawa Forest in December to inspect the effects of slash and other logging debris on the stream ecosystems.

Part one: The colonial cul-de-sac: Land loss, land use and the devastation left behind
* Part two: Ocean bears brunt of Tairāwhiti erosion
* Part three: The science of East Coast erosion

The inspection by the ecologist and other council staff led to criminal charges laid against Ernslaw, which was dragged out as the company indicated it was going to defend them, only to plead guilty at the 11th hour.

Environment Court Judge Brian Dwyer made clear what was at stake when it came to sentencing in late 2022.

“The first victim in this proceeding was the environment,” he said bluntly.

Dwyer also made clear that he was far from impressed with the delays created by Ernslaw.

“The obdurate position adopted by Ernslaw was the substantial contributor to delay in this case.”

The judge marshalled a swath of evidence that Ernslaw’s actions caused major damage to the environment and private and public property. He said while the storm was severe, the main factors causing the damage was the removal of trees and the company’s failure to comply with its resource consent conditions and best industry practice.

“I find beyond reasonable doubt that removal of trees in Uawa Forest was a factor which made slopes more vulnerable to failure …

“While accepting that there may have been failures even on planted slopes during the 2018 storm, I find that such failures would have been substantially less than the failures which actually occurred, as a result of trees being harvested.”

Expert witnesses described a “frightening amount of energy” caused by the slips that carried soil and forestry debris and “the violent nature of the slides”.

Dwyer found that Ernslaw obtained considerable commercial benefit from its forestry operations but had an obligation under the law to meet the requirements of its resource consents, which were designed to mitigate the effects of its activities.

In a summary of facts the judge said that “poor forestry harvesting and management practices that breached conditions of the consent contributed to the storm damage and resultant discharges of forestry debris and sediment”.

“Unstable accumulations of logging debris, slash and/or waste logging material mixed with soil had been left on the edge of landings where harvesting operations had been completed, with many landings having perched slash/slovens (birds nests) overhanging the landings and below them (breach of condition 21 of the consent).”

The Queen’s Birthday storm left an estimated 47,000 cubic metres of slash on the beach at Tolaga Bay and an estimated 400,000 cubic metres throughout the Uawa catchment. The judge noted this came from a number of different forestry sites.

The owners of Mangaheia Station removed 180 trailer-loads of slash, and work to fix other damage cost between $20-$30,000.

A property owner who read a victim impact report said they had taken Ernslaw management for a tour of the damage on their property. A week later they got a call from the company saying they hadn’t been badly affected and the company wasn’t responsible.

Judge Dwyer said while forestry was a major industry on the East Coast, the trees harvested “were ironically (in many cases) planted for land stabilisation purposes”.

“Even more unsatisfactory, however, is the cost to infrastructure, neighbouring properties, neighbouring people, communities and the natural environment which has been occasioned by these incidents. Any sympathy which might be felt for Ernslaw as a result of what may be called ‘the storm factor’ must be tempered by the fact that a real and substantial contributor to the discharges from Ūawa Forest was Ernslaw’s failure to comply with the conditions of its resource consent and forestry best practice when undertaking its harvesting operation.”

In December 2022, Ernslaw was fined a total of $325,000. That year it had made a total income of $41 million. The previous year it made $74 million.

Manu Caddie.  Photo: Aaron Smale
Manu Caddie. Photo: Aaron Smale

For many the prosecutions had been a long time coming. Manu Caddie grew up outside the area but his wife has whakapapa connections to Ngāti Pōrou and the family moved to Gisborne in 1998 and to Ruatorea in 2015.

“I grew up in Tauranga and then coming here there is no significant native bush anywhere, it’s been cleared right back into the hills. Whereas I grew up in the Kaimai Ranges and I was used to having old growth forests around. So I felt sad that the region was bereft of a lot of that and saw a need for more commitment to biodiversity as much as anything else. And pine and pasture isn’t gonna deliver that.”

He’d worked in education and research and is currently investigating the medical properties of Kanuka. He is also involved in the sustainable land use advocacy group Mana Taiao Tairāwhiti. He did a stint on the Gisborne District Council and it didn’t take him long to pick up that there was fear of policing the forestry industry too hard because of its prominence in the East Coast economy.

“I got word that there was a message internally that, no, we’re not going to prosecute. It wasn’t necessarily explicit, but no we’re not going to prosecute. The implication was because the industry is too important to the region.”

The industry is operating on thin margins and Caddie believes this led to the council giving forestry too much leeway in how it operated.

“It’s marginal depending on what the market’s doing for logs and things. There’s a long way to truck them to port from up the coast and they can’t be worth much by the time they get here. So there is a bit of a fear that maybe they’ll walk away. So some people are concerned about that. But I think generally it’s just like, this whole region relies on forestry. So what are we going to do if we put the screws on them and they don’t continue here and decide it’s all too hard?

“I think that sort of fear of biting the hand that feeds was part of the culture of council for a long time. But I hope that’s come to an end.”

He says this reluctance was reflected in the staff responsible for enforcing compliance with resource consents.

“I think that council only had one and a half or two monitoring staff for all consents in the region. And they were very reactive. So it was only when they got a complaint that they followed up rather than sort of proactive monitoring of compliance with consent conditions across the board. But the spotlight went on after 2018. Council started doing proper reports on slash from 2018. Queen’s birthday was when national media kind of picked it up and a lot more pressure came on council. So from then on, they quickly beefed up the monitoring compliance team.”

Caddie says central government bears responsibility as well, but also has deep conflicts of interest in the forestry industry. He believes government ministries have allowed the industry too much say in influencing national regulations, whereas regions like Tairāwhiti have specific conditions that require a different approach.

“The companies want a one size fits all sort of across the country and probably more permissive rules than stricter ones. And with the government handing the development of those rules over to MPI kind of puts industry in the driving seat. They got their way.”

Logging trucks and slash at Gisborne’s port 

Who the industry is has become increasingly opaque. The entities causing the damage often only come clearly into view when companies like Ernslaw are hauled before the courts. Otherwise, their operations and influence are invisible to the general public, even though the taxpayer is often picking up the tab for their recalcitrance when public infrastructure is destroyed.

The land loss of the late 19th and early 20th Centuries was accompanied by rapid changes in how the Crown and Pākehā put that land to use once they had acquired it. Those uses – mainly pastoral farming – were stubbornly persisted with for over half a century, even as East Coast hills kept collapsing.

But in the past 30 years an equally rapid change in ownership and land use is impacting Ngāti Pōrou people and their territory again. Only this time the owners aren’t neighbouring Pākehā or even the Crown, but absentee corporate owners based overseas whose crop of choice isn’t pasture for ruminants but pine trees.

Ngāti Pōrou local Lillian Ward says it is foreign companies doing the damage: “I would prefer that we stop all sales of whenua to overseas investors, especially when it comes to pine forests. There’s got to be better ways to utilise our land and our soil. Because there doesn’t seem to be any social obligation to tāngata whēnua of Aotearoa.”

East Coast fisherman Bush Destounis says the region is being exploited for resources by overseas interests while those living in there have to bear the true cost. 

“Probably 70-80 percent of the forests are foreign-owned. We’re just the resource centre really. We just cut down trees, chuck them on a logging truck, out the port and off to the mills in China. We just supply resources, we’re not making huge money out of timber.”

Destounis’ estimate is probably on the low side. Industry figures published by MPI show there is around 158,000 hectares of forestry on the East Coast. Around 130,000 hectares of that is owned by no more than 15 entities in blocks larger than 500 hectares. Nearly 90,000 hectares of that is owned by nine companies. The MPI figures don’t identify the owners, but a list of resource consents from Gisborne District Council shows the four of the five companies with the highest number are the same companies that were taken to court for breaching those consents – Ernslaw, Juken, Aratu and PF Olsen. Ernslaw, Juken and Aratu are foreign-owned.

Logs being loaded onto a ship bound at Gisborne wharf. Photo: Aaron Smale

Ernslaw’s behaviour is not anomalous. It was one of a number of companies, overwhelmingly foreign-owned, that were the subject of criminal charges after the 2018 flood event. While those companies were fined hundreds of thousands of dollars for the damage left behind, those fines are dwarfed by the profits those companies take out of the country.  

And these companies are also among the largest landowners in the country.

According to an RNZ report, the group of companies that includes Ernslaw are believed to be the second-largest private landowner in New Zealand with almost 100,000 hectares of plantation forests throughout the country. 

To put it in perspective, the greater Auckland area covers around 60,000 hectares; Ernslaw owns land or cutting rights to forestry that covers nearly twice that area. Not all of that is on the East Coast – it has land in Coromandel, Ruapehu, Manawatu/Rangitikei, Otago and Southland – but it has 28 resource consents with the Gisborne District Council for forestry activities. But its breach of the rules here is consistent with its reputation overseas.

Ernslaw is part of a global conglomerate of companies owned by the Tiong family from Malaysia, which has forestry interests in a number of countries including Malaysia, Equatorial Guinea, Gabon, Indonesia, Russia, Vanuatu and Papua New Guinea.

Their operations in PNG in particular have come under scrutiny from groups like Greenpeace and the US-based think tank The Oakland Institute, which have been critical of its environmental and human rights records and its financial operations. A report by the Oakland Institute quoted allegations by PNG-based lawyer Annie Karij against operators associated with Rimbunan Hijau, owned by the Tiong family. Among those allegations, she said Rimbunan Hijau was responsible for landowners being “forced to sign papers with a barrel of a gun at their back. In the presence of police and company officials, without proper legal advice, with guns pointed at them.” 

The report also says Rimbunan Hijau has multiple shell companies with opaque ownership structures and its timber “is traded across the globe with little concern for the environmental damage, misery and suffering caused in producer countries”.

Despite these allegations, Ernslaw (which is owned by parent company Oregon Group) is not only one of the biggest forestry operators in New Zealand, but a significant chunk of its forestry assets are on Crown land.

Three million tonnes of logs a year are being shipped out of the Gisborne port and up the East Coast on their way to China and other markets. But those ships are ploughing through waters that have more than 55 million tonnes of silt coming off the hills those trees once stood on.

Its forestry interests occupy a total of 93,759 hectares but this is spread across different categories from land it owns outright to lease agreements with the Crown, Māori and other landowners. Its forests are across 60,846ha on freehold land, 23,671ha on Crown land, 7,305ha on land owned by Māori Incorporations and 1,937ha on land owned by other owners. It has Crown Forestry Licences of between 13-58 years.

Its revenue for forestry products (logs, pulps, timber) for the year ended June 2022 was $349,075,501. Proceeds from sale of forests in 2022 was $121,478,054. It paid wages and salaries of $44 million. Its total equity for 2022 was $1.11 billion.

Other foreign-owned companies fined alongside Ernslaw included Hikurangi Forest Farms. Although it was Malaysian-owned at the time, it had the audacity to use the name of Ngāti Pōrou’s mountain.

Hikurangi Forest Farms was fined $379,000 in February 2020 for similar breaches to Ernslaw in the 2018 Queen’s Birthday storm. In 2019, Hikurangi Forest Farms was bought out by New Forests, an Australian-owned company, and renamed Aratu. The parent company made $63 million last year.

In sentencing Hikurangi Forest Farms, the judge also took aim at the Gisborne District Council’s lax monitoring.

“The council’s failure to monitor harvesting operations in a large commercial forest established on land known to be highly vulnerable to slope failure, particularly after forest clearance, over a two-year period can only be described as disgraceful,” the judge said.

Māori-owned Paroa station was hit with a huge number of logs that cost hundreds of thousands of dollars to clean up.

Reporting by RNZ’s Anusha Bradley exposed the illegal practices of Hikurangi Forest Farms’ former Malaysian owners, Samling, overseas.

Hikurangi Forest Farms, owned by Malaysia’s Samling Group, was granted consent to buy 22ha of land in Gisborne in May 2007.

Five months later one of Samling’s subsidiaries, Barama Company, was fined for illegal logging in Guyana. In January 2008 it was fined again. The Norwegian Pension Fund quit all its Samling investments in 2010 because of ethical concerns about its operations in Guyana and Malaysia, and Samling’s palm oil operations in Myanmar were accused of illegal deforestation indigenous land grabs and environmental abuses by civil rights groups in that country.

RNZ reported the Overseas Investment Office (OIO) said it was aware of online reports of the company’s practices in Myanmar but had not been able to verify them. It only became aware of the illegal logging fines in 2017.

“After considering various matters, including limitation issues and the age of the fine, and how long ago Samling got OIO consent, we considered the fine was too long ago for us to act on this information alone,” Land Information New Zealand’s OIO manager Vanessa Horne said.

Logs on the Gisborne wharf. Photo: Aaron Smale

Another company that faced legal action was Juken, a Japanese-owned company, which was found in breach of its resource consents and fined $152,000 in 2019. Last year it earned $69 million.

It has forestry on 9,907ha of freehold land, 14,593ha of Crown land, 6,675ha of Māori land, and other landowners of 1,124ha.

DNS Forest Products (2009) Ltd was fined $124,700 in July 2020. An appeal against the fine was dismissed.

New Zealand-owned PF Olsen Ltd was fined $198,000 in September 2020.

These major global companies have been snapping up farms on the East Coast, and elsewhere in New Zealand, over the past three decades. Some of those were state-owned but many are farms that have come on to the market because the owners are retiring and can get a better price from an overseas forestry company than from another farmer.

Forest Owners Association figures show that in the past four years an area of land nearly five times the size of greater Auckland was approved for sale to overseas owners by the Overseas Investment Office.

There have been 110 one-off consents granted under the Overseas Investment Act, using the Special Forestry Test, since October 2018 through to April 30, 2022.

The total area consented was 240,539 hectares. Of this, 90,667 hectares were transferred from a New Zealand owner to an overseas owner; 189,949ha was in existing forestry.

50,591 hectares were consented for conversion to farms, of which approximately 31,400 hectares are to be planted in production forest.

What all these numbers add up to is hundreds of millions of dollars in profits siphoned into the balance sheets of overseas companies while regions like Tairāwhiti are left with the environmental and social costs.

Three million tonnes of logs a year are being shipped out of the Gisborne port and up the East Coast on their way to China and other markets. But those ships are ploughing through waters that have more than 55 million tonnes of silt coming off the hills those trees once stood on. That is just the silt. It doesn’t include the waste from those logs that also end up in the ocean.

But those overseas companies that operate in New Zealand as part of a global market also take something else – hundreds of millions of dollars’ worth of a less tangible but hugely valuable asset: carbon credits.

Carbon credits are a manufactured financial instrument created to put a price on carbon emissions in order to, theoretically at least, reduce those emissions in order to avert global warming. New Zealand’s version of this is the Emissions Trading Scheme.

But the ETS is a political tool masquerading as a free market solution, and it is vulnerable to the whims of politicians who can’t resist tinkering with it with little thought for unintended consequences. And political fiddling has been going on while Tairāwhiti drowns and overseas companies pocket the cash.

NEXT: The Politics of Pine

*Made with the help of the Public Interest Journalism Fund* 

Aaron Smale is Newsroom's Māori Issues Editor. Twitter: @ikon_media

Leave a comment