A new report on logging in Papua New Guinea by leading British think-tank Chatham House has found illegal practices are widespread and transparency in the industry is among the worst in the world.

While Chathan House found PNG's indigenous landowners have uniquely strong customary rights it says these are not being enforced.

Presenter: Jemima Garrett

Speakers: Bob Tate, Executive Officer with the PNG Forest Industries Association, Sam Lawson, Chatham House

GARRETT: The international forest governance project at Chatam House has been running for six years and has examined many tropical timber producing countries.

It's latest report says the majority of timber production in Papua New Guinea is in some way illegal and illegal practices are widespread.

Sam Lawson, the report's author, says clear felling on fraudulently or corruptly issued special agricultural and business leases is a big contributer to PNG's problems.

LAWSON: Well, one of the most balatant illegalities of recent years has been the illegal issuance of licences for conversion of forests for large scale agricultural projects.

GARRETT: A recent Commission of Inquiry into how more than five million hectares of land was leased out under special agricultural and business leases found many leases are legally flawed or do not have landowner consent.

LAWSON: There are other kinds of illegalities are including some small scale logging for domestic consumption and it's also a plentiful evidence that selective harvesting, so-called sustainable forest management in PNG often involves breaches of regulations to meant minimise the environmental impact of such logging.

GARRETT: Just how did Papua New Guinea rate on transparency in the logging industry?

LAWSON: Incredibly poorly. I mean I've examined some of the most poor countries in the world which suffer from illegal logging, including countries which are really just only recovering from complex situations, civil wars and so on, and yet PNG was really probably the worst country we've examined in terms in transparencies ?? information on the logging industry.

GARRETT: In his final report, the Chief Commissioner of PNG's Inquiry into Special Agricultural and Business Leases said the most shocking abuse he found was the practice of extracting logs under the pretext of genuine SABL activities.

The Executive Officer of PNG's Forest Industries Association contests Chatham Houses findings.

TATE: The main basis for their finding is this concept of free prior informed consent on the part of the landowners. Now unfortunately, Chatham House have chosen to ignore our laws and used a definition promulgated by in the broader sense the Forest Stewardship Council, which has no standing in law in PNG. Hence their finding that landowners don't know anything about anything to do with forestry, which, of course, is totally wrong.

GARRETT: In fact, Chatham House found that the use of legally flawed special agricultural and business leases was one of the main problems in the timber industry in PNG. What's your response to that?

TATE: A total exaggeration of the the size and scope of the way SABL's have crept into the forest industry. They are still only a minority of logging operations and we hope as the government ministerial committee works its way through the SABL debacle, that many of those SABL's will be either rectified or terminated.

GARRETT: Chatham House found there was little completely unlicenced logging in PNG and little or no smuggling and that tax collection is better than in many countries.

Sam Lawson says forest laws are strong and landowners have significant rights, but that these and other laws are often not enforced.

LAWSON: We found that law enforcement was incredibly poor and we weren't the first to say that. A number of international bodies have stated this including the International Tropical Timber Organisation and others, law enforcement is largely non-existent in PNG in terms of the logging industry. It's a very inaccessible country and the enforcers don't have independent means of transportation, they have very limited budgets and their bosses are often in the past at least have found to be in hoc to the logging companies. I mean more often than not, the enforcer is expected to be given a lift by the logging company itself to travel around the concession, so you can imagine it's not a meaningful situation when it comes to enforcement of forest law.

GARRETT: In PNG, the current debate hinges around what will happen to the Special Agricultural and Business Leases found to be legally flawed.

Chatham House has added its weight to the Commission of Inquiry's recommendation that they be revoked.

Prime Minister Peter O'Neill has promised to act.

Paul Barker, Executive Director of PNG's Institute of National Affairs, says the matter is urgent.

BARKER: Early action is needed and an immediate erradication of all those. I know that some people in the agricultural Department have been running around trying to legitimise the SABL's that have been authorised, when clearly they should start off being recognised as needing to be revoked, because they were effectively undertaken without landowner consultation and approval.

GARRETT: The Forest Industry's Association acknowledges some special agricultural and business leases are flawed, but Bob Tate says, the Prime Minister's promise does not mean all flawed leases must be revoked.

TATE: The Prime Minister and the NEC directive to the Ministerial Committee reviewing SABL's left the way open for where an SABL may have been, if you like, incorrectly issued. but it is a minor and correctable mistake in paperwork or procedure.

Where possible, those SABL's may yet be made legally compliant.