Supply chain fraud in Vietnam

FSC does not tolerate any form of consumer deception involving fraud by businesses that hold FSC certificates.

To this effect, FSC has requested its independent assurance company, Assurance Services International (ASI), to start investigating allegations of fraud with Cambodian illegal timber in the supply chains of several specific FSC-certified entities in Vietnam.

FSC transaction verification exercise

is carried out to check probable fraud in the supply chain.

This is an isolated incident in the FSC system within the over 35,000 chain of custody certificates and although it is serious, it is not indicative of any widespread fault in the system.

Nevertheless, FSC is treating it with the diligence it deserves.

FSC has specific mechanisms in place to combat fraud. These mechanisms include transaction verification, and special assessments that ASI conducts on certificate holders to verify their compliance with FSC standards.

Transaction verification is a process of comparing and then verifying all FSC transactions made by a company within a specific product type, product group or region and during a specified time period, for example all claims made for FSC-certified bamboo products in 2017. Transaction verification is now an important requirement in our chain of custody standard and strengthens our supply chains.

When a product group or species is confirmed through investigations as high-risk by ASI, FSC implements requirements for transaction verification for companies that include this product type or species as part of their scope. The verification is conducted by a certification body and ASI. There are currently three options that certificate holders can use for transaction verification:

Certificate holders can enter relevant data through a supporting transaction verification tool named Falcon. It saves time and costs for certification bodies when creating transaction records and helps auditors from their certification bodies to receive information in the correct form they need the records;
Alternatively, a desk audit will allow certificate holders to fill in a downloadable spread-sheet template and send that on to their certification bodies; or
Certificate holders can opt to do an on-site audit where transaction information is collected manually by the auditor for ASI to verify.

Wrongdoers are punished in the FSC system. Fraud, when affecting FSC-certified material, can lead to immediate suspension or termination of the certificate of a chain of custody certified business or of a FSC trademark license holder. This action ultimately results in the business being unable to trade any product using an FSC label.

As an additional resource to combat illegality, FSC has a mechanism known as the FSC Policy for Association. It regulates what unacceptable activities certified businesses must commit to avoid, including those activities that are outside the scope of their certification. This safety measure is to ensure that FSC certificate holders are not involved in illegal activities when conducting their business.

If fraud committed by an FSC certificate holder led (or leads) to illegal timber trade, illegal logging, or any other unacceptable activity under the terms of the Policy for Association, then this safeguard is applicable and may result in investigations leading to punitive action against the certificate holder.

Recently, a Polish charcoal producer, Dancoal, had its trademark license agreement suspended because evidence confirmed that it had been mixing non-FSC certified products with FSC material. This swift action demonstrates fraud is not permitted in the FSC system.

ForestIn