Reportage. Chinese companies are operating shell companies in Siberia, employing cheap Uzbek labor and setting whole forests on fire in a dangerous scheme to maximize profits. ‘They want to destroy the forests of low-value trees and then start reforestation with trees that offer higher added value.’

In Siberia, a wild west of shell companies, arson and migrant worker deaths

At dawn on Jan. 21, near Tomsk—a town in southeastern Siberia not far from Novosibirsk—a wooden cabin caught fire. Eleven of the 14 workers living there didn’t notice until it was too late. Later in the morning, their charred remains were recovered: 10 of them Uzbek, one Russian. 

The news agencies in the area were quick with the verdict. The building shouldn’t have been used as a residence at all, and one of the stoves being used by the migrants was defective. The shack was located in the territory of the Green Wood sawmill, in operation since 2011 and owned by a Chinese person, Sun Anni, who seems to have vanished without a trace.

The authorities put the case down to the negligence of the migrants who stayed there—or, at most, negligent homicide by the owner. A tragedy like many others—but at the same time much more than that, as behind it lies the sordid story of economic penetration in the area by unscrupulous Chinese companies, of inhuman exploitation of migrants in one of the most inhospitable areas of the planet and of the willful destruction of the surrounding forests.

Tomsk, with almost half a million inhabitants, shares the same history as the other Siberian cities. The collapse of the USSR has shuttered many of its factories since the 1990s. It closed its oil refinery and metalworking plant many years ago. Just a month ago, another piece of the city’s history was shut down: the Sibirsky Karandashi Fabriki, which had been making pencils since 1912, went bankrupt. 

“In recent years, the new companies in the area all work for the Chinese market,” says a disconsolate worker.

For example, in the agri-food sector, the Tomsk region is selling almost 90% of its pine nuts production, about 6,000 tons, to China. In 2019, according to the TV2 portal, “Tomsk companies sold 1,177 tons of poultry in China.” Particularly popular were the chicken feet, which are not even used for broth in Europe. 

According to Tomsk blogger Andrey Belous, many of these agri-food companies are Russian-Chinese joint ventures intentionally constructed just like the famous Chinese boxes: a complex web of holding companies owning other holding companies, all aimed at hiding who the real owners of the company are. Unsurprisingly, the owners are ultimately Chinese entrepreneurs already working in the timber sector in the area and businessmen with ties to the great local political potentates from the circle of Vice Governor Andrey Korr. 

Belous explains: “The owner of the forest complex Asinovo is the Chinese company Avic Forestry, which in turn belongs to three entities from the RPC. A controlling stake is held by the forestry company Hubei Fuhan [a state enterprise], about 40% is held by Avic International, one of China’s largest trading companies specialized in civil aviation and defense [part of the State Aircraft Corporation of China] and the remaining shares are held by the Yantai Economic Zone. The Asinovo Forestry Park, owned by Avic, China’s forest exploitation giant, houses more than 20 legal entities registered in the Tomsk and Kemerovo regions.” 

It’s a textbook case of what would once have been called “imperialist penetration” if Marxism had not been packed off to the attic in the meantime—a little prematurely, it turns out.

Timber, the real big business in the area, takes us back full circle to the beginning: to the sawmills and the migrants who are dying in them. Moskvovsky Komsomol reported that “last year, the Tomsk region exported 1.5 million cubic meters of timber worth $177 million.” The number one destination was China, followed by Uzbekistan. The manpower used by these companies is primarily Uzbek. Of course, it is not cost effective to bring Chinese labor here when an Uzbek worker costs $70 a month plus accommodation. At the beginning of January, in Tomsk, there were incidents between Uzbek workers and the police in front of the Tomsk Migration Office.

This year, the number of legal entry permits for workers in Russia was reduced to 8,000, and among the aspiring lumberjacks already here, no one was willing to go home anymore.

But the real business in the wood sector is not even deforestation, but rather arson, committed by Chinese companies that have acquired the right to exploit the forests together with more or less criminal local groups.

“This summer, there were fires over an area of 3 million hectares in Siberia, equivalent to almost the whole of Israel,” an environmental activist in the area tells us, citing data from the federal forestry agency. According to him, the vast majority of these fires were arson. “They want to destroy the forests of low-value trees and then start reforestation with trees that offer higher added value,” he said. 

In Tomsk, 10 Chinese companies should be operational by 2022, according to the interstate agreements between China and Russia, but only a few are operational at this point, and they are at risk of bankruptcy. This comes as no surprise, because the arson business does not add even one yuan into the region’s economy. 

An activist group from Navalny’s party is accusing: “We have analyzed the financial statements of JSC Ruskitinveststva for 2017. All companies belonging to the holding are showing negative financial trends, with a total loss of 2.3 billion rubles. Another such company is Jingye, also Chinese. A 49-year lease was signed with this company for 137,000 hectares of forest for half a billion rubles. Now, the lease contracts have been terminated because the Chinese company did not pay the rent. But who will make the effort to restore the areas already felled? That’s an important question.”

The “arson business” is a zero-cost affair for the Chinese and for local speculators, but it has a clear impact on the hydrogeological balance of the Siberian taiga. For years now, Tomsk has been shrouded in a cloud of smog that can be seen from tens of kilometers away.

The rising tide of exploitation that leads towards the destruction of humanity carries with it the rotten stench of the mafia, chicken feet and workers’ blood.

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