Forestry waste: Overseas Investment Office probes East Coast forestry companies

Foreign-owned East Coast forester Ernslaw One is being investigated by the Overseas Investment Office over its part in the region’s ongoing forestry slash and debris damage crisis.

The overseas investment watchdog said it had begun an investigation late last year into whether the company had complied with conditions of overseas investment consents. It had conducted “a site inspection” in November last year.

A ministerial inquiry into East Coast forestry practices and land use is under way following repeated and historic events of damage from flood-borne logs and forestry debris to the region’s infrastructure, private property, waterways and beaches during extreme weather.

Two cyclones have struck the East Coast this year with devastating wood debris results. There was also a major weather event in 2018 causing multimillion-dollar damage to the region, which has some of the world’s most erodible and fragile soils, and there have been cyclones in previous years.

Wood and forestry slash at the Waipunga Bridge in the Esk Valley after Hawke's Bay was struck by Cyclone Gabrielle. Photo / Mike Scott

Ernslaw One, the fourth largest forestry company in New Zealand, and Timbergrow Ltd, also foreign-owned, were successfully prosecuted by the Gisborne District Council last year for breaching their resource consents for their Uawa forest. (The council’s investigations into forestry damage from Cyclones Hale and Gabrielle this year are in the early stages.)

Council records show the two companies were jointly prosecuted for 10 collapsed skid (work landing) sites and “multiple” road collapses, damage outside the Uawa forest and damage in Tolaga Bay. A fine of $225,000 and reparation costs of $130,000 were imposed last year after a four-day disputed facts hearing.

The OIO’s response to NZ Herald inquiries did not mention Timbergrow in relation to its Ernslaw One investigation. Companies Office records show Timbergrow Ltd is 100 per cent owned by Swanton Investment Ltd, of the British Virgin Islands.

Ernslaw One said in a statement that it had no knowledge of an investigation being undertaken by OIO.

“Last November we hosted members of the OIO on a visit of our operations in Tairawhiti to better understand the challenges faced by the forestry industry on the East Coast. They were in the region visiting other OIO consent holders as well as part of their monitoring responsibility. Since then we have provided the OIO with a post-visit update and at no point has there been any suggestion from them to indicate there has been a breach of conditions.”

Ernslaw One is owned by the Oregon Group, with UK, Singapore and Hong Kong shareholders.

Meanwhile, the OIO said an investigation into the Japan-owned Juken NZ company, which operates forestry on the East Coast and has also been successfully prosecuted by the Gisborne council, was concluded in 2020 with the finding “that the condition requiring certain individuals to remain of good character” had not been breached.

The OIO said it had subjected Juken to enhanced monitoring of a clean-up process. The matter had been resolved in January 2020. The Gisborne council’s prosecution of Juken NZ was in 2019.

Foreign-owned Aratu Forests was also successfully prosecuted for resource consent breaches by the council in 2020. But the OIO told the Herald it did not investigate this company because “the offending” occurred before it was sold in 2019 to Eastland Estate/New Forests.

The previous owner was also foreign-owned.

“Any investigation would have been into the former (overseas) owners of Aratu. However, such an investigation was unnecessary because the former investors no longer had control of Aratu,” the OIO said.

Eastland Estate is 61 per cent owned by an Australian shareholder, 27 per cent by a Canadian entity, with the balance owned by US interests.

Two Aratu forests were prosecuted and fined in 2019 and 2020 over a total of 91 collapsed skid sites and damage outside the forests. One forest caused damage to Tolaga Bay. The company was fined a total of $379,000 and reparation costs of $125,000 were imposed.

Foreign investors own 57 per cent of New Zealand’s commercial forests.

The OIO said it had yet to be approached by the ministerial inquiry.

“The inquiry is focused on forestry rather than overseas investment.”