Sunseeker handed £240k fine for using illegal ‘blood’ teak from Myanmar on vessels

In a landmark UK court case, luxury yacht firm Sunseeker has been handed a stiff £240k penalty for using illegal ‘blood’ teak imported from conflict-torn Myanmar on some vessels that it has built.

Sitting at Bournemouth Crown Court on 22 November, Judge Jonathan Fuller KC imposed fines and costs totalling £358,759.64 on Poole-based Sunseeker International Ltd for 11 specific imports of the banned Myanmar teak.

The court heard that Sunseeker’s timber imports involved teak from Myanmar, wenge from Africa and European oak with a combined value of just over £60,000.

Although Sunseeker was sentenced based on 11 specific imports, the court was told there is evidence of many more.

This is understood to be the first prosecution under the new UK Timber Regulation legislation which replaced the EU Timber Regulation following Brexit.

After hearing mitigation and taking into account the firm’s early guilty pleas to the charges, the judge fined Sunseeker £240k, made a confiscation order for just under £67,000 as well as prosecution costs of £51k and a victim surcharge £190.

ENVIRONMENTAL INVESTIGATION AGENCY

Following the hearing, the London-based Environmental Investigation Agency (EIA), which first exposed Sunseeker’s use of illegitimate Myanmar teak in 2018, welcomed the outcome as a landmark moment in the fight against trade in illicit trade in Burmese teak.

'These sentences send a clear and unequivocal message to other luxury yacht manufacturers, both in the UK and around the world, that using blood teak from conflict-torn Myanmar is totally unacceptable and will cost them dearly in the end,' said EIA Forests Campaigner Leader Faith Doherty.

'As well as actually implementing the UK Timber Regulation, the amount of process and legal time within the judiciary reflects the importance of environmental crime and the impact this criminality has.'

SUNSEEKER PLEADS GUILTY

Sunseeker pleaded guilty to: failure to exercise due diligence as an operator when placing timber products on the market; failure to maintain and evaluate due diligence system when placing timber or timber products on the market; failure to comply with article 5(1) of the Commission Implementing Regulation (EU) No 607/201 relating to record keeping by operator.

Judge Fuller said Sunseeker was aware of impending rule changes to timber imports after Brexit which changed its status from ‘trader’ to ‘operator’ and left it in breach of regulations, calling it a ‘systemic failure’;. He pointed out that Environmental Investigation Agency (EIA) had flagged the risk of illegal teak in Sunseeker's supply chain to the company as early as 2018.

In 2018, the EIA formally reported Sunseeker’s US distributors to the US Department of Justice following investigations which revealed that teak which had been traded in breach of the EUTR had entered the company’s supply chains. The US Lacey Act bans imports of goods in violation of any foreign law protecting or regulating plant species.

In a statement, Sunseeker confirmed that, following an investigation by the UK’s Office for Product Safety and Standards (OPSS), it had been fined £358,000 (including
costs and confiscation) for a failure to exercise due diligence and related offences, when placing timber or timber products on the UK market, contrary to the Timber and Timber Products (Placing on the Market) Regulations (UKTR).

‘The unintended failure resulted from a change in legislation on 1 January 2021, following the United Kingdom’s exit from the European Union (EU) (Brexit),’ Sunseeker said in a statement.

‘Although Sunseeker continued to use its existing EU-based supply chain and was undertaking the exact same commercial activity (namely, procuring timber/timber products from the EU) as it had done prior to 1 January 2021, the effect of Brexit was to impose additional due diligence obligations on Sunseeker whenever it procured timber or timber products from the EU, duplicating the due diligence obligations of its EU-based suppliers,’ the statement said.

Sunseeker said it has taken decisive steps to rectify the issue, by implementing a robust timber procurement policy and a UKTR compliant due diligence process.

‘The Sunseeker Board regrets the Company’s failure in meeting its responsibilities under the UKTR and underlines its ongoing commitment to compliance with laws and regulations.’

TIMBER IMPORTS FROM MYANMAR ILLEGAL

Since 2020, the common position among EU member state enforcement authorities has been that it is not possible to conduct adequate due diligence on the legal original of Myanmar timber – meaning that any imports of timber from Myanmar have been in violation of the EU Timber Regulation (EUTR).

On 1 February 2021, the military in Myanmar seized power in a coup and the brutal ruling junta has since been seeking to help support itself financially through lucrative exports of the country’s teak, highly sought-after by luxury boatbuilders around the world for its water-resistant properties.

The regime, including the State-controlled Myanmar Timber Enterprise which oversees all sales and exports of teak, has since had sanctions imposed by the EU, UK and US, effectively making all imports of teak from Myanmar illegal.

Lionheart Capital, the Miami-based investment company, and Italian-owned Orienta Capital Partners purchased Sunseeker from Chinese conglomerate Dalian Wanda, which had owned the British boat builder for the 11 years for £160 million, according to Bloomberg. The group's global revenue in 2024 is estimated to be worth £284m compared to £269m in 2023, with a global order book valued around £519m.

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