Administrative tax proceedings

In 2015, Fibria obtained a partially favorable final decision on the notice of infraction filed in 2012, regarding the barter transaction of assets carried out with International Paper. The fine charged in this case was reduced by half and currently totals R$ 417 million (original value). On January 19, 2016, the Administrative Council of Tax Appeals (CARF), through the casting vote of the president of CARF, deemed groundless the company’s appeal in the administrative procedure. Fibria is considering whether to appeal at the administrative level.

In addition to this case, in December 2015, the company received a tax assessment notice of infraction (fine of approximately R$ 188 million) which requires collection of amounts related to corporate income tax and social contribution, and challenges the deductibility of depreciation, amortization, and depletion expenses used by the company when determining income taxes for the 2010 calendar year.

Suit for damages against Eldorado

In August 2015, Fibria filed a suit for damages against the company Eldorado Brasil Celulose for misuse of an eucalyptus clone. The filing of the main suit for damages was the natural result of the preliminary injunction for expedited discovery brought against Eldorado. In the decision, handed down in July 2015, the judge confirmed the expert report, which indicated a probability of 99.99999981% of the samples of eucalyptus trees collected in different plantations used by Eldorado to be genetically identical to cultivar VTO2, owned by Fibria. The lawsuit is underway in the 4th Civil Court of Três Lagoas, MS.

In 2015, the Justice Department confirmed that the samples of eucalyptus planted in Eldorado Brasil Celulose farms are genetically identical to the VTO2 cultivar owned by Fibria

Civil Action for excess cargo load

In June 2012, a public civil action was filed by federal prosecutors, for a preliminary injunction, given to the company requiring it to refrain from travel on any federal highway with excess weight that may cause damage to federal highways, the environment, and economic order. The updated value on December 31, 2015 was R$ 1,256,000. The company appealed the injunction preventing it from travelling on federal highways with supposed excess weight and was successful, and presented a defense regarding other points pleaded in the lawsuit. The lawsuit is at an early stage and the likelihood of loss is estimated as possible.

Monetary value of fines (R$ thousand)1

2013

2014

2015

Paid

0

0

0

Pending decision2

R$ 1,087,582

R$ 1,186,637

R$ 1,009,317

Total

R$ 1,087,582

R$ 1,186,637

R$ 1,009,317

1 The value of R$ 12 million from the aforementioned TAC is not included in the table, since it is neither a fine nor a lawsuit.
2 Additional information about cases pending a decision is available in the 2015 explanatory notes.

Environmental lawsuits

Fibria is a party in ten environmental lawsuits and procedures, which together may be considered relevant. Of this total, seven are public civil lawsuits challenging the licensing of eucalyptus plantations in the States of São Paulo and Espírito Santo. Another refers to the Conduct Adjustment Term (TAC) signed with the Public Attorney’s Office of Bahia on 12/5/2011, through the Attorney General of Regional Environmental Justice in Teixeira de Freitas, due to incentive agreements with land owners with environmental irregularities. The obligation assumed by the company in the TAC is R$ 12,535,000. The last two procedures concern administrative infractions that generated:

  • A fine assessed in 2014, in the amount of R$ 1. 5 million, written by the Mato Grosso do Sul environmental agency, which discusses the alleged release of effluents into the Paraná River outside the parameters established by law.
  • Fine – the only one initiated in 2015 – in the amount of R$ 500,000, assessed by the municipal environmental agency of Caravelas, BA, which challenges the operation of the Eucalyptus Wood Storage Terminal without authorization from the responsible environmental agency.

Monetary value of the environmental fines
(R$ thousand)1

2015

Paid

R$ 521 

Pending decision

R$ 3,008 

1 The value of R$ 12 million from the aforementioned TAC is not included in the table, since it is neither a fine nor a lawsuit.

Agreements

All agreements signed by the company are in the company’s monitoring and control systems and are being fulfilled within the agreed upon deadline. Only one new TAC was signed with the Bagé, RS Prosecutor’s Office in 2015, whose obligation consisted of donating the amount of R$1,369 to the Bagé Cultural and Environmental Protection Fund.

Wood theft

Wood theft, often associated with arson, reached its peak in 2011, with 297,000 m³, and had a significant reduction of 95% by 2013. Among the actions that promoted the drop in stolen wood are initiatives taken by Fibria to approach the communities in the North of Espírito Santo and South of Bahia, more critical regions, to promote generation of employment and income in the region. In 2015, wood theft reached 82,000 m3, a four-fold increase in relation to 2014 (19,000 m3) due to exogenous factors such as the economic recession experienced by Brazil and the water crisis that undermined family agriculture in these regions. The expectation for 2016 is that the amount of stolen wood decreases with the increase of surveillance by federal and state governments and the increased rainfall in the region.

Volume of stolen wood (in m3)