Chinese sawmills and their Western customers are destroying the last remaining hardwood forests in Russia's Far East through illegal logging, The Financial Times reports, citing a report by the Environmental Investigation Agency (EIA).

The question is whether a crackdown on illegal logging by developed countries will be able to affect the initial links of the criminal chain, which originate in the developing world, the paper notes.

EIA, with offices in the USA and the UK, has established that 80 per cent of all hardwood harvested in Russia's Far East is logged illegally.

The agency also accused Lumber Liquidators, the largest hardwood flooring retailer in the USA, of close links with Chinese suppliers who, it is alleged, sell predominantly illegally logged Russian oak.

Lumber Liquidators told the newspaper it was studying the EIA report and could not yet comment, but believed it contained inaccuracies and unsubstantiated claims. The company said in a statement it had "policies and processes in place for the sourcing, harvesting and manufacturing of all of [its] products", but did not give any details about its supply chain monitoring system.

"We support the protection of the environment and responsible forest management, and if we find that any of the company's suppliers are not adhering to our standards, we will discontinue sourcing from those suppliers," the company said.

The EIA accusation of Lumber Liquidators follows a US government investigation into the company's wood imports, which saw its shares plummet in September 2013. Lumber Liquidators said in a statement at the time it was "cooperating with authorities to provide them with requested information".

Both the USA and the EU currently have regulations which place the responsibility for ensuring legal wood sources on their domestic companies.

"We are now in the international community at a tipping point where we have the means to intervene,” said EIA executive director Alexander von Bismarck. In the absence of such pressure, illegal logging in Siberia has become increasingly more widespread, fuelled by soaring international demand for hardwood, understaffed Russian forestry services, and corruption, the agency notes.

The Russian government announced in August it had busted a criminal ring that had illegally exported logs worth $60 million over the past three years. Forestry has a very high potential for Russia's economy, the paper notes.

However, this potential is diminishing as illegal logging brings wood prices down and rapidly depletes the country's reserves. Russian forestry departments have already seen their resources drop to 20 per cent of the Soviet levels, The Financial Times reports.

Since 2008, Russia has levied 25-per-cent tax on log exports in an attempt to encourage the creation of a local forestry-related sector. However, ever-tightening restrictions on logging in China are boosting that country's demand for wood imports from Russia. This is how Chinese-owned sawmills have spread across neighbouring Russian regions.

The EIA investigation suggests that most of these facilities processed illegally logged lumber. The agency report says Chinese sawmill operators and managers confided in its officers during undercover visits that they had been bribing Russian officials to ignore illegal felling in protected forest areas.

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