The activist group Environmental Investigation Agency (EIA), says Vietnam's military is involved in the smuggling of timber from Laos despite laws banning such exports. Vietnam denies the allegations, saying is working with the Lao government to prevent such smuggling.
The report says an undercover video shot by activists during the past two years shows how logs make their way from Laos to Vietnamese furniture factories.
The report released this week says Vietnam's booming timber industry, worth $4 billion a year in exports, drives illegal logging in Laos, which has some of the last intact tropical forests in the Mekong region.
The EIA report charges the Vietnamese military of bribing Lao officials and then smuggling timber to factories in Vietnam.
The EIA identifies the Vietnamese Company of Economic Cooperation as a major participant in the illegal trade, and says it is overseen by an army branch located in Vietnam's Vinh city.
Researchers Julian Newman says corruption enables the illegal trade to carry on with little benefit to the local community.
"What we have is a total failure of regulation in Laos, it's where these influential businessman can just break the law so openly," noted Newman. "And it's hard to see any benefit really for the Lao people in this industry. Their own factories can't get the timber and the local people have their livelihoods disrupted."
In a statement to VOA, a spokeswoman for Vietnam's Ministry of Foreign Affairs denies the country's military is involved in smuggling timber from Laos. The spokeswoman says Vietnam strictly forbids illegal timber smuggling and logging.
Vietnamese officials have told other media organizations that the Company of Economic Cooperation has a license from the Lao government to import logs.
In 1997 Vietnam banned most domestic logging, and now imports 80 percent of its timber supplies.
The EIA report says timber imports have soared from $123 million in 2000 to over $1 billion in 2008. It says illegal timber for Laos makes up 16 percent of the total.
Lao officials have said in recent months that they are stepping up efforts to halt the illegal timber trade. In June, Prime Minister Thongsing Thammavong issued an order to strengthen measures against illegal logging and timber smuggling.
But EIA says despite the laws, the situation is "chaotic and prone to corruption."
Forest cover in Laos has declined sharply over recent decades from over 60 percent in the 1960s to around 40 percent today.