Bulog alleges scam in rice procurement

Bulog alleges scam in rice procurement

JAKARTA (JP): The State Logistics Agency (Bulog) is
withholding payment of Rp 480 billion (US$60 million) for rice
procured from cooperatives and non-governmental organizations
(NGOs), alleging a major scam involving its own employees.

Bulog chief Rahardi Ramelan said on Wednesday that had not
paid for 214,000 tons of rice, mainly from Java and South
Sumatra, because 70 percent of it was believed to be mixed with
cheap imports.

"I won't pay a single cent for the mixed rice." He added that
he would make immediate payment to suppliers not involved in the
scam.

Bulog officials said that by mixing imported rice and selling
it as wholly locally grown rice, a syndicate involving the
importers, cooperatives and Bulog employees stood to gain as much
as $40 for every ton of rice sold.

Imports are currently quoted about 25 percent to 40 percent
cheaper than local rice.

Bulog has now given the cooperatives and NGOs until Sep. 15 to
remove their rice from Bulog's warehouses. They will have to pay
for storage fees after that date.

A total of 22,600 tons have been collected by their suppliers
from Bulog warehouses.

Bulog buys rice from cooperatives and NGOs to stabilize market
prices. Its market operation this year helped sustain prices
following a successful harvest.

"We have bought about 2.3 million tons of rice from January to
August," Rahardi said, pointing out that Bulog bought
515,000 tons in July and 276,000 tons in August.

Bulog launched the investigation in August when it realized
the scam had occurred since July.

Investigators found irregularities in South Sumatra, West
Java, Central Java, East Java and Bali. They learned that
importers, cooperatives and officials from Bulog and its regional
offices were colluding in the scam.

Bulog temporarily stopped procuring rice in late August and
also stopped making payments pending results of the
investigation.

Rahardi said the syndicates were virtually robbing farmers of
their entitlements.

He said farmers should not be affected by Bulog's drastic
measure because they usually received payment on delivery for
their rice from the cooperatives.

Bulog has identified officials involved in the scam.

Rahardi also called on the Ministry of Cooperatives to take
stern measures against cooperatives involved in the scam.

Bulog is committed to procuring 2.75 million tons of rice from
3,422 cooperatives and NGOs in 1999. It had bought 2.03 million
tons by Sept. 7.

Meanwhile Bulog said it had appointed private trading company
Mahaka International to import 400,000 tons of rice on its behalf
in 1999.

The contract was originally given to Suriya Produce in
November 1998, but the latter failed to carry out its contractual
obligations, it said in a statement.

Mahaka International was able to offer $277 per metric ton of
rice, $10 lower than Suriya Produce, on similar credit terms:
repayable in three years at interest rate of 1.75 percent above
the London Interbank Offered Rate. (02)