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)