Cheating, defrauding and cashing in for dummies

opinion August 08, 2012 00:00

By Tulsathit Taptim

5,114 Viewed

You are wondering, I know, but you can't do it out loud.

To make you feel better, the government’s rice price pledging scheme and its political and economic complications puzzle me too. And on top of that, the government must be confused as well. In an attempt to clear some doubts over how this proud programme can generate massive and rampant corruption, I have talked to someone in the know. The following “Rice pledging fraud for dummies” is not meant for experts, as, apparently as we talk, crooks old and new are still coming up with new ruses to get a piece of the nearly Bt300 billion government pie. This is just meant to give you some idea of how what was initially proclaimed as a noble idea to help farmers is going horribly wrong.

How farmers can cheat: This is a sensitive matter to address. Nobody wants to accuse the poor of being dishonest, for obvious political reasons. We have to admit, though, that when the government has set aside such a HUGE amount of money to buy rice from farmers, there is no way to avoid schemes being cooked up that involve some of them.
“Farmers’ involvement in rice pledging corruption exists, but this is the least of our worries,” the source told me. “You can hardly find a social group with greater integrity than farmers. But since they form the biggest sector of Thai society, naturally there are bad fish here and there.”
Farmers can’t cheat alone. They have to conspire with millers or whoever needs their signatures to reap benefits from the government subsidy. Since the programme offers much more than the market price, a lot more farmers naturally have registered than is economically necessary. Many registrations, according to the source, are highly questionable. Simply put, some farmers have been “hired” to register.
How the millers swindle: One way is to keep “good” rice they get from farmers and deposit “bad” rice in the scheme. They can do this by dodging the authorities – who by no means are equipped to effectively screen rice quality within such a gigantic quantity – or collaborating with the crooked ones. Once the “good” rice has been laundered and become yours, you can sell it at a high price. This is a rather neat scam, as not only have you got good money for “bad” rice, the “good” rice can fetch even better money.
Another way is to claim state payment for rice they don’t really have. The so-called “ghost stocks” scam requires conspiracy with inspectors or high-ranking Commerce Ministry officials. If getting paid for what you don’t really have sounds absurd, if you think about it carefully, this is the recurring theme of rice pledging corruption from top to bottom.
How politicians are raking in dirty money: Where do we begin? Politicians in power can help the farmers cheat, collaborate with the millers, muddle or manipulate the bidding (bidders have to compete for rice in pledging stock and export it) and make money at every step of the way. How massive is the amount in corruption cash? We can only speculate. Assuming every tonne of rice in the scheme can produce Bt500 in corruption return (from the original farmer’s registration to the export bidding process), we are looking at a Bt500 million graft industry, or probably much worse.
How exporters (bidders) defraud: Make no mistake. Exporters need to make profit, or they won’t be in business to begin with. To add to that, the rice price pledging scheme requires the active involvement and faith of exporters as well as their sense of business adventure. The government alone cannot handle the staggering stocks, which sooner or later needs to be sold overseas. And the majority of exporters conduct their trade honestly.
However, things can go wrong when politicians in power want them to. Exporters want to buy at a low price and sell high. It’s as simple as that. This is where under-the-table money comes in. You’ll get it cheap, low enough for your export to be profitable. “But that will come at a price, which you’ll pay to me,” business people will be told.
There it is. You can see how vulnerable the system is to corruption. This is not to mention the other drawbacks, like how the programme must have spoiled farmers, distorted prices and weakened the competitiveness of Thai rice exports. Combine it with the political impact of misusing taxpayers’ money and we’ll have a better understanding of why there have been calls left and right for a government rethink.
The opposition is attacking the rice scheme day in and day out, but hands on their hearts the Democrats must be happy seeing the way this is going, which seems to have “epic fail” written all over it.