Australian wool substitution racket threatens China relations

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A SOPHISTICATED wool substitution racket with the potential to damage relations with China — Australia’s biggest wool market — has been uncovered.

The Weekly Times can reveal that at least 18 bales of Australian wool, worth tens of thousands of dollars, have been seized at mills in China in recent months after they arrived containing wool vastly different from that tested by authorities in Melbourne.

Victoria Police allege the bales were tampered with somewhere between testing in Australia and unpacking in China, with “high-value” fine wool stolen and replaced with “significantly” lower-value product.

The alleged scam, which comes amid record prices for Australian wool, has also thrown into question the integrity of the nation’s wool handling and export system.

Victoria Police Detective Inspector Jamie Templeton said the alleged racket involved four separate incidents of wool that had tested between 19 and 21 microns being stolen and substituted with poorer-quality fibre, including black wool and “sweepings, basically”.

“We’re talking wool worth $10-$12/kg ($1800-$2160 for a 180kg wool bale) being replaced with stuff worth 20-50c/kg ($36-$90 a bale),” Insp Templeton said.

Authorities were alerted to the scam in June and fear it could grow in size given the six to eight-week lag between wool leaving Australia and arriving in China.

Insp Templeton described the matter as “extremely serious … not only due to the total value of the wool stolen but also the potential damage it poses to the Australian export industry”.

“These thefts are incredibly damaging to the livelihood and reputations of the brokers who export this product,” he said.

National Council of Wool Selling Brokers chief executive Chris Wilcox said the alleged racket was “certainly a concern”, with the reputation of the Australian wool industry “extremely important” in a global market.

“The Chinese value Australian wool very highly and anything that causes them concern is a concern for us as well,” Mr Wilcox said.

Victorian Farmers Federation president David Jochinke said the incident represented a major breach of trust between the Australian wool industry and China.

In recent months, China — the No. 1 market for Australian wool with sales worth more than $2.4 billion last year — has locked out a number of local red meat exporters due to concerns over product labelling.

“Unfortunately in these instances everyone gets tarred with the same brush,” Mr Jochinke said.

“We want to have integrity in our product if customers are paying good money. Rogues like this in the industry need to be weeded out.”

Insp Templeton said police were investigating where the swap occurred. Given the wool had been “grabbed” for sampling by the Australian Wool Testing Authority they had ruled out the substitution occurring on farm.

“It has come off property as it should, been properly classed, properly baled, brought into the store and tested by AWTA appropriately,” Insp Templeton said.

After testing, wool is housed at broker stores prior to sale. It is then generally moved to a wool “dump” — where a number of similar-description bales of wool becomes one large one — before being loaded into containers at the Port of Melbourne.

Wool industry sources said to unpack and repack a 180kg wool bale would require access to machinery, including a wool press, as well as the replacement wool itself.

The sources said all indications pointed to the scam occurring in Australia.

Insp Templeton said the crime was “definitely targeted” with police chasing up a number of possible leads. “Whoever did it certainly knew what they were doing,” he said. “They knew it was quality wool.”

By JAMES WAGSTAFF
The Weekly Times

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