AUSTRALIA’S $4 billion wool export industry could face a crackdown on cash transactions in response to a wool substitution scandal being investigated in Melbourne.
Legislative reforms will be recommended by Victoria Police following an investigation into a scam which allegedly resulted in 16 bales of top quality Merino wool, valued up to $3000 each, were found replaced with inferior black and crossbred wool at China processing plants in the past month.
Victoria Police inspector Jamie Templeton said identification on cash transactions would be the focus.
“There are a number of legislative reforms I would like to work through in terms of when we buy and sell wool to a local broker and how that process works,” Inspector Templeton said.
“There are some areas of improvement with a cash market there. Recommendations will be about making sure, when it comes to handling wool bales the paperwork is right and (identification) so we know who we are dealing with.”
Australian Council of Wool Exporters and Processors president Matt Hand, United Wool Company, said cash transactions could open the door to criminal behaviour in any industry.
“No less so in the wool industry,” Mr Hand said.
“You can have a lot of systems in place and criminal activity can unfortunately still occur.”
However, Mr Hand said the wool substitution scam demonstrated Australia’s systems were secure.
“It’s my understanding that in this case the wool testing certification didn’t support the content of bales delivered, dialogue between customer and supplier moved quickly towards a resolution,” he said.
“The exporter was therefore the eventual victim of criminal activity.
“The most important people we need to protect through this whole process are the grower, the end user and the exporter who are all heavily invested in our industry.”
In 2016-17, Australia exported 254 million kilograms of wool to China, representing 79 per cent of the nation’s wool clip, with a value of $2.4 billion.
WoolProducers Australia chief executive Jo Hall said while some “unscrupulous operators” could take advantage of the current system, criminal activity was not widespread.
“We cannot afford to erode any trust or confidence with (China), which is why any case of wool substitution is concerning,” Ms Hall said.
“If this was identified as being a major issue, WPA… would be happy to participate (in legislative reform discussions).
“The Australian wool industry has robust processes in place to ensure the quality and integrity of the product to our trade partners.”