European wool sold with fraudulent NZ test certificates

2.15pm - By KENT ATKINSON

A "ring" of fraudsters in Europe has been forging New Zealand wool testing certificates on carpet wools sold there.

The NZ Wool Testing Authority today said it had detected fraudulent use of test certificates on a small number of wool deliveries in Europe.

The authority can trace every document issued for the past six years through its system, and found the frauds when a customer sought verification of the authenticity of an International Wool Testing Organisation certificate allegedly issued by the New Zealand authority.

"The 'certificate' was significantly different to that issued from the NZ computer system," said the authority's chief executive officer, Stephen Fookes.

Further investigation confirmed that a number of other certificates used on wool sold to that customer also were fraudulent.

Police fraud units in several European countries are investigating.

The New Zealand authority -- which tests wool from all over the world at its Napier laboratories and issues certificates with its objective description and quality -- discovered the fraud through an Asian company which bought wool from Europe and checked on its certificate.

"It looks as though there is a ring out of countries such as the United Kingdom, Ireland, and some on the Continent," Mr Fookes said.

"We have been working with the fraud investigation bureaux in all those countries -- they have linked together for this case."

Mr Fookes said the frauds -- based on forging the hard copy of certificates issued by the authority and presenting them to buyers -- had triggered the development of an internet-based verification system.

As added security, people buying wool tested by the authority would be able to look up the details of the original certificate on its website.

Much international wool trading requires a paper certificate to enable the use of a letter of credit to pay for the wool.

"That's where the fraud has occurred," said Mr Fookes. Somebody has taken the documents and re-engineered those documents to fit the contract."

He said it was fortunate that robust systems were able to detect the fraud, but "it is alarming that there exists a small number in the industry who are prepared to risk the reputation of the majority who would not stoop to this level."

He appealed to woolbuyers around the world who had any doubt about the validity of any certificate to check with the wool-testing authority. This type of fraud not only created illicit gains for the sellers of the wool involved, and cheated the buyer, but could damage the international reputation of the trade and testing laboratories.

Mr Fookes said it was likely that the fraud was used on the coarser cross-bred wools used for carpets because discrepancies in quality would be more obvious when buyers tried to process very fine textile wools.

The NZ Wool Testing Authority has a joint venture with the British Wool Marketing Board, in which the New Zealand laboratory at Napier is contracted to test about 60 per cent of the UK clip.

The NZ authority was sold to its Australian counterpart in April, by its former owners, a group of major brokers in the NZ industry. It was bought for $1.8 million by the Australian Wool Testing Authority Ltd (Awta) and Wool Equities Ltd. Wool Equities holds assets on behalf of NZ farmers in the wake of the wool sector deregulation which axed the Wool Board.

The two companies each hold 50:50 shares in the NZ laboratory, but the Australian authority is a giant compared with its counterpart on this side of the Tasman, which is expected to do just $5 million worth of turnover in the year to July 31.

- NZPA