NFM Rice Deal

NFM's $30m mystery

Guardian Special Report
Thursday 8th May, 2003

The corruption series ends today with Sasha Mohammed's look at the NFM rice scandal.

It was the first corruption scandal to rock the novel UNC administration back in 1998, and definitely, one of the most remembered in the series of allegations of impropriety that still haunt the party...

It seemed innocent enough. A new government, Indo-Trinidadian-based, going on a trade mission to half the population's motherland in just a little more than a year of gaining political power.

Led by none other than then Prime Minister Basdeo Panday, the mission was declared to be a success. In fact, mere months after, the first commercial deal between the two countries with historical and cultural ties was cut - a shipment of rice from India to Trinidad.

That's when the tides turned.

It was the first corruption scandal to rock the novel UNC administration back in 1998, and definitely, one of the most remembered in the series of allegations of impropriety that still haunt the party, now in Opposition, today.

Board members and the CEO of National Flour Mills were fired. The Indian High Commissioner at the time was accused of being part of the shady deal.

And the people of T&T lost $30 million, having never being able to use the rice that came in part, spilt and was basically thrown away.

The history

In January 1997, a little more than a year after the UNC had won the 1995 polls, Panday, then PM, led a large delegation, comprising several private sector top jefés, to India. The mission - to establish trade relationship between this country and India, in an age of globalisation.

Previously, this country's rice was supplied by neighbouring Guyana, and to a lesser extent, the United States.

Mere months later, in July, it was revealed that the mission's first successful deal had been sealed in April - the purchase of 12,000 tonnes of parboiled rice from an Indian company, G Gangadas Shah and Sons, for $30 million.

The rice, which was to take about seven weeks to get to T&T, did not arrive until December 1997 - five months later.

That's when the bacchanal began.

The country did not seem to notice that the long-awaited rice had finally arrived, and quite suspiciously, was not being offloaded at NFM's berth.

Until mid-January 1998, when the Supermarket Association of T&T, then headed by Balliram Maharaj, alerted the population to a looming rice shortage.

Maharaj had said the failure to clear the rice could cost the T&T public at least a 20 per cent increase in the cost of the staple, which would have had to be bought from the St Vincent mill.

Then the battle in the press began.

Elias, who had been appointed as chairman only in May, emerged as the embattled seeker of the truth in a deal which he stumbled on.

The country learned that this was the first shipment of rice from the deal, and it was not being offloaded due to a legal battle between NFM and owners of the Ruby Island, the vessel that brought the cargo, over clearance of the shipment.

The legal battle

A legal battle between the former chairman of National Flour Mills, the controversial Dr Anthony Elias, and Opposition Leader Basdeo Panday, is still being waged in the Port-of-Spain High Courts over NFM's infamous rice deal with an Indian-based company in 1997.

The deal, which involved the purchase of 12,000 tonnes of parboiled rice from Gangadas Shah and Sons Co, cost $30 million, although only half that amount actually reached our shores, and was by the time, too spoilt to be used.

Nothing came out of investigations by a renowned Canadian firm that alleged top NFM officials were guilty of corrupt deals, except Elias' hasty resignation from the Board one year later, after several attempts by the then government to fire him after he busted the scandal.

The matter, though it was not investigated under the former UNC administration, was a hot topic on the hustings during the 2000 general election campaign.

In 2001, when Panday alleged the deal was cut under Elias' watch, the former PNM candidate for San Fernando West filed a defamation suit against Panday, which is still before the courts.

Elias' defence was that the rice deal was sealed on April 16, 1997, one month before he assumed the office of NFM chairman in May that year, and therefore, he was not responsible.

He told the Guardian in a recent interview that nothing came out of the rice deal "because of political interference and those involved were able to walk scot-free".

Amid rumbles in NFM about scams yet to be revealed, and as Prime Minister Patrick Manning gets ready to appoint its chairman, Christine Sahadeo, as his third junior Finance Minister, PNM insiders claim Elias' name has been suggested once again to chair the State-owned company.

When asked about this possibility, all Elias said was: "I am always willing and committed to serve the people of the country in any capacity I feel confident of handling."

Bill of Lading unacceptable

The cargo, it was revealed, was in fact 6,500 tonnes of rice, and had been delayed for weeks in Dakar, Senegal, as a result of problems with shipping documents.

By this time, the quality of the rice, a perishable product, that had been on the sea for some seven months, was being called into serious question.

The battle raged on.

Gangadas Shah wanted NFM to take delivery for the rice and give up its legal rights.

NFM, represented by renowned south attorney Lynette Maharaj, wife of then Attorney General Ramesh Lawrence Maharaj, refused to do this.

She said they did not know the quality of the rice and wanted the suppliers to issue a new bill of lading which would allow the shipment to be cleared, since the existing bill of lading was not acceptable to local Customs authorities.

NFM officials had said it was not the company's fault the clearing of the rice was delayed, and blamed this on incompetence on the part of Ruby Island's charterer.

Who owns the ship?

Then came the issue of who owned the Ruby Island.

The charterer of the vessel was crucial to the legal battle, since there were no shipping lines between India and T&T, and NFM confirmed it had no contract with Ruby Island.

The shipping line, LPG of London, was hired to ensure the rice arrived in Trinidad, but on arrival at the Gulf of Paria, the ship's documents were still not in order.

At first, the Ruby Island was reported to be owned by the Cuban Government, then came claims that a company called Adicon were its owners.

Eventually, NFM's attorneys in London discovered the owners were really Huntsville Navigation Co, which was based in Malta.

After weeks of negotiation, NFM was able to arrange for the Ruby Island to discharge the cargo, without prejudice, but operations halted when the vessel's captain demanded demurrage compensation for the ship's delay at Port-of-Spain.

The Ruby Island was subsequently seized on January 21 on a High Court order from Justice Peter Jamadar, and the rice was finally offloaded.

2nd shipment in trouble

At this time, it was revealed that the second shipment of the rice, also comprising 6,500 tonnes, had left India in October 1997, and was supposed to arrive in T&T by mid-January 1998 as well.

But this cargo, on board the MV LVOV, had been detained at Paranagua, Brazil, since mid-December 1997, following the refusal of shipping agents to pay freight charges.

By this time, the rice reportedly became infested with weevils and had to be fumigated by the Brazilian authorities.

There were also allegations that this shipment contained 197 bicycles for Vir Chopra, Indian High Commissioner to T&T at the time, who said in an interview with TV6 that he only knew about 39 bikes.

NFM chief fired

In February 1998, the NFM Board fired Vasant Bharath for his alleged role in the rice deal, while Elias managed to provoke the ire of then Finance Minister Brian Kuei Tung, by hiring the renowned Canadian investigative firm, KPMG, to probe the deal.

This, amid calls from then Opposition PNM MP Camille Robinson-Regis on Government to launch a forensic investigation into the fiasco.

Her allegations that it was a Government (T&T) to Government (India) deal were dismissed by Panday.

The KPMG report

The KPMG report revealed either a high degree of incompetence in NFM, or worse, fraud of a devious and extensive nature.

It stated that Indian middle man, Gangadas Shah, made a $7 million profit by simply buying rice from one company and selling it to NFM, at a profit of 20 per cent.

Probers suggested the deal was made exclusively by Bharath, who allegedly bypassed all the NFM's normal systems and handled the purchase of the rice exclusively, changing the combined transport bill of lading.

In India, the rice was found to be checked on railway carts, five miles away from the loading point, which was not customary, and lent credence to probers' theory that it was switched by the middleman.

They also discovered that the original order of rice in India was for long-grained rice, but what eventually arrived in this country was short-grained rice.

The report was passed to the DPP and Police Commissioner at the time.

Fraud Squad officers interviewed Elias, but sources said their request to travel to Canada to interview KPMG was shot down by the government, so they could not complete their probe efficaciously.

KPMG was eventually fired by Brian Kuei Tung, having begun the probe into NFM's purchase of a feed mill from a Canadian firm.India's probe

The Indian Government had launched its own probe into the deal, and the former UNC administration, the only recipient of this, claimed no wrongdoing on its part was unearthed.

Chopra had also defended his country, saying the deal was simply blown out of proportion and attempts were being made to sabotage local investors from trading with Indian businessmen.

Where's the rice?

The first shipment, aboard the Ruby Island, was cleared eight months later. By this time, there were serious questions about the quality of this rice, even though it was sent to various organisations for testing.

And although its top officials later admitted that the 6,500 tonnes of parboiled rice was "spoilt from the day it landed, discoloured, breaking and a risk to consumers", NFM had tried to sell the rice to the public by reducing the price to $1 per pound.

Nobody bought it, and it was eventually sold to a Colombian processing plant owner who used it as animal feed.

"He paid next to nothing for the rice," an official said.

"We lost everything."

The second shipment of 6,500 tonnes never reached Trinidad, even though it was paid for long before it left India.

The MV LVOV, which was the vessel carrying the cargo, was seized in Recife, Brazil, and eventually reportedly auctioned for US$200,000 in 1999.

The rice had stayed on board and spoilt, but documents showed that this shipment was actually sold to a company named Balfour McLaine, from Rotterdam in Holland.

A phytosanitary certificate issued by the Ministry of Agriculture in India showed that this cargo of rice was to be delivered in Brazil.

The rice, therefore, was never destined for NFM in Trinidad in the first place.

The main players

Where are they now?

Dr Anthony Elias, former NFM chairman – pursuing his profession as a doctor and tipped to be NFM's new chairman.

Vasant Bharath, former CEO of NFM (he was fired shortly after rice deal scandal was publicised) - now reportedly living and working in London.

Indar Vir Chopra, former Indian High Commissioner to Trinidad - now assigned to Jamaica.

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