Three people in Uzbekistan’s Sirdarya region have been sentenced to 12 years in jail for committing fraud in the cotton business, according to a report by Russian state news agency Sputnik later relayed by local media.
Other people connected to the crime received less severe penalties, the agency reported.
Corruption in Uzbekistan’s cotton industry, whose profitability is known to be underpinned by a vast amount of rights abuses, is something that is widely suspected but little investigated or reported. Emergence of this relatively small case of malfeasance has shed some light on the irregularities that prevail in the industry.
“Sirdarya regional court ruled that the criminal group caused major financial damage to the government and embezzled more than 7 billion sum ($1.1 million) from the region’s cotton sector,” Sputnik reported, citing an unnamed courts official.
Sirdarya region neighbors the Tashkent region to the southwest and is around one hour’s drive from the capital.
Investigations into the fraudulent scheme concerned activities between July 2011 to May 2013 at a factory that collected and paid for deliveries of raw cotton from farmers.
“The criminals not only appropriated money provided by the government for the purchase of cotton, but they also in fact engaged in theft of this valuable commodity, selling it on the side,” Sputnik cited its source as saying.
While Sputnik did not dwell on the particulars of the embezzlement scheme, some insight was provided by an Uzbek journalist who has written extensively on the cotton industry for local outlets.
“The crime begins when the farmers bring the harvested cotton to the factory. If the cotton is grade one, they will take it as grade two or grade three. When there has been rainfall and the raw (cotton) is moist, as a rule it is classified as grade three, but the management at the factory would mark it down as grade four. They pay the farmers according to these classifications. But the factory then charges the government the real amount and so cotton bought from farmers as grade two is sold as grade one. And they stick the difference in their pocket,” the journalist, who asked not to be identified, told EurasiaNet.org.
Another opportunity to fiddle the books comes during the process of weighing in the raw cotton. As a rule, 10 percent of the weight is discounted as trash, dirt and dust scooped up with the raw crop. As a result, one ton of cotton is calculated as 900 kilograms. But in some instances, unscrupulous factory managers could decide to increase their calculated amount of refuse material in the raw cotton to 20 percent, providing another chance to spirit away money.
This kind of fiddle will be familiar to students of Uzbek history. The Uzbek SSR drew the ire of Moscow in the 1980s when it was discovered that Tashkent was submitting wholly fraudulent accounts on the amount of cotton it was manufacturing. Money paid into Uzbekistan from Moscow would be pocketed. The Cotton Affair, as it came to be known, culminated in mass arrests and purges of Communist Party officials and policemen and in the political downfall Uzbek Communist Party general secretary Sharaf Rashidov.
Sign up for Eurasianet's free weekly newsletter.