SHIP AGENT ATTACKS FOOD AID OVERSIGHT

SHIP AGENT ATTACKS FOOD AID OVERSIGHT

A foreign country shipping agent has launched an attack on the U.S. Department of Agriculture and its administration of the federal Food for Peace program.

The agent, New York-based Trans-Orient Marine Corp., is telling other brokers that the department has an informal policy of allowing "kickbacks"

from brokers to their client countries. The agent is backing its claim with letters from the department sent in response to Trans-Orient's complaints about the practices of a competitor.Trans-Orient hopes its actions will force the agency to take a public stand on how commissions are handled among the shipowners, brokers and foreign countries participating in the Food for Peace program.

Such a declaration could help Trans-Orient win back business it lost to Star Trading and Marine Inc., Washington, D.C.

"It is going to put USDA between all the agents and the embassies," said Alison Dobra, president of Trans-Orient.

Under the Food for Peace program, the federal government arranges special loans for impoverished countries to buy U.S. agricultural goods.

The countries receiving the food aid select an agent to secure transportation for their purchases. The country agent receives commissions

from the shipowners it selects to handle Food for Peace cargo.

Last fall, the General Accounting Office, a watchdog congressional agency, warned Congress about the "vulnerability of the program" to fraud and abuse by foreign country agents.

"What they (Trans-Orient) are saying is a confirmation of what we've suggested," said Phil Thomas, assistant director of international trade for the GAO.

For several years Trans-Orient has been trying to get the USDA to levy sanctions against Star. Star shares the commissions it receives from foreign flag ship owners with its country client, Sri Lanka.

Trans-Orient claims that this is essentially a "kickback" from Star to Sri Lanka for allowing Star to serve as its agent, an apparent violation of USDA regulations on kickbacks. Both Star and the USDA state the practice is not a violation of regulations and is proper.

In several pieces of correspondence, most recently a letter from the USDA inspector general's office, the department has maintained that the Star arrangement is not a violation of USDA rules. Trans-Orient wants the rest of the Food for Peace industry to take that as a blanket endorsement by the USDA of shared commissions in the industry.

Whether Trans-Orient's admonitions will carry any weight with other agents is debatable.

"I don't think too many people take Trans-Orient that seriously," said one agent executive, who asked not to be named.

Others, however, agree with Trans-Orient that the USDA has to publicly explain why a "shared commission" doesn't amount to a kickback.

"In this case he (Trans-Orient) has a point," said another agent, who also asked not to be identified.

The USDA admits that there is a problem with the application of its anti- kickback rule.

"We are conceding that people read the regulation and come to different

interpretations of what it means," said Glen Whiteman, deputy assistant administrator in the USDA's Foreign Agricultural Service. "We need to clarify it."

The USDA is currently trying to rewrite the regulations, Mr. Whiteman said. The effort is running behind schedule because of bureaucratic problems, he said.

The USDA, in conjunction with the U.S. attorney's office in Washington, has been investigating Star for more than three years. Star officials were unavailable for comment.