Leading farming groups warn that Australia's multibillion-dollar water market is ripe for fraud or embezzlement because governments have failed to regulate water brokers.
They worry that anyone can become a trader in the burgeoning water market, with no licensing requirement of any kind.
''Anyone can hang their shingle up and away they go,'' said Laurie Arthur, who sits on the National Farmers' Federation water committee.
''You are talking huge amounts of money. You can have these traders holding clients' funds for four or five weeks [before trades settle] and you never really know where your funds are.''
The lack of rules means there is nothing to stop traders taking a cut on the side when matching buyers to sellers, nor are they required to hold clients' funds in properly audited trust accounts, as real estate agents are.
This is despite farmers' water entitlements often being more valuable than their land.
A NSW water broker told the Sydney Morning Herald that at the height of the market 18 months ago, he had between $4 million and $5 million of farmers' money sitting in an ordinary account, as transactions waited to be cleared through state water registries.
''I could have headed off at any time [with that money],'' the broker said.
The Deniliquin trader and a former chairman of the Australian Water Brokers Association, Jeff Shand, said: ''The water trading world is just a cowboy job. Just open slather, in terms of trust accounts.''
The NSW Farmers Association's water spokesman, John Ward, knows of one agent who made more than $500,000 in commissions in 12 months.
''We saw some situations where you would shake your head and say: they wouldn't get away with that in the real world.''
Farmers' organisations have asked the federal government to impose some rules but Canberra has instead referred the issue to the Australian Competition and Consumer Commission, which sees no need for regulation. Yet the commission's own reports document instances of wrongdoing.
These include brokers acting for both buyers and sellers without telling either party to the transaction, brokers granting themselves secret commissions and brokers putting buyers' funds into their private accounts during settlement periods.
''The commission doesn't see a problem but it's like a train wreck waiting to happen'' said the Victorian Farmers' Federation Water Council chairman, Richard Anderson.
''It will only take one broker to run off with a whole lot of money or whatever and the whole thing will collapse in a heap. When you consider that 1000 megalitres of water was worth $2.5 million at the height of the market, you don't have to be attracting too many customers to be putting $100 million or more through your accounts.''
The NSW Irrigators' Council wants traders to be properly licensed and obliged to set up trust funds to ensure their clients' money is safe.
A small group of traders has set up the Australian Water Brokers Association and is working on a voluntary code but a leading water dealer, Tom Rooney, argues the code is not ''rigorous enough''. The association represents fewer than 30 brokers of the more than 200 estimated to be active in Australia.
Its president, Matt Davis, acknowledged controls had been lax in the past but said he was working ''to get this association into a position where it's accountable and strong''.
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