IMB Director Pottengal Mukundan said: “All five of the frauds recently reviewed by IMB have involved the same exporter and Non Vessel Operating Common Carrier (NVOCC). In each case, buyers paid for goods that were never shipped. We suspect there are several more such cases that have gone unreported.”
The scheme is being run out of East Java by fraudsters who lure potential victims with attractive prices for paper and board products. Once the buyer is prepared to make a purchase, the seller persuades them to open a letter of credit, often on a deferred payment basis. It is then claimed that shipments − averaging half a dozen full container loads − have been arranged via a NVOCC. When contacted about the missing shipment the “exporter” then defers responsibility to the NVOCC and denies any accountability.
“The containers are purported to hold products from legitimate Indonesian paper and board companies, but the bills of lading issued are fraudulent and the goods are never shipped,” stated Captain Mukundan. “IMB has been in contact with buyers from the Middle East and Canada who have lost hundreds of thousands of dollars through this scam.”
IMB’s investigation has revealed that the fraudsters had developed a convincing website that could lead buyers to believe they were dealing with an authentic company. However, the bills of lading used do not list any street address or telephone number for the NVOCC − only the website address. “This is highly irregular and leaves the buyer with no means of contacting the NVOCC once the goods fail to arrive,” said Captain Mukundan.
It is suspected that initial contact with potential buyers is often made through a business intermediary, trade fairs or via the Internet. IMB strongly advises that paper and board importers around the world exercise caution and perform due diligence when sourcing consignments from unknown sellers in Indonesia. The alternatives − attempting to recover assets or order banks to stop payment through the Indonesian court system − can prove both difficult and costly.
IMB’s document checking service has extensive experience with trade finance fraud of this nature and is available to review bills of lading and validate their authenticity.