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Date: Saturday, March 1 2003

Fraud is an inescapable part of commerce and all fraudsters rely on some form of documentation to persuade their

victims that a particular transaction is genuine.

There have been some spectacular cases of documentary fraud in recent times--in one case, the Central Bank of the

United Arab Emirates suffered losses of some US$650M while in another case last year, losses amounted to

US$450M with one bank being hit for more than US$20OM.

It is impossible to estimate the total losses due to fraud around the world and a significant proportion of cases go

unreported.

Documentary fraud affects all commodities and palm oil has been one of the most popular commodities to be

affected.

In shipping and trading transactions, documentary fraud has reached epidemic proportions because false

documentation can be relatively easy to generate, often by one person, and passed to an individual in a bank who

may have great difficulty establishing the authenticity of it.

New electronic paperless systems being introduced will change the types of frauds carried out but will not reduce

them. The old traditional frauds of sellers defrauding the buyer may become a little more difficult. But the majority of

frauds where buyers and sellers collude against banks is likely to continue, with electronic documents giving greater

credibility than paper documents would have.

Documentary fraud

In the world of documentary fraud, there are many possible scenarios. Often fraudsters will select commodities in

great demand and offer them at reasonable prices using convincing documentation. Sometimes, brokers are used to

sell the goods and either know that the transaction is fraudulent or do not care whether it is or not. When the

transaction crashes, the broker protests his innocence and reminds all the parties that he, too, is an innocent victim.

Seldom, if ever, will he agree to pay his commission.

Over the last few decades, documentary fraudsters have accumulated vast sums of money from manipulating

documentary letters of credit and it is appropriate to look at these instruments to examine their flaws.

Buyers defrauded

Under letters of credit, sellers present false documents confirming that the cargo has been consigned to the buyers

and loaded on board the vessel. The documents are credit-complying and the negotiating bank pays out to the

sellers. Due to the transit time between the load port and the discharge port, it is often many weeks before the buyers

realise that no cargo has been shipped and that the documents negotiated through the banking systems are

worthless. In that time, the proceeds of the letter of credit have been dispersed by the sellers beyond the reach of the

buyers and the courts.

The 
  


 is a specialized department of the International Chamber of Commerce.

International Maritime Bureau

The ICC International Maritime Bureau (IMB) is a specialised division of the International Chamber Of Commerce
(ICC). The IMB is a non-profit making organisation, established in 1981 to act as a focal point in the fight against all
types of maritime crime and malpractice. The International Maritime Organization (IMO) in its resolution A 504 (XII)
(5) and (9) adopted on 20 November 1981, has inter alia, urged governments, all interests and organisations to
cooperate and exchange information with each other and the IMB with a view to maintaining and developing a co-
ordinated action in combating maritime fraud. The IMB has a MOU with the World Customs Organization (WCO) and
has observer status with Interpol (ICPO).

IMB¶s main task is to protect the integrity of international trade by seeking out fraud and malpractice. For over 25
years, it has used industry knowledge, experience and access to a large number of well-placed contacts around the
world to do this: identifying and investigating frauds, spotting new criminal methods and trends, and highlighting other
threats to trade.

The information gathered from sources and during investigations is provided to members in the form of timely advice
via a number of different communication routes. It lists the threats and explains how members can reduce their
vulnerability to them. Over the years, this approach has thwarted many attempted frauds and saved the shipping and
trading industry many millions of dollars.

The IMB provides an authentication service for trade finance documentation. It also investigates and reports on a
number of other topics, notably documentary credit fraud, charter party fraud, cargo theft, ship deviation and ship
finance fraud.
As well as helping to prevent crime, the IMB also has a duty to educate both the shipping community and a wider
audience that comprises just about every entity engaged in trade. To this end, the IMB runs a regular series of
courses and training programmes that have a wide-ranging syllabus and many proven benefits. It also offers bespoke
consultancy services in areas such as ship and port security.

One of the IMB¶s principal areas of expertise is in the suppression of piracy. Concerned at the alarming growth in the
phenomenon, this led to the creation of the IMB Piracy Reporting Centre in 1992. The Centre is based in Kuala
Lumpur, Malaysia. It maintains a round-the-clock watch on the world¶s shipping lanes, reporting pirate attacks to local
law enforcement and issuing warnings about piracy hotspots to shipping.

With its multi-lingual and multi-disciplined staff, experience, unique structure, industry support and well-placed
contacts, the IMB can rightly claim to be the world¶s premier independent crime-fighting watchdog for international
trade.

The IMB's responsibilities lie in fighting crimes related to maritime trade and transportation, particularly piracy and
commercial fraud, and in protecting the crews of ocean-going vessels. It publishes a weekly piracy report and
maintains a 24-hour piracy reporting centre in Kuala Lumpur, Malaysia.

The bureau, endorsed by the UN's International Maritime Organisation, was founded in 1981. The body has observer
status with Interpol and a MOU with the World Customs Organization.[1]

Its present director is Captain Pottengal Mukundan.

Losses due to official misconduct account for a great many maritime trade incidents. Each incident can be complex and
wide-ranging in nature. It is therefore unlikely that any one company will have the knowledge and resources to be able to
investigate it thoroughly.

If you need help, the IMB has a well-experienced investigation team on standby. In the past two decades, IMB staff have
successfully investigated hundreds of cases of maritime fraud, including some of the biggest and most infamous.
Importantly, our investigations do not just determine the facts, they are designed to limit the damage and enable losses to be
recovered.

We provide a professional and results driven service. Our investigators are drawn from a number of specialist backgrounds,
are multi-lingual and have the specific skills you require. We have worked in all sectors of international trade, conducting
investigations for a wide range of organisations, from ship owners and managers to insurance and reinsurance companies,
and from banks to law enforcement agencies.

For further information on the different areas we can conduct investigations in, please refer to the menu on the left.

Fraud is a growing and global problem. Modern frauds are often complicated and invariably cross national boundaries,
further compounding the difficulties associated with determining if a fraud has taken place and if so, who has perpetrated it.
This makes the problem of seeking redress and recovery that much harder: victims are confused and not sure what to do
next, or who they can turn to for help. They will quickly find that fraud is a low priority for local law enforcement.
But the longer victims take to react the more difficult it is to track down fraudsters and the less chance there is of bringing
them to book or recovering lost assets.

FraudNet makes a positive and unique contribution to combating the global problem of fraud and asset recovery. FraudNet
provides a new, innovative way to tackle fraud and track down and take action against the offenders using the combined
strengths of a global network.

FraudNet provides fraud victims with a first local-point-of-contact service using legal specialists that can help, and the
resource of a global network of partners to investigate and take action against fraudsters in foreign jurisdictions, increasing
the chances of recovering losses. If you think you are, or may be, a victim of fraud and are not sure what to do next, why not
contact your nearest FraudNet member and find out.

You can find your local FraudNet country member by selecting the country name from the pull-down list and clicking the
search button. Alternatively if you know the name of the company you are looking for please type it into the Organisation
box.