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trip to Iran. The account was subsequently shut down with two weeks’ notice on the grounds (as she later discovered), that “we don’t want to deal with anybody who might be dealing with Iran.
“The banks are petrified of the threat from the US, who tell them, ‘if you deal with Iran, we will stop your dollar trades’.”
Chris Towner
This story resonated with Jenkins, who had experienced a very similar experience. Like Ward, his company was given no initial explanation as to why their local bank account was being shut down with 30 days’ notice, despite a flawless 25-year trading history.
“We discovered that the reason was our strong Middle East connections – the bank just didn’t want the risk of being associated with us. We told them that this would affect our relationship with them globally, and only then did they recant … but they now constitute a far smaller part of our business.”
Jan Ward
Unfortunately for Taylor, this is a problem which he comes across all too frequently, there being no obvious solution to the Iran issue despite the roll-back of sanctions, because of banks’ refusal to process payments due to concern over remaining controls in the USA. The issue is currently further complicated by the lack of cash which has forced many Iranian companies into unpopular barter deals with the Chinese. However, he did have some words of encouragement: “It is important to build long-term relationships because these do bear fruit. The UK still has a very good reputation with Iran, with many companies fondly remembered from 20 years’ ago – they still want to trade with us.”
Ian Jenkins
Stoter stressed that the banking issue wasn’t constrained to countries such as Iran. In relatively stable parts of Africa, such as Ghana and Kenya, there remains hardly any appetite for risk, leaving companies unable to transact via their house bank.
Ward suggested that the way around this problem was to open a company in one of the free trade zones, such as Dubai or Singapore. However, she acknowledged that this was probably not an option open to smaller businesses.
Questions from the floor Margaret Romanski
Simon Harris, sales director, Charles Kendall Freight, picked up on the earlier point about the frustration regarding countries such as Iran, ostensibly free of sanctions yet still not connected back to the banking system: “This creates massive problems and it’s so frustrating as there are huge opportunities out there with oil, infrastructure ... . It’s interesting to note that
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the Americans were the first ones there to do business when the sanctions were lifted ... but they are the ones now holding everything up.”
Rebecca Ho, group logistics manager for procurement, Unatrac, drew attention to the different mindset required for global exporters: “We are having to constantly deal with change management; Ebola, Russian sanctions, terrorist activities ... it’s all part of our day-to-day business. In the EU, regulation has been so well-developed that you can assess the trading environment for years ahead, but that’s not the case with the rest of the world.”
Ward agreed with Ho’s observation, but made the point that it was very exciting to travel and visit different markets, undertake the background research, and talk with people on the ground. One of the factors holding back UK exporters is that they have already formed an inaccurate opinion, often whipped up by the media, as to what a country such as Turkey, or the Ukraine, will be like. It is only after having visited these countries for themselves that they realise their initial fears were overdone.
“Working in a global environment, you can’t predict what is going to happen around the corner, so you just have to roll with the punches, and make sure that you either pre-empt the risks or are fast and flexible enough on your feet to cope.”
Taylor echoed Ward’s point about the need for research, stressing that DIT could be an invaluable resource in this respect, “because most of us have past industry experience, and can therefore work alongside businesses”. Having said that, the Government needs to help reduce the risk factor, and understand that people are risking their capital and their lives, “which is why forums such as this roundtable are so invaluable.
“It might seem easier to stay at home and do research on the Internet, but you have to actually go out there and visit these countries to understand what is actually happening there.”
Other key issues – overseas legislation
‘What other risks do exporters need to seek protection for?’ asked Murray.
In response, Jenkins raised the issue about broader risks in the supply chain, in particular, the long international shadow cast by US legislation. He noted that freight forwarding companies were invaluable in this area, given their intimate knowledge of the supply chain.
“The 2016 Transparency International Report concluded that global corruption had worsened. There is a danger that UK exporters fail to look closely enough at
THE BUSINESS MAGAZINE – THAMES VALLEY – MARCH 2017
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