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Warning on growing fraud risk By Philip Parkin

A Stratford global risk and compliance specialist has warned exporters to take every step they can to minimise the growing risk of fraud. GWCI chief executive Graham Welland was speaking in the aftermath of a bizarre multi- million pound fraud case involving $36m worth of copper. The case involved Mercuria Energy Group, a

Swiss multi-national commodity trading company, who made a deal with Bietsan Bakir, a metal fabrication company based in Turkey, for the supply of the 10,000 tons of copper blister, which was to be shipped to China. But on arrival, it was found that the copper

had been switched with paving stones, spray- painted to resemble the semi-refined metal. This happened despite the 300 containers

that were used having been inspected and sealed to prevent fraud. Once the eight ships with the containers had

set sail, Mercuria – one of the five-biggest oil traders in the world – paid the $36m to Bietsan, with whom it had a previous business relationship. A fraud investigation is now ongoing, with a

dozen people already arrested. Graham Welland believes the case to be a

crucial example of why the transparency of a company’s supply chain is essential. He said: “Corrupt and fraudulent activities are

common practices within this industry and companies need to protect themselves and their goods during all stages of a transaction, however complex the supply chain.” He added that the coronavirus pandemic had ‘undoubtedly’ caused an increase in fraud, which

underlined the need for appropriate due diligence. He said that the pandemic, as well as a

reduced supply of goods, had led to the rise of international scammers targeting businesses. PwC’s recent ‘Global Economic Crime and

Fraud Survey 2020’, which quizzed more than 5,000 respondents across 99 territories about their experience of fraud, found that 47 per cent of them had suffered from this, the second highest reported level in 20 years. Respondents reported total losses of $42

billion to fraud, with the most common types of crimes being customer fraud (35 per cent), cybercrime (34 per cent), asset misappropriation (31 per cent), and bribery and corruption (30 per cent).

‘Corrupt and fraudulent activities are common practices within this industry’

Mr Welland added: “Much like with Mercuria,

GWCI has seen a rise in companies ordering stock and reporting nothing arriving as well as requests of upfront fees to be paid prior to large orders that should immediately raise concerns. “Companies should carry out due diligence

prior to making a commercial arrangement as this can prevent losses like those experienced by Mercuria. “This means appropriately vetting of individuals and companies you do business with. In the long run this can prevent huge financial losses, both through legal fees and lost revenue”. He added that with regarding the copper

scandal, the usual practice when goods are not delivered, is for a trader to make a claim against a cargo's insurance policy. However, in the case

of Mercuria, six out of seven contracts used by the Turkish company to insure the cargo were forged. He warned that fraudulent activity would

always take place, however it was in the interest of companies to put in place appropriate measures to help to protect them. As part of its procedures, GWCI produces

detailed reputational damage reports, which can show businesses exactly who they are trading with and the associated risks. These reports can help protect companies

against any reputational and financial damages that could materialise if they are found to be trading with enterprises or individuals who have unethical links.

New courses planned to help exporters

The Chamber is stepping up efforts to help Britain’s exporters deal with the increase in red tape that has hit them post Brexit. The Office of National Statistics was forced to admit that exports to the

EU fell by £5.6bn in January, as Brexit trade rules – and Covid-19 – hammered businesses. However, according to Chamber international trade training manager

Leah Quarmby, the number of courses that the organisation is running to help exporters deal with the new rules is being stepped up. She said that eight training webinars had already taken place this year,

attended by 32 delegates. She said future training courses were filling up fast, as businesses booked

in their staff so that they could get to grips with the new paperwork. She said: “We are aiming to run a minimum of three courses a month.

The most popular ones at the moment are understanding exporting, trading with the EU after Brexit and customs procedures. These areas are huge at the moment, the more of these we can offer, we will. “Training is on the increase as so many rules and regulations surrounding paperwork for import and export has changed after Brexit.

34CHAMBERLINKApril 2021 “As well as the individual courses, we are also launching a new project

which I believe will help larger businesses. “I decided to create this as I have had several requests for bulk training,

so rather than companies having to ask, I would like to make sure our customers are in the know on what we can offer them.” These courses will accommodate up to eight delegates, and are aimed at

not just documentation staff, but also finance and sales people, buyers and others. The training courses run so far have been widely hailed as a huge

success, as comments from delegates have proved. Kay Southall, of Offspring International, said: “I enrolled onto these

courses as I am in a relatively new role and wanted to get a bit more understanding in the documentation/procedures side. I found the courses very informative although relaxed and gained a lot of useful information from them. I would recommend to anyone.” And another delegate, Donna Watson, of Truflow Air Movement Ltd, said: “I enjoyed the course and it provided me with exactly what I needed.”

Graham Welland: Fraud has risen during the coronavirus pandemic

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