INSURANCE REPORT
25
ORGANISED CRIMINALS SWAP $36 MILLION SHIPMENT OF COPPER FOR PAINTED ROCKS AFTER INSPECTION
13 people have been taken into custody in Turkey after an order for $36 million of copper was found to have been switched for containers full of painted rocks as shipments started arriving in China.
According to a report in the insurance media, the order had been placed by a Swiss commodities trader for some 6,000 tonnes of blister copper being shipped in more than 300 shipping containers. The buyer and seller had reportedly done business together previously.
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The first shipment of copper was initially loaded into containers before being surveyed by an inspection company, and seals were used to prevent fraud. However, the buyer’s lawyers claim that, under the cover of darkness, organised criminals opened the containers, replaced the copper with painted paving stones, and switched between fake and real container seals in an effort to avoid detection.
As ships left the Turkish port
terminal every few days, the same thing happened. With the vessels at sea, the trader paid the $36 million in five instalments. The fraud was only discovered when the containers began arriving
in the Chinese port of Lianyungang later that month. By then, all eight vessels were en route to China, the report states.
The article in Insurance Journal says that normally, in such cases of non-delivery, a trading house could make a claim against a cargo’s insurance policy but, on this occasion, it transpired that just one out of seven contracts used by the Turkish company to insure the cargo was real. The rest had been forged.
The case highlights commodity traders’ vulnerability to fraud, even when security and inspection controls are in place, the report states. The trader is seeking redress in both Turkish courts and through a UK arbitration case against the copper supplier.
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