Mr C K Sharma - Shipping Frauds - Untold Stories - 19th Nov 2014

1. EEnnddeeaavvoouurr CCrreeaattiivveess PPvvtt LLiimmiitteedd
wwwwww..sshhiippppiinnggccoonnffeerreenncceess..ccoomm
SShhiippppiinngg FFrraauuddss
UUnnttoolldd SSttoorriieess
PPrreesseenntteedd bbyy
CCKK SShhaarrmmaa
AAccaaddeemmiicc AAddvviissoorr
19th November 2014
Mumbai

2. PPeerriillss iinn SShhiippppiinngg
High Value Assets.
Bad Weather.
Pollution Risk.
Navigation Hazards.
Pirates.
Dangerous Cargoes.
War Zones.
Dangerous Countries.
Cyclical Industry
Bad Owners/Charterers
Maritime Frauds
Commercial Risks

3. MMaarriittiimmee FFrraauuddss
We must differentiate between:
Oversight
– IRS vs IR; CCC vs China Register
Lack of due diligence:
– Not reading the whole contract carefully.
– Documentation in a hurry : Example - LOI
Countersigned by Bank?
Series of unfortunate incidents leading to
disaster:
– Khalijia 3 Ink purchase by Mont Blank
Maritime Fraud:
– Definite “Intention to Cheat” the other party

4. MMaaiinn TTyyppee ooff MMaarriittiimmee FFrraauuddss -- II
Non-Existent or defective cargo:
– Wet Sugar from Thailand
Non-Existent Ship:
– Igloo Tana oos
Non-Existent Parties:
– Desire to buy cheapest cargo or freight via least
known brokers or internet is a great help to
fraudsters. Very common in Containers. Case of
Project Cargo in Essar – freight paid twice.
Negotiation of Shipping Terms by non-shipping
people :
– Ship Owner asking for USD 4 pmt for use of
Crane in FOB Steel Cargo.

5. MMaaiinn TTyyppee ooff MMaarriittiimmee FFrraauuddss -- IIII
Trickster Ship Operators:
– 2005 : Project Cargo from Mumbai to Iraq
discharged at Bandar Abbas, Iran. Owners
changed Ship’s name but ship nabbed later. The
German Operator from Sharjah was never traced.
Documentation Fraud:
– False BL.
– LC with tricky terms.
– False documents: Coal offered to OPG reportedly
rejected at Chinese port. Docs of last voyage
submitted.
– Freight prepaid BLs: Great problem for ship
Owners if the freight is really not received in
Owners account. SCI case of Calcutta to Kuwait.

6. CCaassee ooff CChheemmiiccaall TTaannkkeerr iinn NNGGCC
CCaassee ooff SStteeeell CCooiillss ffrroomm IInnddiiaa ttoo
SSaauuddii AArraabbiiaa
There are Disasters associated with
discharging against LOI.
Bad intention of the counterparty is
often the reason as in the case of
Importer in Kandla where Norwegian Gas
Carriers was the Ship Owner.
But sometimes, one can get caught in a
freak situation as in case case of Steel
Coils.
Moral of the story is that no matter
what you do some uncertainty will always
haunt you in Shipping.

7. CChhaarrtteerr PPaarrttyy FFrraauuddss -- II
Charter Party Frauds:
– A ro-ro vessel loaded a cargo of vehicles
for the Defence Ministry of a South East
Asian country in the Black Sea. The
shipper allegedly paid all the freights due
to the charterer based in Rotterdam. The
charterer sent the shipowner an email
confirming payment of freight including
remittance advice from the bank. The
shipowner releases freight prepaid BLs and
the vessels proceeds through the Suez
Canal.

8. CChhaarrtteerr PPaarrttyy FFrraauuddss IIII
No freight is received and it turns out
that the charterer had provided false
remittance. The owner stops the vessel
Red Sea near Sudan and demands payment
of freight before proceeding. The freight
is not paid. The vessel disappears is no
longer contactable by the cargo owners.
The owner, based in Ukraine is also
difficult to contact. Now many months
later the location of the ship and the
cargo remains unknown.

9. Global ttrraaddee iinn pphhaannttoomm ccaarrggooeess
In May 1998 an Indian in Dubai, Madhav
Patel who Owned Solo Corporation dealt in
cargoes that actually never existed but ALL
documentation was done between his UK
Company and Dubai Company. All documentation
was done in Solo’s office as needed by Banks.
Citibank, Barclays and ABN Amro were the
main Banks which lost £500 Million.
Such cases keep happening even today to the
dismay of Banks honest importers who often
find that their cargo Insurance is not any good
in such cases..

10. THANK YOU FRIENDS