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Warning fraud in seafood exports

09:38 | 25/12/2016

VCN- On 22nd December 2016, the Vietnam Association of Seafood Exporters and Producers (VASEP)  launched a warning to export enterprises to avoid fraud in the implementation of commercial contracts on seafood exports.

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Seafood processing at Binh Dinh Seafood Joint Stock Company. Photo: Thu Hoa.

According to VASEP, recently, there have been several export enterprises in seafood deceived with hundreds of thousands of dollars by ECHOPACK INC, represented by a person named Jason Brown, residing at: 5084 Francois, Cusson Lachine, Quebec, Canada. The export shipments have been conducted payments through GENERAL EQUITY Bank (representative of Echopack Company at Level 4 , General Equity House, 17 Albert Street, Auckland 1010, New Zealand) in the form of L/C with 60 days from the date of issuing Bill of Lading and the certificate of food safety of the CFIA.

Accordingly, the L/C has been opened with 2 terms of risk, including: customers are allowed to take a bill of lading to move goods for quarantine and the signature of customers at the bank must match the signature of the customers on commercial contracts with export enterprises. The incident occurred as follows:

After the shipments of Vietnamese seafood export enterprises were transported to ECHOPACK (representative name: Mr. Jason Brown) by the above method, ECHOPACK received the goods.

The banks representing enterprises in Vietnam sent records and banking documents to GENERAL EQUITY Bank to request payment for goods after ECHOPACK received the goods. However, EQUITY GENERAL Bank replied slowly and refused payment due to illegitimate L/C.

GENERAL EQUITY Bank informed that there were many illegal points of the documents. Accordingly, the signature of Echopack when opening L/C at GENERAL EQUITY Bank did not match the signature on a contract with Vietnamese seafood enterprises in the set of documents. Then, they sent back to Vietnamese export enterprises the set of documents, with 1 original B/L with 3 copies missing.

The Vietnam Association of Seafood Exporters and Producers (VASEP) and member enterprises stated that Echopack and GENERAL EQUITY Bank deliberately avoided payment for the purchase. Echopack intended to deceive Vietnamese export enterprises when this company used another signature on the contract signed between the two sides to open the L/C and the L/C had a clause that the signature on the contract sent to GENERAL EQUITY Bank must match the signature on the contract in the set of documents for payment. Although GENERAL EQUITY Bank knew that the set of documents was invalid, it still let Echopark take the original Bill of Lading to receive the goods.

GENERAL EQUITY Bank also deliberately violated the provisions of payment through L/C, such as L/C to be paid at maturity and the payment term of the L/C was 60 days, but the time of notification of invalid documents exceeded 40 days. It was reported that GENERAL EQUITY Bank in New Zealand closed from 2014, but it still opened L/C and transferred it to Vietnam.

Regarding this incident, on 15th December 2016, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has sent a letter to VASEP to support businesses as follows:

Focus on studying the market, checking reviews, ratings, credit risk and trading of foreign partners, especially trading partners and financial intermediaries. The verification can be carried out through public sources or from companies that specialize in providing verification services (such as famous organizations providing information or Credit Information - the State Bank of Vietnam) or through the channel of the foreign associations in the import countries and diplomatic missions.

Because the purchase contract is the basis for resolving the dispute between parties, enterprises need to have strict regulations to protect their interests (especially the provisions on resolution of dispute and complaint), reducing the adverse circumstances for businesses when disputes arise.

In the process of payment, enterprises should study principles and international practices to understand the roles and responsibilities of stakeholders, thereby considering suitable methods of payment and reasonable conditions to ensure benefits for companies.

In the course of transaction, enterprises may consider using the services of banks (such as confirmed letters of credit, non-recourse discounting and payment for export) to ensure the possibility of recovering money from the banks providing services, as well as supporting businesses to study information on importers and agencies issuing letters of credit.

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In addition to the above contents, VASEP has also directed Vietnamese seafood enterprises to review, identify and prevent transactions with Mr. Jason Brown as well as with ECHOPACK INC, located at: 5084 Francois, Cusson Lachine, Quebec, Canada.

By Le Thu/ Hoang Anh