CCS
warns banks to beware of fake funding requests
 |
| Check suspicious documents
before closing the deal |
London,
23 September 2002
- Investigations by ICC's Commercial Crime Bureau have revealed a spate
of fake funding requests for projects connected to the tourist industry. The
bureau says fraudsters are attempting to mislead banks with a phony financial
document that claims to guarantee loans for large construction projects.
Entitled the London Short
Form Guarantee, the fictitious document follows an established format to add
credibility to requests for bank funding. CCB says it is usually accompanied
by bulky reports purporting to outline the planned development, together with
impressive balance sheets and resumes of parties said to be involved with the
project.
"This scam is particularly
active in Eastern Europe and Africa," said CCB Assistant Director Jon Merrett.
"The fake guarantee and its bundle of supporting information has been used
there to give authority to requests for funding for projects ranging from new
golfing and tourist facilities to revamping entire airports."
According to CCB, the scam
takes advantage of the fact that some banks commonly provide collateral for
multi-million dollar private sector construction projects.
Adding further layers of
complication to the fraud, some fraudsters pay bona fide brokers a hefty commission
to promote their project and negotiate with banks on their behalf.
CCB is calling for banks
to exercise caution when approached for finance to support a construction project
from an unknown source, particularly when an unusually large amount of information
is provided with the request.
The fraudulent documents
may seek to give an impression of authenticity by falsely claiming to be subject
to ICC's Uniform Customs and Practice for Documentary Credits "Publication
500, latest revision."
"Banks should look
carefully at what collateral is offered to underwrite any finances being advanced
for a project. It is especially important to look out for the 'London Short
Form Guarantee' or any similarly worded document," said Mr Merrett.
"If you see such a
document, the project is unlikely to exist beyond the drawing board and the
guarantee being offered has no legitimacy at all. It simply does not exist,"
Mr Merrett added.
The Commercial
Crime Bureau is part of Commercial
Crime Services. Based in London, CCS is a division on the International
Chamber of Commerce.
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For further information
contact Jon Merrett at ICC Commercial Crime Service in London on +44 (0) 208
591 3000.