Middle East Bank – Trade Finance Loan Fraud by a Corporate Customer
The Fraud
A major Middle East bank reported a complex fraud relating to eight loans advanced under a trade finance facility to a corporate customer in Singapore. We verified the bank’s loss in excess of USD 18.5 million.
The customer had been in significant financial distress with outstanding debts of as much as USD 1.55 billion. Attempts to rescue the company had failed.
The company had been involved in widespread fraudulent activity in an attempt to alleviate their dire financial position. This included obtaining a facility from the Middle East bank on the basis of forged financial statements. Other fraudulent documentation, including duplicate bills of lading, was then provided in support of the eight loans.
Risk Features
- In good faith and in the ordinary course of business, the Insured acted upon financial statements, invoices, sales contracts and bills of lading.
- The evidence confirmed that the Insured granted the loans in reliance upon falsified financial statements.
- The invoices and sales contracts were purportedly signed and stamped by authorised signatories of the suppliers and purported buyers; however, the letterheads and signatures on those documents were forged.
- Evidence was obtained that the Insured were not, as they had been led to believe, in possession of original bills of lading but had only been provided with duplicates.
