eBSI TradeBrief Issue 4

A Hot Tip about Trade Finance in the United Arab Emirates

Last updated: 24 Sep 2011

Newsletter containing International Trade related articles and events. Signup at http://www.ebsi.ie To Join http://www.globaltrade.net Simply log in with the ID and Key below to start getting new business today! ID: eBSI KEY: 1234

? URDG SEMINAR SET FOR DUBAI - 14 JUNE ....1 TradeBrief ISSUE 4 2010 May ? DOC CREDIT CLINIC.......................................3 eBSI RD ? 3 IFC MEETING - ISTANBUL .........................4 ? CAREERS IN EXPORTING................................6 .. 7 ? WEBLINKS FOR EXPORTERS...........................8 5 ? CHOOSING A FREIGHT FORWARDER ...............10 8 ? CHINA SYSTEMS UPDATE...............................12 ? EXPORTABLE NIGERIAN COMMODITIES............13 ? THE FRAUD EXCEPTION IN LCS ......................15 ? RECENT EVENTS ...........................................17 . BEIJING 2010 TRADE ROUTES TO RECOVERY Beijing, China What was anticipated to be the largest ICC Banking Commission meeting ever had to be postponed due to an EU Travel U restriction cancelling over 16,000 flights around Europe after an Icelandic Volcano eruption spewed ash and R dust particles into the atmosphere casting a shroud over D Europe for a week which potentially could damage aircraft engines. G Dubai, United Arab Emirates Due to the danger, Eurocontrol took the dramatic step to The Dubai Chamber of Commerce and Industry ban all civilian flights in Europe just days before the ICC which hosted the Spring 2009 meeting of the Banking Commission was set to take place in Beijing. ICC Banking Commission will be holding a URDG 758 The Beijing meeting was anticipated to become the a implementation workshop in Dubai on record breaking ?Banking Commission Meeting? due largely 14 June 2010 at the prestigious offices of to the meticulous planning by ICC China. the Dubai Chamber. Vincent O?Brien, a member of the ICC Banking The Beijing meeting had an agenda cram packed with Commission Guarantee Task Force and moderator for practical action oriented topics. An ICC China Trade th Finance Forum was planned for April 20 and while some of the URDG workshop scheduled for 20 April in Beijing the key speakers could not get to China due to the volcanic will lead this important workshop timely scheduled in ash the event went ahead and was well attended, Dubai for mid June. particularly by Chinese and regional delegates. O?Brien stated ?This workshop is of tremendous importance to traders, bankers and corporate lawyers The options open to the ICC Banking Commission due to this exceptional circumstance are being considered and operating in the Gulf ? the rules become effective on 1 members of the commission from more than 100 countries July 2010 and all parties need to be ready. are anxiously awaiting the outcome. The essential nature of this workshop has been underlined by the recently published report of the ICC Vincent O?Brien, ICC Representative to the WTO Expert Banking Commission ?Rethinking Trade Finance Group on Financial Crisis said ?members of the commission did everything humanly possible to make it to China ? it 2010,? which surveyed trade bankers in 75 countries. was such a pity as ICC China had planned this event to be The report stated that ?44% of respondents indicated a showcase event in the history of the ICC Banking that there was an increase in the number of claims Commission?. under guarantees and standbys in 2009?. It is alarming to see that 23% of respondents reported an increase in the number of court injunctions stopping payment under bank undertakings. According to O'Brien the need for strong and clear demand guarantee rules as in the URDG758 is clearly essential ?particularly as the figure from the 2010 survey is almost double the figure reported in the 2009 Survey (12%)?. Knowledge of the rules and how to implement them are the key focus of the Dubai Chamber workshop on 14 June 2010. To register and get full details you must visit http://www.dubaichamber.ae/urdg758 www.ebsi.ie 1 EBSI EXPORT ACADEMY TradeBrief eBSI News & Commentary Shipping: playing a vital role in the export cycle. Directors Note April/May 2010 will be remembered by millions of people for the disruption to travel around Europe following the persistent ash cloud from Welcome to the Icelandic Eyjafjallajoekull volcano. This fourth Expert Profile News reports tended to focus on the losses of Name: James Tweed issue of eBSI the airlines and the inconvenience caused to Position: Managing Director Tradebrief! Employer: Coracle Online travelers, but other sectors suffered as well. Location: London, UK The US exported seafood trade and Zambian Specialisation: International Shipping flower and vegetable growers are good examples Contact: info@coracleonline.com of exports that traditionally rely on air transport to get their goods to market in a timely fashion and while some journalists might have It is now 100% clear that gotten a little carried away with the theory that no planes might mean no food, what there is only one superpower they failed to mention is that almost 90% of the EU?s external trade and over 40% of on this little planet of ours at internal trade is already transported by sea. that superpower is In response to the restriction of flying, British supermarkets swiftly reacted by ?mothernature?. receiving Kenyan exports in Spain, from where they could be transported by road and sea to UK consumers. These supply chains worked because the sea based Due to the cloud of volcanic infrastructure was already in place. ash hovering over western During the ash cloud crisis, the most focus that the sea received was the news that the Europe and the resultant Royal Navy was going to be pressed into action to rescue stranded British holiday travel restrictions the ICC makers from the continent. Banking Commission meeting It is reasonable to expect that as the dust settles (no pun intended), commentators will scheduled for Beijing from 21 make reference to the fact that shipping actually provides the least environmentally to 23 April did not take place. damaging form of commercial transport. The round table of international shipping associations (BIMCO, Intercargo, International This was unfortunate as the Chamber of Shipping and Intertanko) notes that in terms of CO2 emissions per tonne meeting had a tightly packed of cargo transported one mile, shipping is recognised as the most efficient form of agenda covering ICC official commercial transport, however, given the scale of the industry and the vital role in opinions, update on URDG 758 which it plays in international trade, shipping is a significant contributor to greenhouse implementation, panel gas emissions. discussions concerning actions Comparison of CO2 emissions between different modes of transport: taken to support trade in Transport Grams per tonne-km context of financial crisis as Cargo vessel over 8,000 dwt 15 well the official launch of the Cargo vessel 2,000 - 8,000 dwt 21 Heavy truck with trailer 50 ICC Banking Commission Air freight 747-400 1,200 km flight 540 Global Trade Finance Survey Ships come in many different shapes and sizes of course, all having been adapted to ?Rethinking Trade Finance the type of cargo that needs transporting. Ship design is an evolving practice as fuel 2010? and operational efficiency become the watch words for the modern era. However, we must keep the eBSI Now Offers Certified Shipping Courses wheels of trade in motion and eBSI is delighted to announce that we have entered into an agreement with Coracle we hope you will find this Online to begin providing online courses in preparation for the examinations for the edition of the eBSI trade brief Institute of Chartered Shipbrokers (ICS) leading to the following qualifications: of interest. * Background to Shipping * Foundation Diploma We have practical articles on * Advanced Diploma impact of the volcanic ash on * ICS Membership exams ? PQE shipping, our trade payments Courses we can offer online now include: * Background to Shipping clinic, summary report on the * Dry Cargo Chartering IFC partners meeting in * Economics of Sea Transport and International Trade Istanbul, steps to be taken to * Emissions Trading advance your international * Introduction To Shipping * Legal Principles in Shipping trade career. * Liner Trades * Logistics and Multi Modal Transport We also have highlights on * Marine Insurance exporting commodities from * Port Agency * Port and Terminal Management Nigeria and how to move them * Ship Operations and Management by selecting your freight * Ship Sale and Purchase forwarder. * Shipping Business * Shipping Law * Tanker Chartering Vincent O?Brien Participants can study at their own pace and take the courses alone or as preparation for the ICS Exams. To enrol or for further details on these courses please email John Farrell at jfarrell@ebsi.ie. www.ebsi.ie 2 EBSI EXPORT ACADEMY TradeBrief eBSI Doc. Credit Clinic Stamp it out! Q 2010/02 - Please excuse us for asking what appears on the surface to be a very basic question but even within our bank there are different opinions as to the correct approach to apply in upholding the international rules for letters of credit i.e. UCP 600. We issued a letter of credit for a large sum which was available with a nominated bank by deferred payment. The letter of credit called for ?FULL SET CLEAN ON BOARD MARINE BILLS OF LADING MARKED FREIGHT PREPAID NOTIFY APPLICANT?. Expert Profile Name: Vincent O?Brien A presentation was made to the nominated bank which they have deemed to comply and Position: First Director Employer: eBSI then made a prepayment to the beneficiary. Location: Kiltimagh, Ireland Specialisation: International Trade Finance Upon receipt of the documents the data on the bills of lading and in fact all other Contact: vob@ebsi.ie documents are in strict compliance with the terms and conditions of the letter of credit. The problem is that on examination of the three pieces of paper presented to represent the full set of bills of lading it is obvious that the pieces of paper are photocopies of original bills of lading, in fact it is obvious that the three pieces of paper are poor quality photocopies. For completeness we wish to state truly that the each of the three pieces of paper have a maroon coloured stamp ?THIS IS AN ORIGINAL? on their face, and an apparently original signature in blue ink. Other than this stamp and signature everything else about the document indicates to our document examiners that they are either photocopies or were printed out from a fax machine which is in urgent need of repair or at least a refill of toner. We have refused the presentation citing the discrepancy ?original bills of lading not presented? However the nominated bank has refuted our notice of refusal insisting that the presented documents comply with the rules, in particular UCP Sub-article 17 (b) ?A bank shall treat as an original any document bearing an apparently original signature, mark, stamp, or label of the issuer of the document? It is true that the three pieces of paper bear an apparently original stamp and apparently original signature. Please clarify what is the correct approach to adopt. Answer There is no doubt that the bills of lading to be presented under the credit must be originals. This requirement has been articulated in UCP 600, sub-article 17 (a) ?At least one original of each document stipulated in the credit must be presented?. The key issue here is whether banks should treat the three pieces of paper you have described as ?originals? and therefore be determined in compliance as you indicate there is no conflict in the data itself. I have come across this situation on a number of occasions and there is a widely held view that if the documents bear an apparently original signature, as is the case with your query then the documents will be treated by banks as originals and therefore be in compliance. However, you have asked for my opinion and my opinion differs fundamentally with this widely held opinion. I argue that just because a document has a label or stamp or apparently original signature conveniently affixed it does not change or alter the fundamental and obvious nature of the document. I am sure your document checkers are of ?reasonable mind? and totally familiar with checking original bills of lading on a daily basis. So, my opinion in a nutshell is that if the documents are obviously photocopies and from the information provided bad quality photocopies then the documents would not in my mind satisfy the requirement for original bills of lading. If we refer to UCP 600, sub-article 17 (b) ?A bank shall treat as an original any document bearing an apparently original signature, mark, stamp, or label of the issuer of the document, unless the document itself indicates that it is not an original. The nature of the documents you describe clearly indicate to me and I would also believe to any competent court that the documents are not in fact originals. Therefore, it is my personal opinion that the documents are not original and the discrepancy is valid. International Trade Certified Training Programmes Programme Intakes every two months from January & March 2009 ? Certificate in Logistics ? Certificate in Finance ? ITS Accreditation ? Advanced Certificate in Delivered exclusively by: International Trade & Logistics The electronic Business School International ? Diploma in Export Operations Tel: +353 94 9381444 Fax: +353 94 9381708 ? Certified Courses in Shipping Web: http://www.ebsi.ie Email: info@ebsi.ie www.ebsi.ie 3 EBSI EXPORT ACADEMY TradeBrief eBSI IFC Report rd 3 IFC Global Partners Meeting ? Istanbul, Turkey Istanbul, Turkey rd The 3 IFC Global Partners Meeting which took place in Istanbul on 28 & 29 April 2010 was a chance for Trade Bankers in issuing banks in the IFC Global Trade Finance Program (GTFP) to network with confirming banks of the program which being updated on significant issues of the day. Topics covered in the meeting included a presentations on prospects for developing country trade, and regional panels covering Africa, CIS and Latin America & Caribbean. New IFC Initiatives were also showcased at the international meeting with over 160 delegates from 30 A Discussion Panel on 'Managing Growth Through the Ups & Downs in Nigeria' countries attending. IFC GTFP is establishing an operations was moderated by Gboyega Songonuga, IFC Principal Trade Specialist, hub in Istanbul in order to better service its client banks. Regional Head ? Africa and had interventions from Mr. Banjo Adegbohungbe, Access Bank and Mr. Kenny Aliou, FMBC Nigeria. Antonio Alves moderated the Regional Panel on Latin America and Caribbean A Panel discussing Africa?s Silk Road ? Trade ties between Africa and China which consisted of Mrs. Angela Martins - Banco ABC Brazil; Mr. Patricio Ovalle - consisted of interventions from Mr. Craig Polkinghorne, Standard Bank; Mr. Banco CMF Argentina; Mr. Guillermo Bueso - Banco Atlandida, Honduras; Mr. Florian Witt, Commerzbank, and Mr. Kenny Aliou, FMBC, Nigeria. Fernando Monasterio - Banco Ganadero, Blii dM Jli J d B It i l Chil www.ebsi.ie 4 EBSI EXPORT ACADEMY TradeBrief IFC Report eBSI Among the other areas covered during the 2 day event, presentations from Mr. Andrew Burns, Manager, Development Prospects Group on future growth trends in developing markets and an incisive presentation from Mr. Ahmet Cimenoglu, Head of Economic Research in Koc Holding painted a start and yet revealing picture of the antecedents to the Global Financial Crisis and economic models which have best weathered the storm. eBSI First Director, Vincent O?Brien delivered a presentation highlighting the benefits of the new URDG 758 global rules on Demand Guarantees which will enter into force on 1 July 2010 as well as an overview of GTFP Trade Advisory Projects. Ms. Makiko Toyoda, Head, IFC Trade Advisory Ms. Monserrat Ganuza, Supervisor, GTFP Scott Stevenson, Senior Manager of the IFC Global took attendees through the wide Operations explained the current best practice GTFP delivered the closing remarks covering spectrum of Technical Assistance and Training in GTFP Utilisation. the highlights of the conference. provided by IFC to Issuing Banks. Regional Discussion Panels Africa Focus: Managing Growth Latin America Focus: It Takes Two to Through the Ups & Downs in Nigeria Tango ? Funding Trade with Latin Banks - Banjo Adegbohungbe, Access Bank - Angela Martins - Head of International - Kenny Aliou, FMBC Nigeria Department, Banco ABC Brazil Moderator: Gboyega Songonuga, IFC - Patricio Ovalle, Head of Trade Finance, Banco Principal Trade Specialist, Regional Head ? CMF Argentina Africa - Guillermo Bueso, C.E.O., Banco Atlandida Honduras - Fernando Monasterio, C.E.O., Banco Europe Focus: Spotlight on CIS -- Ganadero, Challenges and Solutions for Local Trade Bolivia Financing - Julio Jaraquemada, Chairman of the Board of - Victoria Chentsova, Credit Bank of Moscow Banco Internacional - Chile - Olga Nizovskaya, Credit Bank of Moscow Moderator: Antonio Alves, IFC Senior Trade - Aleksey Nikiforovich, IFC Trade Finance Specialist, Regional Head ? Latin America Specialist Moderator: Mark Rozanski, IFC Trade Mr. Thomas Smith of eBSI and Mr. Vulkan Selchuk of Specialist, Regional Head ? Europe/CIS Foreign Trade Line Export School in Istanbul networking at the event. www.ebsi.ie 5 EBSI EXPORT ACADEMY TradeBrief eBSI eBSI Career Focus Careers in Exporting? Export Sales Representatives Following from my article on developing a career in International Trade a number of readers asked me to take a closer look at the opportunities out there? well? here we go! First off the mark this issue is a career which can lead to a life changing income if you find the right product to represent in your market. What is an Export Sales Rep/Agent? Expert Profile Name: Thomas Smith In a nutshell, an Export Sales Rep/Agent can be either a salaried (the Rep part) Position: Operations Director or independent commission based agent who is contracted by an exporting Employer: eBSI Location: Kiltimagh, Ireland company to represent the company in an agreed territory, region or specific Specialisation: International Trade Training marketing channel. Contact: ts@ebsi.ie If you are ?still? reading this, maybe you are interested in starting your own import/export agency. And why not? International trade can be a very lucrative business, even in the first year. But there are also probably several questions running through your head, such as: What products should I trade? How do I establish contacts? Where can I find suppliers and buyers? How much startup capital do I need? Is it worth it? In short: How do I begin? These are the most common questions potential traders ask, and it?s completely normal to feel a bit lost and confused at first. But international trade need not be a daunting venture, and this is where we can help. eBSI?s International Trade Specialist (ITS) Accreditation Program is the ideal choice for individuals who wish to start their own import/export agency. How so, you ask? Well, as a student, you will learn from international trade experts the knowledge and practical skills you need in order to succeed in the import/export business. This in turn will increase your value to current or potential employers, and give you access to better career opportunities. Basically, the ITS Program will help you understand the whole transaction process which is essential before approaching other companies to offer yourself as their representative. Just like in other businesses, success in the import/export industry calls for familiarity and passion. The ITS Program will teach you everything you need to know, as well as give you access to the right contacts. Best of all, you can take the course at your own pace, in the comfort of your own home! Delivered worldwide from Ireland, a top country in export, the ITS Accreditation Program is a distance e-learning course that allows individuals to achieve international trade accreditation and certification without having to worry about any geographic or physical restrictions. No matter where you are in the world, you can learn from globally renowned experts and become an expert in trade yourself! Advantages of the ITS Program The course is a combination of blended learning and peer-to-peer interaction on an international scale, making it a truly unique learning experience. Lessons are wide and varied, with topics such as document preparation, warehousing, transport, trade finance, packing, customs clearance, eBusiness, and more. As mentioned earlier, you can take the course on your own schedule. The ITS Program is perfect for full-time employees and stay at home mothers who would like to work and learn about international trade at the same time. In addition, you can choose to either enroll in the entire program or take only the modules that are specific to your needs. Once you begin, the lessons are sent directly to your computer. Live sessions are online and come with transcripts, so even if you happen to miss a session, you don?t really miss out on anything. On the eBSI online campus, you can establish connections with fellow students, alumni, and consultants, and maintain these relationships even after you graduate. Our alumni network is a close-knit community that continually shares knowledge and trade and employment opportunities with one another. www.ebsi.ie 6 EBSI EXPORT ACADEMY TradeBrief eBSI eBSI Career Focus If you opt to take the entire ITS Program and complete it successfully, you will receive the International Trade Specialist professional accreditation. This lifelong title can be used on your CV, letterheads, business cards, and other correspondence, signifying your expertise to colleagues, employers, and clients. Why not just take a weekend seminar or a traditional MBA? The ITS Accreditation Program is made up of three key advantages that provide optimal results in the most efficient manner possible: ? Highly specialized focus on directly applicable knowledge ? Accelerated time to expertise ? Minimal cost of expertise This unique combination allows you to attain the highest degree of expertise on international trade while getting the most out of your time and money. FIT Initiative Graduation hosted by ICC Bangladesh in Dhaka on 3 December 2008 Since you can take the ITS Program from home, there is no need to commute. The course itself is also more affordable and takes less time to complete than a traditional degree program. A traditional MBA usually requires several years to finish. The ITS Program can be completed in just 8 to 12 months on a part-time basis. Free government resources and weekend seminars may be available for little or no cost but lack the depth to teach actual expertise. Accredited and Recommended The ITS Accreditation Program is the leading professional international trade training program and has gained worldwide recognition, some of which are: ? Accredited by the Institute of Export, UK ? Accredited by the Institute of International Trade of Ireland ? Recommended by the Irish Exporters Association ? Recognised by the Czech Institute of Trade, Transport and Forwarding ? Recommended the Russian Marketing Association ? The Finance of International Trade Module of the ITS Accreditation has been used as training support within the major Multilateral development banks: EBRD, IFC, ADB and IADB. Who's in YOUR professional network? A key element in e-learning certifications facilitated by eBSI is the synergy of networks that often takes place between participants. Because of the cross functional approach of the certifications, participants gain greater exposure to complimentary skill sets than could be the case when studying alone. A Shipping clerk working in a freight forwarder can help a small SME exporter and bring in new business for their company. A trade banker can help that shipping clerk with the correct preparation of a transport document for presentation under a documentary credit. The possibilities are limited only by your imagination and your eye for opportunity. Graduates of eBSI certifications gain lifetime membership of the eBSI Online Campus in order to ensure lifelong sharing of knowledge and also membership of an International Trade oriented Business Networking site Trade Professional.net where they can manage their professional network and develop life long relationships with fellow trade professionals. Grants and Assistance towards Training A number of Agencies and Organisations provide assistance in part funding training programmes in the areas of International Trade. For Example, In Ireland FAS can offer up to 50% grant aid on for participants working in SME's who wish to take the ITS Accreditation Programme. Participants from Emerging Markets can apply for grants of up to 60% depending on their personal circumstances. Emerging Markets applicants can contact eBSI at EMGS@ebsi.ie for further details and application forms. For more information about the certified training outlined in this article feel free to contact Thomas Smith at eBSI on Tel: +353 94 93 81444 or email ts@ebsi.ie. Certificate in Finance of International Trade Learn all you need to know about Methods of Payment & Finance! ? Online Tutorials with ICC Banking Commission Members Contact us for more details: ? Certified by the Institute of Export UK eBSI Export Academy ? Includes ICC Online Training in UCP 600 Tel: +353 94 9381444 Fax: +353 94 9381708 ? Recognised by International Finance Corporation Web: http://www.ebsi.ie Email: info@ebsi.ie www.ebsi.ie 7 EBSI EXPORT ACADEMY TradeBrief eBSI eBSI Weblinks for Exporters eBSI Weblinks for Exporters is a new section that will provide you every issue with websites recommended by our course participants as being of particular use to them in their international Trade Activities! Websites that can be considered for inclusion in this section include but are not limited to International Trade, Trade Finance and Logistics sites such as: ? Business Networking Sites ? References or Blogs If you have a site to recommend then send it ? Import Export Directories to Weblinks for Exporters at weblinks@ebsi.ie! ? Country Portals ShipServ is the leading maritime e-marketplace, helping the buyers and sellers of sh Search for a supplier, product or service in your ip supplies to reduce the costs language! It's quick and easy thanks to associated with doing business together. They do this EUROPAGES' multilingual search. Whether by through an innovative portfolio of software, services and key-word or business sector, you'll find what hosted applications designed by shipping people, for you're looking for in the language of your choice. shipping people. http://www.shipserv.com http://www.europages.com Coracle delivers expert professional development packages and ?AFROTRADE? provides an training so excellent opportunity to any lutions for the shipping industry. Their blended and commercial organization that adaptable skills courses allow shipping professionals to easily wishes to expand its market to the integrate education and training into their work or home lives. giant and needy market of Africa. That is why eBSI counts Coracle as its strategic education They sell a comprehensive partner for our clients in the Shipping industry. Check out their directory of African Importers. new iphone apps for the shipping industry at: http://www.afrotrade.net http://www.coracleonline.com/apps TradeKey.com is world's leading marketplace Search Engine Colossus: International Directory of which connects traders with worldwide Search Engines can be looked upon as an effort to wholesalers, buyers, importers & exporters, give the internet "structure". This WWW roadmap manufacturers and distributors in over 220 allows surfers to efficiently gain access to country countries, quickly and cost effectively. specific search engines and directories. http://www.tradekey.com http://www.searchenginecolossus.com Biznik is an award-winning community of entrepreneurs and Plaxo ? An enhanced address book Tradeprofessional.net is a Business small businesses dedicated to tool for networking and staying in Networking Site dedicated only to helping each other succeed. It contact. It will also inform you of International Traders and includes a trade has groups, events calendar, updates of your contacts. You can Jobsite, Blogs, Forums, Events, groups and forums and member contributed import contacts also. online Marketplace. Highly Recommended! articles among other items. http://www.plaxo.com http://www.tradeprofessional.net http://biznik.com www.ebsi.ie 8 EBSI EXPORT ACADEMY TradeBrief eBSI IFC FIT Initiative IFC FIT INITIATIVE LAUNCHES IN KENYA th 6 country to join the program and second in Africa! Nairobi, Kenya th The 6 country to be added to the IFC FIT Initiative online Trade Finance e-learning program will be Kenya, and will act as a regional hub for the East African nations of Uganda and Tanzania. The formal launch is scheduled st to take place on 21 May 2010 when the IFC reaches the milestone of 100 seminars delivered under the Global Trade Finance Program (GTFP). This particular regional roll out will be followed-up with a seminar on the new rules on Demand Guarantees ? URDG 758 on 2 June in Lagos Nigeria with ICC Nigeria and the Central Bank of Nigeria. Those interested in either event can contact us at info@ifcfitinitiative.com for further details. Next Intakes The IFC ?FIT Initiative? is an e-learning Online Collaboration Site for stakeholders The next roll out of the IFC FIT Initiative program that is designed with an important To leverage the network aspect of the 'FIT' will commence for participants in dual purpose: Initiative all stakeholders (participants, tutors 1. to train and certify international trade and coordinators) will have access to an online Bangladesh, Cambodia, Kenya, Nigeria, finance professionals th networking and collaboration system designed to Pakistan and Vietnam on the 14 of June 2. to build an online global network of facilitate exchange of ideas and contact building. 2010. A major seminar on URDG will take international trade and finance professionals who will share knowledge and experience on place with the support Online Interactive Core Learning Material of ICC Nigeria and an online platform specifically developed for The Finance of International Trade (FIT) course the Central Bank of Nigeria in Lagos on 2 the program is comprised of the following Learning Units: June, those interested should contact * Methods of Payment This Three Month program is delivered in a bunmiosuntuyi2004@yahoo.com ASAP! * Bills of Exchange combination of the following learning * Documentary Collections elements: Those interested in participating in the * Documentary Credits program or requir * Import Documentary Credits ing further details can Online Support site for students * Bonds & Guarantees contact the IFC FIT Program Students will be incorporated into the eBSI * Forfaiting, Factoring & Invoice Discounting Alumni and will be able to collaborate through Administration at info@ifcfitinitiative.com * Structured Trade Finance a purpose built learning platform. or contact directly their local coordinators * Export Credit Agencies * Complex Transactions listed in the table below. Online Specialised training in UCP 600 * Warehouse Financing ICC Approved Online Training in UCP 600 The IFC FIT Program * GTFP Trade Facilitation Program is now firmly (Mentor or Upskill 600). established with over 350 graduates already! Will you be next? Next Intake Dates for the IFC FIT Initiative Project Partners in the IFC FIT Initiative The next program intakes will take place in the eBSI Gratefully acknowledges the participation and contribution provided to fo the success of this project by the following project participants: llowing countries on 14 June 2010 Bangladesh, contact Ataur Rahman, Bangladesh@ifcfitinitiative.net Pakistan, contact Umar Farooq, Pakistan@ifcfitinitiative.net Nigeria, contact Arije Abdulrasaq, Nigeria@ifcfitinitiative.net Vietnam, contact Martin Nguyen, Vietnam@ifcfitinitiative.net Cambodia, contact Cambodia@ifcfitinitiative.net Kenya, contact Kenya@ifcfitinitiative.net www.ebsi.ie 9 EBSI EXPORT ACADEMY TradeBrief eBSI Expert Commentary Choosing the Right Freight Forwarder? Choosing the right freight forwarder to support your export efforts never has been more critical than during the current crippling recession ? despite the fact that it may be abating. Even Icelandic Volcanoes can be overcome! Expert Profile Selecting the correct forwarder can mean the difference between satisfied Name: Gerard Korver customers and unhappy ones; efficient, cost effective distribution of your Position: Managing Director products abroad or careless, wasteful handling of them. Ultimately, whom you Employer: www.Export-Trading.com choose will translate into either greater company profitability or an income Location: Dusseldorf, Germany Specialisation: Export Consultant statement splattered with red ink. Contact: info@export-trading.com I speak from experience. After almost 30 years in sitting at conference tables opposite literally dozens of shippers ranging in size from multi-billion dollar corporations to those with a few million in sales, and as diverse as home improvement companies to non-profit organizations, I believe there are distinct parameters that, if adhered to, will benefit both the shipper and his transportation agent. Here are some thoughts on the criteria needed in choosing a freight forwarder, or, to use the current transportation speak, logistics provider. Pre-Negotiations Before even entering into negotiations with the logistics provider sitting across the conference table, analyze your own transportation procedures and determine your requirements. You probably have used forwarders in the past. What was the rationale in using past agents, and are these reasons still pertinent? How many shipments will a new agent be handling? Will they be primarily via ocean, air, or truck? For ocean, do your shipments consist primarily of container loads, or do they sail as ?break bulk? or heavyweight freight? If by air, will the predominance of your cargo fit into the ?bellies? of passenger aircraft, or must it travel via the more expensive main deck configuration? If your freight moves by truck, is it a full truck load or LTL (less than truck load)? Is your cargo bound for regional, national, or international destinations ? or a combination of all three? Does your cargo consist mostly of high density or lightweight freight ? ?bricks? vs ?feathers?? Negotiations Don?t leave negotiations solely in the hands of your traffic people, as competent as they may be. Draw upon the knowledge and expertise of other departments in your company: finance, marketing, purchasing, and information technology. Also, involve senior management in the negotiations to determine their priorities. Be clear in your own mind what is most important in moving your freight, cost or level of service. It is important that you make the above vital determination early on, because your search is really for the right combination of service and cost. You, the shipper, want what I call the best ?value equation? in your company?s current production and distribution activities, either to links in your assembly chain or to your ultimate customers. Too many times I have sat at the negotiation table and listened to different viewpoints and priorities from a potential customer?s traffic group, only to learn 2 months later that top management had in mind other, different sets of priorities. In order to get the best value for your transportation dollar, you need to know and understand your internal value equation ? the best combination of rates and services for your company. Most important, properly communicate these values to your potential service provider. When requesting a proposal from the forwarder, insist upon clear, precise language when outlining his services. Refuse to accept vague generalities. Be clear as to what your company expects from a potential vendor. The better your logistics requirements are defined, the better and more specific the forwarder?s proposal will be. Learn the forwarder?s physical facilities. Does he possess a network of domestic and international offices? How extensive are they? Are the facilities located in those areas of the United States and abroad for both your inbound and outbound shipments? Are these offices owned and operated by the forwarder rather than franchise operations or wholly independent agents? www.ebsi.ie 10 EBSI EXPORT ACADEMY TradeBrief y eBSI Expert Commentar When requesting a proposal from the forwarder, insist upon clear, precise language when outlining his services. Refuse to accept vague generalities. Be clear as to what your company expects from a potential vendor. The better your logistics requirements are defined, the better and more specific the forwarder?s proposal will be. Learn the forwarder?s physical facilities. Does he possess a network of domestic and international offices? How extensive are they? Are the facilities located in those areas of the United States and abroad for both your inbound and outbound shipments? Are these offices owned and operated by the forwarder rather than franchise operations or wholly independent agents? While technology plays an ever increasingly important role in logistics, the quality of the people assigned to your business still remains the single most important factor in ensuring the success of your cargo program. Does the logistics provider have a skilled, experienced workforce who not only can move routine shipments in an efficient, hassle-free manner but also have the ability to respond to emergencies with cool-headed judgement and decisive action? This last capability is extremely important. Our company recently lost a large piece of business because our customer believed we hadn?t reacted with enough speed to a developing situation. We actually had the situation under control, but unfortunately, the customer panicked and did not trust that we would know what to do, after 30 years of managing the account. So the counterpart is that once you engage a service provider for his expertise, trust his judgment and don?t attempt to micro-manage his service. How many of your forwarder?s personnel will be handling your type of freight? What are their experience levels? How many will be dealing directly with your company, and how many will be support people? Where will they be located? Do the people principally handling your business have experience and knowledge of your industry, and, if not, will there be a training process to learn more about your organization? How much of their time will be devoted to your company vs. other shippers on their customer list? In what manner and how often will the supervisor of your account communicate with your traffic and other pertinent departments? How will the forwarder contact the carriers for shipment of your freight? Will it be by telephone, on-line, or via e-mail? A high percentage of ?touchless? communication when booking shipments can reduce costs and heighten efficiency. Who are the forwarder?s preferred carriers? Are they the Maersks, Lufthansas, and FedExs of the transport world, or are they small, marginal airlines, steamship companies, and trucking firms? Be wary of the forwarder who claims ?cheapie? carriers save you money and are just as good as the leading carriers. His reasons may be disingenuous, having more to do with fattening his bottom line than moving your freight. That being said, a large carrier today does not necessarily mean service is excellent. Ask your forwarder why he uses potential service providers as opposed to ?Brand X.? The more you learn about a forwarder and his way of doing business, the better you will understand whether the consolidatis a good fit for your business. Finally, does the forwarder have the ability to locate every one of your shipments at any given moment and report this information back to you quickly and accurately? Does he use his own technology to provide this information or does he utilize a third party technology firm? Implementation A signature on a contract is only the start of a complex yet hopefully satisfying relationship with one of your key vendors. Don?t allow grass to grow under your feet to implement this new alliance. After signing the contract, have representatives of your company?s departments who will be involved in cargo operations meet as quickly as possible with the forwarder?s staff assigned to your business. Discuss thoroughly the processes and procedures detailed in the new agreement. Develop a realistic work schedule to which both parties can adhere to, a schedule that clearly defines implementation steps and responsibilities. Circulate the schedule to senior executives for their comments and evaluation. Both shipper and logistics provider live in an increasingly complicated and litigious society. Choosing the right forwarder will go far in avoiding many of the problems inherent in shipping millions of dollars worth of cargo. It will allow the shipper to focus attention on broad management strategies and not the nitty-gritty business of moving freight. www.ebsi.ie 11 EBSI EXPORT ACADEMY TradeBrief eBSI China Systems Update ?Honours Graduate? Honours Graduate Ms. Souzan Tarazi, Dubai Bank, Head, Trade Finance & Corporate Operations  Mr. Hisham M. Hammoud, Chief Operating Officer and Mr. Ahmed Humaid Lootah, Head of Central Operations  Award from eBSI Export Academy Director, Mr. Vincent O?Brien and Scholarship Partner, China Systems, Mr. Masood Hussain. Dubai Bank sees opportunities in the challenging environment. Despite the challenges facing banks across the globe since the onset of the financial crisis it is encouraging to observe that certain banks see opportunities amidst the current challenging environment. According to Mr. Hisham M. Hammoud, Chief Operating Officer ?the secret to success during turbulent times is to work closely with customers and to understand their trade cycle so that solutions can be packaged to match their specific trade needs?. Dubai Bank?s commitment to long term relationships with customers has played an increasingly important role particularly in the area of trade finance according to Mr. Ahmed Humaid Lootah, Head of Central Operations ?We are now seeing very positive results from our demonstrated commitment to work in partnership with our trade customers?. Dubai Bank has seen an increase in the value and volumes of trade transactions concluded year on year despite the financial crisis. Ms. Souzan Tarazi, Head of Trade finance & Corporate Operations elaborated ?there are two key factors that require heightened awareness ? first, trade is fundamental and important business to sustain economic development and promote recovery and secondly there is a clear migration by trade clients back to traditional trade finance products?. She continued ?In particular, we are seeing an increase in the use of standby letters of credit where the contracting parties have ongoing trading relationships?. It is important that customers have confidence in the expertise of bank staff managing mission critical trade finance transactions where first class trade processing operations are a pre-requisite for success. Ms. Souzan Tarai, Head of Trade Finance & Corporate Operations at Dubai Bank recently achieved an ?honours? final result upon completion of the International Trade Specialist Accreditation with eBSI Export Academy. CS Sponsor Special ?Ferrari? Prizes at IFC Global Partners Meeting Ferrari Laptop winner was Mr. Abdel Garcia - Director and Ferrari Radio Controlled Car winner was Wim Vanooteghem, Head of Trade Finance, Banco Ficohsa - Honduras Head Financial Institutions, KBC, Emerging Markets. rd China Systems sponsored a special draw at the IFC 3 Global Partner?s Meeting held on 28 & 29 April 2010 in Istanbul, Turkey. The special prizes were an ACER 10? High Spec. Ferrari Branded Laptop as first prize and a Radio Controlled Ferrari Sports Car as the second prize. www.ebsi.ie 12 EBSI EXPORT ACADEMY TradeBrief eBSI Country Focus - Nigeria Exportable Nigerian Commodities Nigeria, with its natural resources, is a nation with high growth potential. Scattered across the country are several solid mineral deposits. Her climate and weather conditions are ideal for cultivating exportable commodities that have high international demand. Ayemibo Bamidele is an avid blogger covering the great opportunities for export in Nigeria, in this issue he covers exportable commodities in Nigeria. Next issue he will explore Financing options for Exporters. Expert Profile Name: Ayemibo Bamidele Position: Trade Product Manager Nigeria is an emerging economy; however, because of the federal Employer: Diamond Bank Nigeria government?s focus on the exploration and exportation of crude oil, other Location: Lagos, Nigeria exportable commodities are ignored, and much of her potential remains Specialisation: Trade & Finance untapped. Contact: bayemibo@gmail.com Most of Nigeria?s commodity exports are primarily cultivated by small scale farmers. Despite this fact, the country still ranks among the top ten in the export of commodities worldwide. According to Chemonics International Inc.?s report called Overview of the Nigerian Sesame Industry, Nigeria was the seventh largest exporter of sesame seeds in the world in 2002. This position has improved to enter the top 5 Sesame Exporters globally by 2007 as will be seen later in this article. The Agribusiness Development Assistance to Nigeria (ADAN) evaluated Nigerian commodities in terms of market, supply, profitability, barriers, geographic dispersion, environmental impact, employment generation, and foreign exchange earnings. In its report, the ADAN came out with the ten most interesting products for export, listed below in descending order: 1. Ginger 2. Gum arabic 3. Sesame 4. Cashew 5. Leather/skins 6. Marine products (prawn farming) 7. Wood products (hardwood charcoal, plank, etc.) 8. Horticulture 9. Floriculture 10. Medicinal plants (Prunus africana or pygeum) The potential of Nigerian exportable commodities has continued to grow annually due to the increasing world population and the consequent rise in the rate of consumption of these products. This is also manifest in the current global shortage of food and agricultural commodities. www.ebsi.ie 13 EBSI EXPORT ACADEMY TradeBrief eBSI Country Focus - Nigeria In 2007, Nigeria produced over 110,000 tons of sesame seed, which is about 50% of the nation?s capacity. Half of this amount was exported and the other half was consumed locally. According to the 2007 United Nations Food and Agriculture Organization (UN FAO) report on sesame seeds, the 50% that was exported put Nigeria in 5th place among sesame seed exporters around the world. The FAO states that ginger production worldwide looks optimistic due to the growth of harvesting areas and production since 1999. Ginger harvesting areas around the world were 310,100, 319,751 and 321, 732 hectares in 1999, 2000 and 2001, respectively; while production was 775,717, 812,372 and 835, 173 tons in 1999, 2000 and 2001, respectively. Nigeria, which is the world?s largest ginger producer, harvested 166,800 hectares of ginger in 1999, and her area of cultivation expanded to 174,000 hectares in 2000 and 2001, because of the high and rising demand from both domestic and foreign markets. On the other hand, cashew production in Nigeria has declined due to low patronage and increased post harvest losses and wastage. According to the National Cashew Association of Nigeria (NCAN), cashew can be found both in the wild and under cultivation in 16 of 36 states of the federation. The average annual output in 2000 was 176,000 tons. However, this number has decreased over the years. The Ministry of Agricultural and Rural Development states that Nigeria presently produces 30,000 metric tons of cashew nuts per year from a total holding of 50,000 hectares, most of which are under small holdings or small scale farmers. The importance of the development of exports in these sectors was highlighted in 2004, when, during her speech at the Nigeria National Crop Outlook Conference held in Kano, Nigeria, Mrs. G.M. Sasore, Specialist Advisor and CEO of the Nigerian Export Promotion Council said ?Recent developments in the Nigerian economy had led to the recognition of the ultimate significance of development and marketing of quality agricultural produce as a means of enhancing the foreign exchange earning capacity of Nigeria.? Another key factor in maintaining competitiveness in the future for Nigerian Commodity Exports will be the ongoing maintenance of the high quality of product which has become a hallmark of Nigerian agricultural exports in particular. It is a well known fact that the quality of a product will to a major extent determine the demand for it. A good quality product will attract the attention of importers even at a premium price whereas poor quality will require significantly lower prices and thus lower margins. Throughout Nigeria a process of quality improvement and process standardization has been taking place to ensure that from the farm gate to the port of loading produce destined for export are bagged, standardized, sealed in bags duly marked for export with all the necessary information including type of produce, grading officer?s mark, grade, country of origin and other necessary particulars. Only after this rigorous process are goods cleared for transport to further processing or to the port of loading. There a further series of inspections take place at registered warehouses by government approved inspection agencies to ensure that the quality stated from the farm gate is accurate. Phytosanitary procedures such as fumigation or disinfection to eliminate living pests or contaminants are then employed where needed to ensure a safe product for export with appropriate certifications. In conclusion, with more that 60% of Nigerian commodities being produced by peasant farmers, less that 40% of the arable land under cultivation and almost 50% of the commodities perished as post-harvest losses, it is therefore very obvious that Nigeria has very great potential for further growth in production, quality enhancement and standardisation that are yet untapped in the commodity export business. The Nigerian Government has implemented a number of programmes to assist commodity exporters through the Nigerian Export Promotion Council which administers, among other activities, the Export Development Fund, Export Expansion Grant and an innovative ?Manufacture?in-Bond? scheme which can help alleviate some of the costs involved in getting goods ?Export Ready?. These government programmes coupled with private sector initiatives such as innovative export financing products offered by local banks such as Diamond Bank and multilateral international training certifications such as those offered by the International Finance Corporation through eBSI Export Academy (see www.fitinitiative.com for details) are essential ingredients to ensure a prosperous future not only for Nigerian agricultural and commodity producers, but also their brothers throughout Africa! www.ebsi.ie 14 EBSI EXPORT ACADEMY TradeBrief eBSI Expert Commentary The "fraud exception" and the L/C independence principle As L/C practitioners know, the documentary credit is a bank's undertaking to pay against presentation of documents which comply with the terms and conditions of that undertaking (L/C). It is a well-established principle of the documentary credit that it is independent from the contract of sale on which it is based. As a corollary, banks deal only with documents and Expert Profile not with the goods/services to which documents relate. The Name: Pavel Andrle seller (the beneficiary) has the bank's undertaking to pay Position: Secretary - Banking Commission provided it presents compliant documents to the bank. The Employer: ICC Czech Republic Location: Prague, Czech Republic bank, in its examination of documents and judgement, decides Specialisation: Trade Finance Training whether to take them up or to refuse (for discrepancies) Contact: pa@cmail.cz independent of the buyer (the applicant). How far the seller's performance risks are mitigated very much depends on the documents required by the documentary credit that are issued on the instructions of the buyer - in other words, on the correct selection of the documents in line with other terms of the contract of sale (above all, the delivery terms) and their correct and precise description. The buyer´s knowledge and experience and/or those whose services he uses (the issuing bank) are crucial. Any dispute regarding the delivery of goods or any other term or condition of the contract of sale, etc., should be decided separately from the L/C transaction. Even though the independence principle is accepted worldwide, occasionally courts decide that issuing banks are estopped from making payment under L/Cs based on an alleged contractual failure by the seller to fulfil its obligations under the contract. This happens despite the fact that the essence of the documentary credit is that if the seller/beneficiary meets the conditions of the L/C (presents compliant documents), then he is to be paid regardless of any possible dispute concerning the delivery of the goods to the buyer (applicant). This is the choice the contracting parties made when they concluded the contract of sale and selected the documentary credit as the instrument of payment. Therefore, in my view, these judgments are clearly incorrect. Fraud exception However, there is one well-established exception to the independence principle, the so-called "fraud exception". Even here, unless it is clear from the documents themselves that they are fraudulent, banks are reluctant to be the party to decide that fraud occurred. In general, there should be no problem with courts intervening in independent bank undertakings, such as those involving L/Cs, in this exceptional case. No bank wants to be obliged to knowingly pay a fraudster. It would be absurd if the issuing bank or the confirming bank were obligated to pay its deferred payment undertaking at maturity to a fraudster simply because the L/C is legally independent from the contract of sale. But if courts are to employ the fraud exception, it should be under very strict conditions. - The fraud must be established. It must be "outright fraud", such as fraudulent presentation of documents for non-existent cargo, or similarly, "proven manifest fraud". - The injunction can only be employed in order to prevent a payment to the beneficiary in case the fraud in relation to presentation of documents took place. There is a difference between "manifest fraud" on the one hand and an "alleged fraud" or a "commercial dispute" on the other. Courts are expected to draw a line between these different situations. A further convergence of laws and their interpretation in relation what constitutes a fraud in the context of independent banking undertakings would be very welcome. In any event, an injunction should be granted only in very exceptional cases of fraud to prevent payment to the beneficiary. If the beneficiary has been already paid by the nominated bank (confirming bank) by means of negotiation or as prepayment of its deferred payment undertaking or prepayment or purchase of the draft accepted by that nominated bank as per sub-article 12 (b) of UCP 600, then it is too late. The documentary credit in that situation has been already discharged towards the beneficiary; there only remains the reimbursing obligation of the issuing bank towards the nominated bank Pavel Andrle discusses technical LC details with an eBSI consulting client. as per sub-article 7 (c). Any intervention by the courts to prevent the issuing bank from reimbursing the nominated bank, which in good faith and as clearly authorized by UCP 600 paid the beneficiary, is clearly wrong. www.ebsi.ie 15 EBSI EXPORT ACADEMY TradeBrief eBSI Expert Commentary UCP 600 and fraud It is said that UCP 600 does not deal with fraud, that the fraud issue is to be settled according to the applicable law. While it is true that UCP 600 does not mention fraud directly, my belief is that the essence of UCP 600 is to protect banks that adhere to the UCP in cases of fraud. Consider article 34, which provides: "A bank assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a document or superimposed thereon ... ". Another sub-article, 12 (b), gives a nominated bank that accepted a draft or incurred a deferred payment undertaking authority to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank. In line with the above, sub-article 7 (c) defines the issuing bank?s reimbursing obligation towards the nominated bank: "... an issuing bank undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank's undertaking to the beneficiary." The last sentence in the previous paragraph underscores the fact that, even if the issuing bank would not be obliged to pay the beneficiary (because of the fraud), it must reimburse the nominated bank which already paid said beneficiary. Negotiation When the L/C is available by negotiation, UCP 600 says: " ... an issuing bank undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the issuing bank." If the tenor is sight, then it is pretty straightforward; the reimbursement will be provided by the issuing bank when it takes up the documents. In this case, the negotiation might be effectively provided by the nominated bank only by advancing the funds to the beneficiary against the draft/documents. If the fraud is known only after the negotiation - advancing funds to the beneficiary - took place, then, in my view, there is no room for the fraud exception, as there only remains the reimbursement obligation of the issuing bank towards the nominated negotiating bank. However, the situation may be less clear if the tenor (of the draft and/or documents) is usance. Then, according to the definition of the term "Negotiation" in article 2 of UCP 600, the nominated bank might either "advance funds" or "agree to Training in international standard banking advance funds to the beneficiary on or before the banking day on which practice and procedures can significantly reimbursement is due to the nominated bank". reduce the risk of fraud. If the nominated bank negotiates by advancing funds, i.e., pays the beneficiary against the presented draft/documents, then it is to be reimbursed by the issuing bank when the reimbursement is due, i.e., at the maturity date of the usance period. Again, I see no role for the fraud exception after the funds are advanced. If the negotiation is done by "agreeing to advance funds on or before the banking day on which reimbursement is due to the nominated bank", this could be a different situation. If the beneficiary is paid when the maturity of the agreement to advance funds by the nominated negotiating bank is due, and if this is before the fraud is established, the issuing bank must reimburse the nominated bank at the maturity of the usance period. If, by contrast, the fraud is established before the agreement to advance funds is due, i.e., before the beneficiary is paid, then the idea that the nominated bank must in any case pay the beneficiary - the fraudster - and that the issuing bank must reimburse that nominated bank because the negotiation has already taken place, would seem to be unjust. The other difficulty with negotiation could occur if the negotiation is completed after the presented documents are sent to the issuing bank. Is this negotiation as per UCP 600? It would seem that the definition of the term "Negotiation" suggests that it is to be made (whether in the case of an advance of funds or an agreement to advance funds) against the draft and/or documents. Indeed, the use of the word "purchase" in the definition suggests that negotiation must be made in this way. The applicant and fraud The buyer is responsible for its conduct. It has chosen its contract party and should get to know that party before it agrees to sign a contract with it. If the party is unknown to the buyer, the respective measures to be taken by said buyer and the details of the contract should reflect this. Moreover, if the use of a documentary credit is agreed upon, the conditions of the credit should be very well thought through. For instance, a pre-shipment certificate of quality issued by an independent inspection company with a clear requirement as to its content might be called for to minimize the risk of fraud. That said, many buyers are negligent and reckless regarding the selection of their business partners and the negotiation of the contract terms. If the fraudster/beneficiary has already been paid, then my view is that it is the buyer who should suffer the loss, not the banks that acted in good faith in accordance with the mandate they were given by UCP 600. However, it is also true that in many well-known fraud cases the applicant was not an innocent party, but actually a fraudster himself. The bank can become a victim of a fraud committed by the applicant as a result of the security it took in relation to the L/C. Of course, this kind of fraud would not prevent the issuing bank from paying for compliant documents presented under the L/C unless the beneficiary was also a party to the fraud (and unless it had not already been paid, as discussed above). Pavel Andrle is an international trade finance consultant and trainer for eBSI Export Academy and Secretary of the Banking Commission of ICC Czech Republic. His e-mail is pa@cmail.cz www.ebsi.ie 16 EBSI EXPORT ACADEMY TradeBrief eBSI eBSI Recent Events Demand for eBSI experts to deliver seminars and attend conferences around the world has grown dramatically despite financial crisis. Here is a brief overview of some of our more notable appearances since last issue! Dubai, United Arab Emirates Vincent O?Brien was invited by Standard Chartered Bank to deliver a seminar to their clients on Trade Finance for Emerging Markets on 18 November 2009. This seminar was attended by over 60 delegates and covered aspects also of relevance following from the Global Financial Crisis
Posted: 23 September 2011, last updated 24 September 2011

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eBSI TradeBrief Issue 4   By eBSI Export Academy