How to Avoid Maritime Fraud

International fraud connected with shipping business is a major problem, not simply for the victims but for the business as a whole. It must be acknowledged, however, that the difficulties of detecting and preventing fraud are considerable. International frauds are frequently very sophisticated. In cases where such activity has been discovered, it has often been found that the frauds have been perpetrated over a long period of time without the victims realizing that they have been duped. Even when companies discover that they have been the victim of a fraud, they are frequently reluctant to admit the fact, as it does not reflect well upon their reputations or their security systems. In one recent case a key staff member of a Liner Agency was found to have taken bookings from a number of shippers on a “freight prepaid” basis. He put the bookings through the system however as “freight collect”, issued his own receipt (on company letterheads) to the shippers and pocketed the freight. He then made out duplicate Bills of Lading on the Line’s form, but stamped “Freight Paid” which he issued to the shippers, who were none the wiser. It was inevitable of course that rather irate consignees would demand to know why they should have to pay the freight twice to obtain the goods and would quickly alert the Line. Not surprisingly, the subsequent investigations revealed that the employee had made off with the proceeds. Without the assistance of the law-enforcement agencies such victims are unlikely to be able to track down the offender themselves, and so the criminal may go unpunished and be able to perpetrate the same fraud on another unsuspecting party. Sophisticated criminals will frequently use to their advantage the protection of different jurisdictions worldwide, especially those where freedom of information is highly restricted, and from which extradition is difficult. This makes the pursuit of criminals both expensive and time-consuming, and is calculated to put off even the most determined victims. There are, fortunately, a number of measures that companies (and individuals) can take to avoid becoming victims of fraud. Checking the bona-fides of customers and clients is a straightforward precaution. Limited liability companies have their details filed in the public domain and credit checks can be carried out by a number of private agencies very speedily. Inquiries can also be made within the trade or profession, and names cross-checked in directories, or with Chambers of Commerce and other institutions. Education and training are powerful weapons in the fight against fraud, and information is readily supplied by organisations such as the International Maritime Bureau (of which more later), BIMCO, Insurance companies, Banks and others to alert likely victims to the dangers which are posed by fraudsters and criminals. Customs, Police and Revenue authorities worldwide are of course also committed to preventing fraud and can be of great assistance in pursuing and prosecuting malefactors in the public interest. The IMB (International Maritime Bureau) has also established an international center against Piracy in Kuala Lumpur in an attempt to co-ordinate efforts to stamp out this menace.