Trade Frauds are Rampant

Trade frauds are becoming more and more prevalent. Traders have been advised to be cautious to avoid being swindled, trading officials stated.
Late last year, Hamush, a Brazilian importer, signed a deal with a Korean exporter (K Co.) to import textiles valued at 150,000 dollars. Some days later, Hamush sent a letter of credit (LC) which the Hong Kong Private Bankers (HKPB) issued to a Korean Bank named Hana. The shipping and the negotiations of the related banks for the exported goods went on proceeding.
But some days later, an LC equivalent to 1.2 million dollars was issued by HKPB once again and Hamush asked for more rapid and frequent shipments. K Co. began to doubt the authenticity of the orders and asked the KOTRA (Korean Trade and Investment Promotion Agency) in Uruguay to investigate HKPB's credit. It appeared that HKPB was a fictional company and the whole deal was a fraud.
In May, 1997, a similar fraud case occured. A Korean Brazilian (Mr. Kang) ordered textiles equivalent to 1 million dollars from a Korean textile exporter named Ilsong Trading Co. The LC was issued by the problematic HKPB. Mr. Kang bought the LC from a swindler. Ilsong submitted the LC to a Korean Bank, Dongwha Bank which has recently been shut down. Dongwha Bank paid the money to Ilsong. But six months later, when Dongwha Bank required the payment of that LC from HKPB, Dongwha discovered that HKPB was not a real bank. But by this time it was too late.
An official from KOTRA said, ' Several other fictional banks with names such as 'Swiss Private Bankers' or 'HKPB' continue to send fraudulent LCs to Korean banks. The Korean companies and banks have to check the credit of the banks which send the LCs.'