JEDDAH: Since its accession to the World Trade Organization (WTO) in 2005, the Kingdom has expressed its willingness to build business ties with foreign enterprises, which has allowed both the companies and the country reap substantial financial benefits. As a result, the potential for corporate growth of both Saudi business and foreign establishments has been extensively promoted domestically and internationally in the hopes of showing the world the financial gains to be had by doing business with Saudi Arabia.
According to the Saudi Arabian General Investment Authority (SAGIA) foreign direct investment witnessed 51 percent growth in 2006, reaching SR67.5 billion ($18 billion). In the same year, domestic investment increased by 9 percent to just over SR1.2 trillion ($33 billion).
However, in the world of global business lies a dark side. One local business owner, who runs a wholesale produce company, spoke to Arab News recently about the trap of international wire fraud.
“We were contacted through our B2B (business-to-business) posting for quite a large order by a man going by the name of ‘D. Godwin’ who claimed to be the import manager of JohnWhite Enter Co. Ltd,” said the entrepreneur on condition of anonymity. “He promised to pay 100 percent of the cost for the merchandise, including shipping, to their destination in Cotonou located in the Republic of Benin in West Africa. He said they would be willing to send the funds for the items via wire transfer to our company’s bank account in Saudi Arabia.”
Many local business owners wishing to make their products known to the world have resorted to marketing their wares on B2B websites, such as TradeBoss, Alibaba, and the like. While there are major success stories about the use of e-commerce for international B2B transactions, there are also tales of scam artists using these sites, posing as legitimate business executives, to rob suppliers who use these sites to increase their export revenues.
After “D. Godwin” made initial contact with the Saudi businessman, he asked for a pro forma invoice, a standard document used in business transactions to establish the value of the transaction before it is made. “We sent the invoice and were told that the money had been sent and we should receive it within five business days,” he said.
The contact called periodically during this waiting period, tempting the Saudi businessman with discussions of further business deals, including becoming the sole distributor of produce for the company in West Africa.
“I see now that all of these tactics were just to gain our trust further, setting the trap,” he admitted. “The day before the transfer was to be completed we got an e-mail and a phone call from ‘D. Godwin’ requesting we respond to a governmental organization known as the Benin Food and Drug Administration Control, which asked for a health certificate in order for the bank to legally complete the transfer of the funds to our company account. A representative of our company contacted the so-called administration, which asked us to pay $5,000 for the authorization. We sent the funds and were sent a fake document that our buyer said they sent to their bank allowing for the transfer to continue.”
But the drama was far from over. Similar requests kept coming, asking for more fees. However, the company refused to pay any more fees. The deal collapsed, the contact vanished, and the Saudi businessman ended up robbed of $5,000.
He urged others not to make the same mistake. “We figured out it was a scam by running the Benin company name and the fraudulent Benin administrative body through search engines online to find that no such organization existed,” he said. “I wish we would have investigated further before sending the money, or even answering these tricksters in the first place.”
Call for caution
Arab News contacted the Jeddah Chamber of Commerce and Industry (JCCI) to find out what local businesses could do if they had become victims of an import scam.
“Businesses just need to be careful and make sure the foreign companies they are dealing with are trustworthy,” a source said. According to warnings posted on Fraudwatchers, a website set up for the purpose of educating the global Internet community of fraudulent acts, the Republic of Benin tops the list of countries where these types of frauds originate, followed by Cameroon, Togo and Nigeria.
The Benin Chamber of Commerce has its own warnings posted online in French.
“No license or product registration fees are required of foreign enterprises that wish to export their merchandise to Benin,” says the warning, adding that all official documentation is the sole responsibility of the local importers.
The US Embassy in Cotonou has issued its own warning to businesses seeking to export to Benin.
“Businesses should be particularly cautious about unknown Beninese ‘companies’ promising them big business deals. Unfortunately, a number of Nigerian criminals, increasingly in collusion with Beninese, use Benin as a base to defraud companies and citizens with ‘419’ scams (e.g. advanced fees), so named for the relevant section of Nigerian law prohibiting the act,” says a message posted on the embassy’s website.
These criminals lure their prey with official sounding acronyms, such as WAIDCO, WADECO, WAADA, BAFDAC, BEFDAC, BFDA and WARC.
The crooks cover their tracks using temporary mobile phone numbers (in Benin the mobile prefix is 229) and cyber cafes for their e-mails and faxes.
Until law enforcement agencies can catch up with these criminals, perhaps the best advice for Saudi exporters is to follow a simple rule: Seller beware!