Cargo Thefts

There are several variations in the modus operandi of cargo thefts. In a typical example, the vessel, having loaded a cargo, deviates from its route and puts it into a port of convenience. Such ports are Tripoli, Beitut, Almina, Jouneih, Ras Salaata and others along the coasts of Greece, Lebanon and Suria. The cargo may be discharged and sold on the quayside or in a more sophisticated manner. Such an act is often accompanied by a change of the vessel's name or a subsequent scuttling in order to hide the evidence of theft. The whole process of investigation is proved difficult as by the time the loss is known the cargo disappears and the actual recovery of goods is unlikely. The owners of these ships are "paper companies" set up a few days prior to the operation.

Fraud related to Chartering of vessels

This is also known as Charter-party fraud". Establishing a chartering company required a modest initial financial commitment and is usually subject to little regulation. In depressed conditions of shipping market, there is no demand on tonnage and owners anxious to avoid laying up their vessels are tempted to charter them to unknown companies without demanding any substantial financial guarantee for the performance of the charter contract.

The fraudulent charterer can turn this situation to his advantage. Having chartered a vessel from an unsuspecting owner, the charterer canvasses for cargo, knowing that in a depressed economy, shippers will be willing to cut corners in the hope of reducing transport costs and thus saving on freight so that their goods can be more attractively priced the charterer offers low freight rates on pre-paid basis. He can afford to do that, as he has no intention of completing the voyage.

Soon, after the vessel sails from the port, the charterer disappears. He may have paid his first month's hire or he might not have paid any hire charges as are due from him. Meanwhile the ship-owner may find himself with substantial bills to meet from port authorities along with the ship's route as well as for crew's wages and for provisioning the ship. Worse, the ship owner may find that his ship, not having delivered the cargo to the consignees, has been arrested and this leads to protracted and expensive legal wrangle.

In order to get their goods to destination, shippers may agree to pay a freight surcharges or they will agree to a diversion and a sale of the goods to cover costs and then state the export process all over again. Sometimes, when no such compromise can be reached, the ship owner will instruct the master to divert his ship and sell the cargo wherever he can, and this become as much of a criminal as the charterer.

Precautionary Measures for Fraud Prevention

There are certain basic precautions against maritime fraud that commercial interests, like exporter and importers, banks and insurance companies, should be aware of and should be able to implement.

Exporters and Importers

The checks and precautions that buyers and sellers can implement are:

1. Care should be exercised when dealing for the first time with unknown parties. Careful inquiries should be made as to their standing and integrity before entering into a binding agreement.

2. Shipment should be by well-established shipping lines. In India, vessels approved by GIC should be preferred.

3. The cargo owners should be wary:  - If the freight rate is too attractive - If the ship owner owns one vessel only 'singleton') - If the vessel is over 15 years of age. - If the vessel has passed through various owners.

4. Payment by irrevocable documentary credit, confirmed by a bank in seller's country, provides the best safeguard to the seller. Should the seller have any doubt about the authenticity of the documentary credit, he should immediately consult his bank before parting with the goods.

5. As far as the buyer is concerned, he should ensure that he receives the documents he has stipulated in his documentary credit application.

6. As far as the buyer is concerned, he should ensure that he receives the documents he has stipulated in his documentary credit application. Therefore, the buyer must consider carefully which documents he requires. For example, an independent "loading certificate" would add significantly to his protection as would detail instructions on which shipping line or forwarding agent is to be used. The inspection of cargo should be as close to the time of loading on board as possible.

7. In order to ensure that the subject cargo is in fact loaded on the specified carrying vessel, the buyer may stipulate for a "report on the vessel" from an independent third party.

8. Conference or national lines bills of lading should be used and marked "freight prepaid" with the amount of freight clearly stated in the bill of lading.

9. Services of dependable and well-known forwarding agents, who are also members of a national association, should be engaged.

10. Buyers and sellers should attempt to identify whether the carrying vessel is on charter and who the chatterers and owners are and whether chartering is done only through agents or reputable institutions.

To be continued………………..