Business Scams

The world has become an open market for various business innovations, opportunities and unscrupulous scams too.

Sovereign borders no longer limit the reach of business people and businesses. The early ‘border blind’ investments were often referred to as Multinational Corporations that had business tentacles touching economies of many countries across the globe. These investment giants generally followed the rules and regulations of investment regimes because they had their corporate reputations to protect, and if they veered off the path of business ethics, it was often with the blessings and anointment of the host Government. For instance in the Second World War some western Multinationals were allowed by their Governments to develop some new food products specifically to service the markets in the enemy camps so as to keep making money even during the raging war. In Apartheid South Africa some western owned financial institutions and large corporations were allowed to either expediently change their identities or sell shareholding to locally registered subsidiaries of the very same corporations so as to appear to pull out of the country but continue reaping the profits. The basic fundamental for re-engineering of these companies was based on premise that Government approval should be sought and obtained to avoid problems in the future. This was a clear indication that the businesses intended to stay around for a long time to come.

The situation has evolved over the years with the advent of liberalization, regionalization, and globalization. The world has become more cut throat and businesses whether Multinational or domestic have become more daring and are prepared to ‘make or break’ at any cost.

Today many Multinationals all over the world have been convicted for bribery, corruption, book fixing, sanction busting, and out right lying to the public and Government authorities.

Many of us have received e-mails informing us that we have won a lottery that we did not purchase a ticket for. We are told that we have won millions of US dollars and should provide a bank account so that the funds can be transferred to our accounts. The naïve and greedy people have generously provided their bank accounts and also generously lost the little savings that they had to the scam lottery outfit that forged signatures in order to withdraw somebody’s hard earned money. This scam has also been modified to offer millions to anybody who is willing to supply their bank account to deposit fictitious monies stolen from Nigeria, Sierra Leone, Liberia, and various oil companies. The end result is that you lose the little you have in your bank account to the fraudsters.

As the years go by the scams become more sophisticated. Today we receive e-mails inviting us to conferences and seminars in the USA, Canada, the UK, Japan and many other exotic places. The invitations tell us that all expenses including air travel and accommodation will be paid for by some kind and benevolent institution abroad. We are only requested to pay a registration fee of USD300 to cover administration costs. Well, if you ever remit this fee that is the last you will ever hear from the organization because all they want from you is your USD300. If they receive 500 such contributions then they amass a huge USD150,000 from unsuspecting forced donors! There will be no conference and no further communication between you thereafter.

The ingenious scams border around some form of legality and are laced with some solidness. Many business people have received notifications that they have been awarded a trophy for being best company in a particular sector or field and are invited to fly to some European city to receive the award at a special award giving ceremony. The inviting institution generally uses your local telephone directory to pick out the prominent but local companies that will pay up around USD2,000 to travel abroad to receive their award. Once a hundred such companies have been identified and checked out for capacity to pay, they are contacted officially by written correspondence and officially invited. The organizers make sure that the award ceremony takes place during the lowest travel season when airfares and hotel room rates are cheapest. The excited winner of the award pays the USD2,000 from which USD600 goes towards the group return air tickets, USD200 pays for the 4 days in a hotel on special group rates, and USD200 covers the plastic or glass trophy, certificate, some buffet meals etc. The total cost for each person to attend the awards ceremony comes to about USD1,000 since the conference room is provided free by the hotel providing the accommodation. The organizers make a quick USD1,000 on each participant and walk away with a cool USD100,000 at the end of the event! Everybody walks away happy! The participants believe that they have won some useful prestigious award and feel honored to display their trophy and certificate as a mark of their achievement. Strictly speaking, these participants have been scammed for USD1,000 because no clear and open analysis was made to warrant the winning of the award. It is extremely difficult to prove the fraud and therefore the practice of strange awards being given to companies all over the world continues.

In developing countries brochures are being developed to attract investors into Industrial and Trade parks with the promise that special Duty Free incentives will be offered to the investors that sign up for these opportunities. Claims of Special Incentives are documented in the leaflets. Attractive options are lifted from local Investment Acts to entice investors without clarifying how one qualifies to get these incentives. Many promises of good business opportunities are offered. The catch is that applicants must pay a registration or booking fee of around USD40,000 in addition to several months of advance rental for business premises. Of course the businessmen that produce these attractive brochures and leaflets are only interested in collecting the registration fees and the first 3 month rental advance payments from the unsuspecting investors. If 40 would be investors paid up front a total of USD50,000 then a package of USD2 million would have been raked in as free money. The investment marketing company then closes offices and disappears with this big bonus leaving the investors to fight with the local authorities about the promises made to them by the bogus marketing company. Unfortunately, even clever business people out there that have never visited our countries get cheated by fraudsters who pretend to have inside information and special contacts in the Government. The moral of the story is that being fore warned as this article highlights, allows businesses and the authorities to be fore armed. At the end of the day the old basic Latin rule for doing business namely ‘Caveat emptor’ which means ‘Let the Buyer Beware!’, still holds true.

Published 22 July 2008