“The King of Pepper” was almost cheated of 3 million USD

From the story that 100 containers of cashew nuts from Vietnam exported to Italy were at risk of being cheated, Chairman of the Board of Directors of Phuc Sinh Joint Stock Company Phan Minh Thong, a businessman known as the “pepper king”, shared the story again. My real story happened 15 years ago and gives advice to Vietnamese businesses to avoid similar pitfalls. This story is in the book “Beyond, Business Ways” written by Mr. Thong himself, written by Mr People’s intellectual sums up turn off again.

Guest from Bulgaria with strange request

In 2007, I attended the world’s largest food and beverage fair in Germany, connecting with many new customers. Among the partners who visited Phuc Sinh’s booth, a European guest named Mike Tyson introduced himself from Varna company in Bulgaria and wanted to import Vietnamese black pepper in large quantities.

At the end of the fair, I returned to Ho Chi Minh City. After that, Mr. Mike Tyson emailed and faxed a request to bid for pepper in the quantity of 50 containers. Orders specify the type of goods, specifications, moreover they require immediate delivery. In particular, Mr. Tyson said that it was the first time he bought pepper in Vietnam.

The order is too large, buy 50 containers but also require a one-time delivery. To my surprise, I told my partner that I could only supply up to 30 containers. The customer still insisted on the full 50 containers. After 5 working days, I closed 37 containers, priced at 6,300 USD/ton.

However, when negotiating payment terms, problems began to arise. I ask my partner to pay 20% of the order in advance, the rest I will fax the export documents to the customer and then they will pay later. But the partner does not agree, wants to collect 100% through their bank.

This is too risky for us. The shipment amounted to 3.3 million USD, it was not easy to nod when I only met them once at the fair. If I were in the present, I would fly to them and talk. But that time was 2007, I was young, inexperienced and the company was only 5 years old.

Then I ask the partner side to pay at least 10% in advance. The company has to borrow from banks and banks only agree to provide credit if the contract has a prepayment clause. Varna finally agreed to pay 10% in advance.

When we received the 10% advance, we were overjoyed. Having their collection through their bank is not a bad idea. If they have money to pay, the bank will deliver the documents, if not, the bank will keep our documents.

When Phuc Sinh asked the bank for advice, they also said that if the bank asked for a good collection, it was quite safe. The company felt secure and started buying 37 containers of pepper, paying farmers in full in advance to pick up the goods.

Doubt when customers urge

But the trouble started. Mr. Tyson announced to buy pepper to Bulgaria but pay to Turkey. This customer assured his company still dealing in other items like that.

After contacting the bank in Vietnam and being advised to exempt the bank from asking for good collection, I agreed. The company exports goods on CIF terms to Bulgaria, collecting banks in Turkey.

Vietcombank, the bank Phuc Sinh uses the service, said that the transaction was very large, so we need to ask the buyer for the name of the bank. The bank in Turkey that Varna provides is well known, has a high rating, and is safe. So I confirmed, made a contract of sale. At that time, this contract was the largest value since my company was born.

After the goods were shipped, Mr. Tyson called to remind me to send the bill of lading number when completing the documents. A few days later, the other customer asked for the bill of lading number, complaining why it took so long. In the following days, the partner repeated the question about the bill of lading number many times.

I started to feel that something was wrong when a customer asked for too many bills of lading. 37 cargo containers only have one set of documents, once lost, all will be lost. If the customer has a set of vouchers in hand, they can pick up the goods. I told myself to be careful, only replied that the bank was checking the documents because the shipment was too large.

Having read somewhere about a scam case if a customer has a courier bill of lading number, I held a staff meeting, informed the relevant departments that “no one is allowed to report the shipping number”. orders for customers”. Only I am allowed to do that.

The set of documents to collect my company sent through Vietcombank. Then, the bank uses DHL express delivery service to send it to the collection bank in Turkey. Three days later, DHL unexpectedly informed the bank in Turkey that there was no customer named Varna. The set of documents is too large, the bank does not want to process.

I immediately called my partner and told me what the bank announced. Mr. Tyson now said he would check, maybe the bank was wrong, and still asked for a bill of lading number, told me to call DHL back because Varna’s people were waiting at the bank.

I immediately replied: “The bank also did not give me the bill of lading number”. I had a company meeting again and again and again no one was allowed to give the bill of lading number to the customer.

The guest from Bulgaria urged again to ask for the courier’s bill of lading, to announce the name of the new collection bank. The company asked Vietcombank to check and was informed that this bank was also good. Therefore, we request Vietcombank to send documents to this bank.

Meanwhile, I still receive emails, faxes and phone calls from customers asking for their bill of lading number. I’m just saying briefly, I’m checking with the bank and will let you know later. At this point, a hunch tells me this customer has a problem.

Two days later, Vietcombank received information from a new bank in Turkey saying that it had received the documents but Varna was not their customer. Sensing there was a risk of fraud, they returned the voucher. The last set of documents arrived in Ho Chi Minh City. When I held it in my hand, I was both happy and worried.

At the same time, the shipping company announced that the ship had docked in Bulgaria. The goods will be unloaded and loaded at the port of Varna. Mr. Tyson once again called to ask if the documents had been returned to Vietnam. I questioned the fact that both banks said Varna was not their customer. Mr. Tyson became confused, said he would check again and then the phone beeped, no one answered.

Days later, Mr. Tyson continued to ask about the shipment’s documents. I just replied Vietnam is on holiday and will check later.

It’s almost certainly a scam, I was shocked when I got my documents back. But the next step is to find a way to get these 37 containers out of Bulgaria. The company was only 5 years old at that time. The amount of goods after deducting the customer’s deposit is more than 2.9 million USD, which is huge for us and almost all are bank loans.

Amazing last minute

However, the next difficulty arose. The shipping company reported that the goods had been unloaded, so a company had to carry out the procedures to carry the goods back. Delivering goods is not as simple as initially envisioned.

I decided to use the service of Damco, the largest logistics company in Europe at that time. Mr. Samuel, the chief representative of this company, after listening to my presentation, asked them to first authorize the entire shipment of Phuc Sinh for them.

My heart is still full of doubts. Is it okay to authorize such a large shipment? I wondered but reassured myself Damco is a huge company. Moreover, without authorizing them, there is no way to get the goods.

After checking in, I waited for the train from Varna to Hamburg (Germany) to pick up the goods. However, a few days later, Samuel called to inform that Phuc Sinh’s old buyer was accompanied by a lawyer, giving evidence that he had advanced 10% and wanted to keep the goods. “We are working on it and will contact you soon,” Mr Samuel said shortly.

I heard the news that my heart jumped out of my chest worried about the shipment being held. If they keep the goods, I will be kept close to 47 billion dong, all the money borrowed from the bank, at this time the interest rate is 18-22% per year. The more I thought about it, the more scared and desperate I became.

After that, Mr. Samuel announced that the shipment had cleared customs, no problem. Although there were some problems that caused the train to depart a week later than expected, the logistics company we hired finally announced that the shipment had been on board.

In the above case, as long as I disclosed the bill of lading number to the customer in Bulgaria, the documents were lost, which means the loss of the order of more than 3 million USD.

Exporting businesses should carefully check the collection bank, the identity of the buyer, especially the customer who works for the first time but orders in large quantities. My advice is that wherever the buyer is, the collection bank must be there, avoiding the case of delivery to Italy but the collection bank is in Turkey. In particular, Turkey is a place that regularly records frauds related to import and export. Finally, never give the customer the bill of lading number.

(According to Dan Tri)