An ICC Article submitted by SOFT-FRAME INFORMATION GROUP

London April 18th, 2005 - Update on May 27th, 2005

Non-existent cargoes of sugar are being sold on the internet in a high-tech fraud which could cost the sugar industry millions of dollars, an investigation by ICC's Commercial Crime Services (CCS) has found.

Investigations by CCS, the crime fighting arm of the International Chamber of Commerce, have found an increase in recent months of fraudulent sugar cargo contracts.

The frauds bear the hallmarks of a similar epidemic which struck the sugar industry in the mid 1990s - except now the fraud has moved online.

CCS officials say some websites are using "supermarket sales tactics" to advertise cargoes of sugar that may not actually exist, urging buyers to "SAVE! SAVE! SAVE!" One site even advises buyers not to waste time and money dealing with suppliers who charge high prices and fail to provide the goods, saying "we will not only provide you with sugar but will save you money".

Additionally, it appears the fraudulent deals are being offered by a new set of players.

"We have been asked to look at a number of sugar cargo contracts offered by parties previously unknown to us," said Jon Merrett, Assistant Director of the CCS Commercial Crime Bureau.

"The contracts contain a number of suspicious features that highlight the questionable nature of the transaction. These are all warning signs we saw the last time around and it would seem that this is another case of an old fraud that has been repackaged to embrace new technology. There is a very good chance that the sugar does not actually exist."

CCS says the following danger signals will help traders steer clear of suspicious transactions:

• Prices that are significantly lower than the industry standard.
• References to "Grade A" sugar, which does not exist.
• References to the colour of the sugar as 'sparkling white', which is not an industry term.
• Misspelling of references to ICUMSA, the International Commission for Uniform Methods of Sugar Analysis. This often appears as INCUMSA with an extra 'N'.
• Repeated references to 'Top' or 'Prime' world banks - these phrases have no specific meaning.
• References to 'ICC Provisions of Non-Circumvention and Non-Disclosure.' ICC has never published rules under this title.
• A reference to 'the funds in the buyer's account to be good, clean, cleared, unencumbered and legally earned or obtained and of non-criminal origin' - a phrase no bank would use because it could not validate such a statement.
• Many incorrect references to ICC, eg 'the parties do hereby accept the international provision of "Force Majeure" as published by the International Chamber of Commerce, Paris, France, and as defined by ICC Rules Uniform Customs and Practice'. The reference is wrong, because the Uniform Customs and Practice for Documentary Credits, commonly known as UCP 500, governs Letters of Credit and not Force Majeure.

A good way to avoid becoming a victim is to be familiar with the terms and conditions of legitimate sugar contracts. Where this is not possible, it is important to have all documents and offers checked by CCS before entering into a deal.

CCS is a division of the International Chamber of Commerce - the world business organization.