The Commercial Section of the Chinese Embassy in Kenya once again urges Chinese exporting enterprises to remain vigilant against trade fraud.

Release Date:

2020-03-30

Since the issuance, on November 20, 2017, of the notice titled “The Commercial Sections of the Chinese Embassies in Kenya and Uganda Urge Chinese Export Enterprises to Guard Against Trade Fraud,” the Commercial Section of the Chinese Embassy in Kenya has repeatedly received letters from domestic import‑export companies reporting that, in conducting foreign‑trade export transactions with Kenyan and other counterparties, they have fallen victim to trade fraud. As a result, goods have been stranded at the Port of Mombasa in Kenya, incurring substantial demurrage charges, or shipments have been released without payment, leading to severe losses for the affected enterprises. The Commercial Section hereby summarizes recent cases and once again cautions exporting enterprises to remain vigilant against trade‑fraud schemes.

Typical Case 1:

Domestic Company A entered into a sales contract for agrochemical products with Kenyan Company B, with China Export & Credit Insurance Corporation (Sinosure) providing insurance coverage. Company A shipped three consignments sequentially to the Mombasa port designated by Company B (with the consignee located in Uganda), and, via a bank collection procedure, presented the complete set of original documents for the first shipment to the Ugandan bank specified by Company B. However, upon maturity of the payment, Company B neither made payment nor took delivery of the goods. Consequently, Company A instructed its presenting bank to return the full set of documents; yet the bill of lading returned by the receiving bank was a color‑printed copy rather than an original. Furthermore, when Company A contacted Company B through the channels provided by Sinosure, Company B stated that it had never entered into a contract with Company A. Based on these circumstances, Company A concluded that someone had fraudulently impersonated Company B to conclude the contract.

Typical Case 2:

Domestic Company A established internet communication with a well-known Swiss Company B. Company B sent an inquiry to Company A, providing detailed information about its headquarters. Company A sought approval from the local export credit insurance company and ultimately entered into two export contracts with Company B, shipping two separate batches of goods—one to the Swiss headquarters and the other to a Kenyan company. The export credit insurer covered the transaction under an OA 60‑day payment term, and Company A mailed the bills of lading directly to the contact at Company B. Upon receiving the bills of lading, the Swiss company stated that neither shipment had been ordered by them, suspecting fraudulent impersonation, and further asserted that the Kenyan company had no affiliation with them.

Typical Case 3:

Domestically, Company A, through an introduction, communicated with a contact at U.S.-based Company B and entered into an export contract. The contract stipulated that the goods would be shipped to Company B’s Kenyan branch and delivered to the Port of Mombasa. The U.S. head office confirmed via email that payment would be made by the U.S. parent company, with terms of 60 days’ credit. After Company A dispatched the first shipment, the other party placed an additional order. When Company A began following up on payment for the first batch, the counterparty replied that they were in the process of applying for a visa and that payment would have to be made directly to the U.S. company. They also requested that the documents for the second shipment be submitted together to the Company B contact, who would arrange payment accordingly. The other party repeatedly delayed payment; later, they claimed that Company B’s CEO had suffered a severe traffic accident resulting in fractures to both hands and feet, rendering him temporarily unable to make payments. Subsequently, they alleged that the CEO had died in the accident, making it impossible to process payment. Sensing that something was amiss, Company A promptly engaged another client to travel to Kenya to investigate. They confirmed that the purported address of the Kenyan branch was legitimate, but were unable to locate the company itself.

The fraudulent schemes in such cases exhibit a high degree of similarity:

1. Impersonating well-known enterprises from Uganda, Kenya, or abroad (or their subsidiaries), registering intermediary companies within Uganda, and exploiting their reputation and proprietary information to perpetrate fraud—fabricating documents, forging seals and employee identities, and entering into fictitious contracts.

2. Conducting transactions using high-risk payment methods. Exploiting the fact that our exporting enterprises lack familiarity with new markets and are eager to expand trade volumes, fraudsters persuade them to use credit‑sale arrangements (O/A) and other payment methods that carry significant risks for the seller; after taking delivery of the goods, they refuse to pay or even disappear without a trace.

In light of this, domestic enterprises engaged in trade with counterparts in Uganda, Kenya, and other countries are advised to exercise heightened vigilance and heed the following precautions: First, avoid conducting transactions via the aforementioned high‑risk payment methods; instead, opt for letter of credit payments whenever possible to mitigate risks. Second, exercise due diligence in selecting trading partners by thoroughly verifying foreign‑side information and gathering intelligence through multiple channels, including contacting the company’s headquarters by phone to confirm the authenticity of branch offices and orders. Third, upon the occurrence of such incidents, promptly pursue appropriate legal measures to safeguard your rights—such as filing a timely report with INTERPOL—and dispatch personnel to the location of the goods to arrange for their return or re‑shipment, thereby minimizing losses. Additionally, report the situation to the relevant authorities and to the commercial section of your country’s embassy.