Two, somewhat related items, recently caught my eye during the last week. The first relates to some advice provided to Nigerian soccer referees by the acting secretary-general of the Nigerian Football Association. According to a report by the Ethics Newsline, Nigerian soccer referees were told to feel free to take bribes as long as they don't let the bribes influence their calls. As a fairly high level soccer referee, I found this to be quite an interesting concept, to say the least.
They are not quite the same, but bribery and fraud share something in common, which is the self-enrichment of some through their willingness to illegally take that which belongs to others. This brings me to the second item that I noted – another fraud story. This fraud, however, took place ten years ago. (Although not a current case, remember that there is more to these stories than just an interesting read. The lessons present in such cases also can save lessors a lot of money and grief, which is why I have included it here. After all, forewarned is forearmed.)
The monitordaily.com website is the reason that I was reminded of this particular episode in the annals of lessors being taken. April 2006 marks the ten-year anniversary of the launch of this daily leasing news service . In celebration, they are providing their readers with three of the top leasing headlines from 1996 every day during April. One of these headlines related to the Philip Morris scam which forced Nelco, a well-known and respected computer lessor, into Chapter 11 federal bankruptcy protection. Other banks that were involved included Signet Banking Corp., NationsBank of Charlotte, Corestates, Bank of Montreal, CreditstaldtBankverein of Vienna, Long Term Credit Bank of Japan, and Hitachi Credit America.
In this fraud, an individual, purportedly representing Philip Morris, sought computer leases for a top secret project within Philip Morris. According to this fellow, the lessors could not divulge anything about the project to anyone, including Philip Morris, due to its sensitivity. The dollar amounts of the leases were, apparently, too much for Nelco to pass up. Leases were entered into and subsequently funded through various banks and lessors, with the proceeds (some $323 million) going to the scam artist. The equipment, of course did not exist. The whole thing unraveled when someone from one of the banks, performing due diligence and unaware of the need for absolute secrecy, contacted Philip Morris to obtain a current Certificate of Incumbency. The fact that the perpetrator did not work for Philip Morris was ascertained very quickly and law enforcement became involved. Much of the money was unrecoverable by this time, however, and the damage done.
The lessons? (1) Do not relax your policies and procedures, no matter how attractive the deal, and (2) make certain your documentation package is complete and current.
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