Photo: Duc Anh
Vietnam Association of Seafood Exporters and Producers claims Canadian company Echopack is accepting shipments and colluding with a New Zealand bank to avoid payment.
The Vietnam Association of Seafood Exporters and Producers (VASEP) has warned enterprise members about fraudulent activity by Echopack Inc. based in Quebec, Canada, which have resulted in some losing hundreds of thousands of dollars.
According to VASEP, export consignments were paid via General Equity Bank, representing Echopack Inc. and based in Auckland, New Zealand, under the form of a 60-day letter of credit (L/C) from the date of the bill of lading and CFIA food safety certification.
The L/Cs included two terms regarding risk: the client takes one bill of lading to receive goods for quarantine and the client’s signature at the bank must be the same as the signature on the commercial contract with exporters.
After Vietnamese seafood shipments were exported to Echopack under such terms, Echopack received the shipment. Banks representing Vietnamese seafood exporters sent documents to General Equity Bank for payment. However, the bank’s response was slow and it refused to pay as the L/Cs, it claimed, were invalid.
The bank sent an email to Vietnamese seafood exporters, informing them that Echopack’s signature when registering to open an L/C at the bank was different to the signature on the contract with the Vietnamese exporters. The bank then sent the Vietnamese side export documents, with one of the three copies of the bill of lading missing.
VASEP and its members claim that the buyer, Echopack, and General Equity Bank colluded to take shipments without payment. The bank accepted to allow Echopack to pick up the shipment with invalid documents and also deliberately contravened provisions in L/C payments. “There is information that the New Zealand-based bank closed in 2014 but still opens L/Cs and has connections to Vietnam,” VASEP warned.
BIDV sent a document to VASEP proposing joint support be provided to enterprises in their seafood export transactions. Vietnamese exporters need to research markets and check the credit risk and previous trade of foreign partners, in particular partners linked via intermediaries.
Such verification can be carried out via public sources or purchasing information from companies specializing in providing verification services, as well as importer associations and diplomatic agencies. Exporters need to strictly regulate the contract terms protecting their rights. They should also research international principles and practices relating to payments to understand the role and responsibility of relevant sides, then consider choosing reasonable methods and conditions.
BIDV also warned Vietnamese exporters to use banks’ services to ensure the ability to retrieve funds and to research importers and bodies issuing L/Cs.