By: Hamish Champ
February 28, 2014
British polymer distributors and suppliers will meet next month to discuss how companies can avoid being caught up in the sort of fraud which recently saw nearly 800 metric tons of material stolen from a group of plastics firms.
The scam, operated late last year by a bogus outfit calling itself Kreate UK Ltd., saw a number of domestic and Italian plastics companies defrauded to the tune of around 1 million euros ($1.37 million) combined.
A spokeswoman for Northants Police told PRW that the force was still investigating the Kreate fraud and was following what she called "a number of leads." PRW is a sister publication of Plastics News.
Meanwhile, member companies of the British Plastics Federation's (BPF) Polymer Distributor and Compounders' Group — some of whom were affected by the Kreate scam — plan to look at how they can tighten up their systems to ensure that a potential new customer is legitimate before doing business with them and so avoid being ripped off.
One member of the group said the sector was "definitely being targeted" by criminals, while another told PRW the police did not seem interested in following up such frauds and so rather than chase criminals the industry had to be more vigilant early on in the relationship with a new customer.
"We can do site visits, which works for some but isn't appropriate for every business. We are also looking at requiring photocopies of directors' passports before signing anything away or getting managing director approval for any deal," he said.
Another source said: "We're a small industry. If we as a company have never heard of a customer, references are very important. And if those references look iffy then it's a warning sign."
Mike Boswell, who combines his job as managing director of Plastribution with being president of the BPF and will be involved in next month's meeting, said frauds on the scale of the Kreate affair were a big concern for the industry.
"We obviously want to avoid scams that cost our industry millions of euros. So we need to tighten policies and procedures, but without alienating new customers.
"New customers should know that when they approach us that there is a process they will have to go through.
"If we do things to change the way we deal with new customers it would be helpful if we all moved more or less in the same direction and get everyone on board. The more united we can be as an industry the better."
When dealing with a new customer, Boswell said he believed that confirming its status as a legitimate legal entity and its knowledge of the intended trade were essential.
"One also needs to establish that the representatives of the company are duly authorized to enter into purchase contracts with the supplier and that delivery locations for the goods are under the control of the company."
Boswell said that with Plastribution having faced the issue of a potential bank scam last November he had "the greatest sympathy for those who have been defrauded [in the Kreate scam]."