On August 27, Gulf News reported that the Dubai Public Prosecutor has ordered the police in the Jebel Ali district of Dubai to investigate possible fraud in the disappearance of 6,000 tons of rice that Indian exporters had shipped into Dubai. According to Gulf News, a company with offices in Dubai, Al Rawnaq Al Thahbhi General Trading (Al Rawnaq), ordered around 6,000 tons of rice, as well as spices and coconut, from 20 or so exporters in India between March and April 2019.
In a pattern characteristic of other recent trading fraud schemes in the United Arab Emirates (UAE), Al Rawnaq was ostensibly run by a man who identified himself as Shaikh Tariq Awais, a Pakistani national. Tariq rented a warehouse in the Al Quoz locality in Dubai, and Al Rawnaq ordered merchandise from the Indian exporters.
One of the exporters stated that they had done due diligence on Al Rawnaq by visiting the Al Rawnaq office, checking its trade license, meeting its general manager, and receiving telex transfer (TT) receipts from a Dubai money exchange that they believed confirmed the acceptance of the remittance request and the initiation of the transaction. When that exporter saw that there was a gap of 10-15 days between the issue of the TT receipts and the transfer of funds, he said, “We found this odd as such transactions don’t take more than 2-3 working days. When we brought this to Tariq’s attention, he blamed the delay on banks.”
Ultimately, however, each of the 23 TTs, which totaled AED 15.38 million (US $4.18 million), were cancelled after checks issued against them bounced because of insufficient funds. By the time that exporter representatives arrived in Dubai to inquire further, the Al Rawnaq warehouse where the 6,000 tons of rice had been stored, in some 250 shipping containers, had been emptied, the Al Rawnaq office had been vacated, and Tariq and others supposedly connected with Al Rawnaq had disappeared. In addition, the post-dated check that Tariq had used to rent the warehouse also bounced, as did a check to a Dubai travel firm that had sold airplane tickets and arranged visit visas for Al Rawnaq.
The Public Prosecutor has now directed the police to investigate accusations of fraud against six men and two companies, including the money exchange house that allegedly handled the TTs, for their “role and alleged complicity in the scam.”
Note: Fraud schemes involving the use of postdated checks are commonplace in the United States and other countries, and have resulted in losses of as much as $100 million in a single scheme. In this case, what is more striking is not the amount of money fraudulently taken (though even those losses are proving ruinous to some exporters), but the sheer volume of goods that presumably were resold and reshipped quickly before the exporters recognized that they had been defrauded. Exporters everywhere should take note of this scheme and treat the offer of postdated checks by a purported buyer anywhere as a red flag indicative of grave risk, if not fraud.