Realist, not conformist analysis of the latest financial, business and political news

Lekoil’s Fake Sheikh Scam – All It Needed Was A Phone Call

Ricardo’s comparative advantage

It always is amazing when people fall for a scam. Because – in hindsight of course – there’s always a marker to the scam. A simple and easy manner of spotting that summat ain’t right.

With the Lekoil Fake Sheikh scam it’s simpler than most too:

The London-listed oil company that fell for a “fake sheikh” scam over a supposed $184 million loan said yesterday that its advisers should have been able to detect the fraud.

Lekoil also named for the first time the purported representative of the Qatar Investment Authority with whom it believed it had negotiated the deal.

The company said in January that it had secured a loan from Qatar’s sovereign wealth fund to finance a key development in Nigeria, only to be told ten days later that no such loan existed.

Lekoil is $600,000 out of pocket, having paid $450,000 to Seawave Invest, as an intermediary for introductions to the purported representatives of the QIA. It paid a further $150,000 in legal and other fees, understood to be to Norton Rose Fulbright, its legal counsel, and to Control Risks, which carried out checks on Seawave.

Now you might think it a bit odd that anyone pays a fee to be introduced to an investment fund. Such funds are, we would all think, always on the look out for places to invest. So, just rock up, tell’em what you’re doing and let ’em make a decision. Except, well, in certain parts of the world it doesn’t quite work that way. The gatekeepers like to have a little doucer before allowing anything to be discussed.

No, really, sorry to have to say, this is the way it works. I was once on the fringes of the need to pay $50,000 in cash to the Prime Minister of one of the ‘Stans for a one hour interview. Not to actually gain a result you understand, not for anything to happen, other than just being able to be in the same room and make the case.

Just how some places are.

The thing is though, Control Risk etc do have an method of working out whether a loan really is going to be issued by a wealth fund. It’s called the telephone. Call them up – someone like Control Risk, or Norton Rose, will get through – and ask ’em. ‘Allo, so, this loan then, whaddabahdit?

“What loan?”

“Don’t pay that invoice!”

This isn’t rocket science and at $150 large you’d imagine someone would have had enough airtime left to make such a call.

Apparently not……

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