Around here we’re rather aficionados of the scam. We have to be, having – well, one of us at least – worked in the Russian metals industry for a decade. A sense of humour about the things that people will try to do to steal money was rather a necessity in that environment.
Perhaps my favourite was actually in the United States. A bloke was claiming to be able to do that old dream, turning lead into gold. The specific method was low energy transmutation which was a load of old cobblers. But there was a much, much, easier manner of working out that it was a scam. He was looking for investment. And if you can turn lead – $400 a tonne – into gold – $2,000 an ounce and thus $66 million a tonne at the time – then what the hell do you need investment for? It took a very long time to get that point over to a starry eyed potential investor who happened to be my boss at the time.
Which brings us to the scam perpetrated on Warren Buffett’s Berkshire Hathaway company:
Warren Buffett, world’s fourth wealthiest man has been swindled by a German manufacturing company of €643million
There is an amusement that that report comes from a Nigerian outlet. Presumably domestic such have now been stopped and it’s necessary to look internationally for examples. It’s also not the first time such has happened:
DC Solar built mobile solar generators for sporting events and music festivals. The company attracted at least a dozen investors in complex deals that raised money through what’s known as tax-equity funds. They included Progressive Corp., East West Bancorp Inc., Valley National Bancorp and Sherwin-Williams. Warren Buffett’s company invested US$340 million.
DC Solar, however, built and leased only a fraction of the roughly 17,000 mobile units it claimed were in use, authorities said. Instead, DC Solar used money from new investors to pay off old ones, according to a statement from the U.S. Attorney’s Office in Sacramento.
$340 million into a Ponzi scheme, eh? But today’s example is fromGermany:
Precision Castparts Corp, a unit of Warren Buffett’s Berkshire Hathaway Inc, has been awarded 643 million euros ($700 million) in arbitration for having been fraudulently induced to buy a German maker of pipes and fittings.
So, they wanted to buy the company. How much should they pay? Well, have a look at the accounts, obviously:
Internal documents cited by the German newspaper Handelsblatt suggest some of Wilhelm Schulz’s employees inflated the company’s Ebitda – earnings before interest, tax, depreciation and amortisation – by simply scanning in letterheads of third companies and Photoshopping them to create fake orders and invoices.
At least 47 business deals that had helped create the impression of a company on the up were completely fabricated, said Handelsblatt.
Pretty simple really. But as that other German laddies said if you’re going to lie about something go big.
Gotta’ check those bank statements. Deposits should match up with invoices. A decent sampling would catch that scam.