Builders merchants face ruin after local gang con

Dubai and Sharjah traders fall victim to ‘long firm’ and lose millions in just two months

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By  Sean Cronin Published  September 24, 2005

At least seventeen builders’ merchants in Sharjah and Dubai could face financial ruin after losing millions of dirhams in an elaborate fraud. The traders fell victim to a variation of a scam that has been used by con-artists for decades, the so called ‘long firm’ — which describes a company that has been set up for fraudulent purposes. They estimate the gang may have amassed between AED6 million and AED7 million over the last two months. But a loophole in the law meant that the suspected ringleader was able to escape over the border to Oman, as a police investigation into fraudulent trading can only be triggered once a cheque bounces. In most of the cases, the company initially bought goods with cash before asking for credit of between 45 and 90 days — during which time they ordered lorry loads of goods ranging from copper pipes to hard hats, timber and water heaters. Construction Week has interviewed seven of the traders, who have all related a similar account of how they were duped into believing that the men who approached them were genuine. At least two of the businessmen have taken their cases to Heerah Police Station in Sharjah. The largest sum lost by a single company was AED260 000. Some of the businessmen involved have asked to remain anonymous through fear of being black-listed by their own suppliers. Hameed Siddiqui of Sharjah-based Al-Haleef Trading, said: “They contacted us back in June and said they were working on several major projects. We have lost AED151 000. The last cheque we received from them was dated 6th September.” One trader, who did not want to be named, described how the company paid cash for its initial purchases in order to gain his trust. “They originally contacted us two months ago saying they wanted water heaters and copper pipes — both of which are products that are easy to sell on.” “They asked for credit, which is not unusual as 90% of our business is credit. We always have a procedure to check people out. We visit them in their shop and ask for a copy of their trading license and passport, and we get them to fill out a credit application form which has to give a trade reference of another company that has given them credit.” “They did all of this and we supplied them with an order worth AED28 000. But I got suspicious when I received another call from another company again asking for water heaters, and then a third company. “I knew I had been conned, but when I contacted the police, they said they could not do anything until a cheque bounced. The last day that the gang was known to have ordered goods in Sharjah and Dubai was 5th September 2005, after which point they disappeared. Since then cheques issued to traders across both emirates have been returned by banks. “It is difficult to say how much they have stolen but I know they wrote at least 60 cheques from the number on the one that they gave me,” he said. Osbin Miranda, sales manager at Saudi Industrial Detergents Corporation, based in Sharjah, said that the firm also used the same modus operandi to approach him. “They took about two truck loads of products from us, which we believe may have been later sold in either Abu Dhabi or Oman.” The revelation comes as GCC governments are studying the introduction of a unified law to combat commercial fraud.

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