The following letter arrived on my desk:

Dear Mr Setter

With reference to your article about unusual banking practices and the reaction you received from Mr Kats of Uruguay, I think it is appropriate that we make our contribution with a story that is happening to us right now.

In July, we sold a container of African raw material through our Italian agent to a tanner in Pakistan. They wanted payment 30 days from arrival of the goods whereas we were prepared to accept a maximum of 40 days from the date of the bill of lading (b/l). The Pakistani company was unable to accept a letter of credit or a bank guarantee to back the purchase, so we agreed that a third company (Italian) should be the guarantor.

When all these matters were settled a contract was drawn up and signed by all parties.

The company applied for the import licence based on the signed contract and once this was obtained on September 21 we effected shipment on the first available steamer and the relative b/l was issued on October 7.

As it happened the steamship company did not sail to Karachi directly but docked in Singapore and the container reached Karachi later than expected.

The importer asked us to postpone the payment date from November 15, the due date on the contract, to November 30 because he needed time after arrival of the steamer to sell the goods and subsequently cash the proceeds of his sales in order to pay us.

That, of course, was not acceptable to us, because we had made a sale for a firm payment date and had not sold this lot on a consignment basis.

When we insisted that payment was made on November 15 the importer accused us of manipulating the date of the b/l.

This was not true but we wanted to be scrupulous and checked with the shipping agent who loaded the goods if the date on the b/l was the actual date of sailing, and when this was confirmed we advised the importer accordingly.

The importer told us that he was unable to pay on the due date so we checked with his guarantor in Italy if they would pay on the 15th and were informed they would not. Obviously, a guarantee is not worth the paper it’s written on.

We again informed the importer that we receive payment on the due date otherwise we would resell the goods and cancel the contract due to default of payment. He did not answer. Nor did he answer two reminders, so we sold the goods to another importer in Karachi and informed the first buyer.

This second importer very reluctantly bought the container as he did not want to be put into an awkward situation with his colleague and friend in Karachi, but since the whole situation was clear and legal, we convinced him to help us out.

Our bank promptly advised the United Bank Limited (UBL) that they had to transfer the documents to the new buyer and our shipping agent advised his Pakistani counterpart to deliver the container to a new party.

All seemed in order until the new buyer informed us that the shipping documents were not available as they had been surrendered to the first buyer. We checked if our payment had arrived via our bank and to our surprise, UBL, who had precise initial instructions to surrender documents against payment on November 15, and a second instruction not to deliver the documents to the first buyer, answered with the following telex to our bank.

"Ref your telex msg dated 14.11.2000 we hereby inform you hat (sic) we have already deliver the documents to the first buyer as per your forwarding letter dated 25. 10.200(sic) and due date date advise to you vide our swift message dated 03.11.2000 which was due for payment on 15.11 .2000. At maturity the buyer inform us vide their letter dated 15.1.2000(sic) which is: quote.

‘I have some dispute with the suppliers as regards steamers details and b/l date.

Also since the steamer has arrived very late have not able to inspect the goods at the port which our condition with the suppliers. Without inspection of goods I can not pay the documents. I have already inform the suppliers accordingly.’ unquote

‘We are unable to apply your instruction as per your telex msg dated 14.11.2000


UBL TPC Corporate Branch KHI’ unquote

It is quite clear that UBL Karachi have not executed the instructions from our bank. Neither the original instructions nor the amended instructions were followed.

UBL have surrendered the documents, and marked on the bill of lading that payment was effected, thus legally clearing the way for the steamship company to deliver the goods.

But UBL are clearly wrong since the payment was not and still hasn’t been transacted. Of course, our bank has demanded immediate return of the shipping documents.

It is disgraceful that the importer has unilaterally amended a signed contract along the lines of his beliefs and necessities.

We have never accepted that the date on the bill of lading was false. On the contrary, we maintain it is correct and it is up to the buyer to prove otherwise, which of course he can’t.

We do not accept, like all shippers of hides and skins, that goods are inspected in port upon arrival, unless this is agreed upon beforehand. In this transaction that was not the case. The buyer just pulled this rabbit out of the hat and had the nerve to tell us that he would pay on December 22, one month after he assumed he would receive the goods in his tannery.

The buyer accuses us of fishy business with regard to the shipping date. However, I leave it up to your readers to make their own judgement.

Signed ………

The letter is signed and the author is known to the editor.

Sam Setter