The buyer who did not exist

Situation. A European manufacturer. An unsolicited approach from a buyer on another continent, wanting a bulk order — several hundred thousand dollars of product, shipped on terms.

The buyer presented as a well-known company in its own market. Everything checked: the company existed, it was long established, it was exactly the size and kind of business that would place an order like this. The paperwork was consistent. The people were responsive, professional and in no hurry.

Why the usual checks would have cleared it. Because the company was real. Its registration was real, its history was real, its reputation was real. Anyone running the standard desk check — searching the name, pulling what filings were available, looking at the website — would have found a legitimate business and approved the order.

And in a market with no reliable public record, the desk check is where almost everyone stops. There is no comprehensive registry to interrogate, no credit file, no press archive worth the name. The absence of bad information gets read as good information — which is precisely the assumption the scheme was built on.

What we did. We stopped verifying the company and started verifying the people.

• Separated the two questions. Is this company real? — easy, and it was. Are the people we are corresponding with actually this company? — a completely different question, and the one nobody asks.
• Went there. Where the public record is thin, the record is physical: premises, staff, neighbours, suppliers, local counterparties, the people who would know. We sent people.
• Established the real picture — ownership and control, who the founders actually were, the financial substance behind the business, and how it really trades.
• Compared it against the people placing the order. They did not match. Not in personnel, not in address, not in banking, not in anything.

Outcome. The approach was an impersonation. An organised group had taken the identity of a genuine, reputable company and was using it to obtain goods on credit — from this manufacturer, and presumably from others. The order was declined. Several hundred thousand dollars of product did not leave the warehouse.

The lesson. Verifying the company is not the same as verifying the people you are talking to — and virtually every due-diligence process confirms the first while assuming the second. The better a company's reputation, the more attractive it is to impersonate, so a clean check on a well-known name is not reassurance. It is where the question starts.

And in opaque markets there is no substitute for physical verification. Where there is nothing to look up, somebody has to go and look.

The arithmetic. The check cost a fraction of one per cent of the order. Due diligence is almost always cheaper than the loss it prevents — and always cheaper than the litigation that follows, which here would have meant suing a company that had done nothing, in a jurisdiction with no practical enforcement, over goods already gone.