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. Last Updated: 07/27/2016

British Scam Preys on Russian Firms

LONDON -- Russian firms hungry for high-level Western business contacts are being bilked out of hundreds of thousands of dollars by shady operators who charge them for conferences that often are never held, British authorities said.


What's more, police say they are having a tough time making prosecutions because Russian victims are unwilling to travel to Britain to file formal complaints.


The schemes are deceptively simple. Native Russian speakers in Britain are hired and given telephone lists of Russian and other CIS companies, which they call to pitch high-level conferences. Advance payment is requested. Companies later find that the conferences are largely shams or, in some cases, never held at all.


"There are 40 victims in Russia and the CIS who paid ?2,000 to ?4,000 ($3,500 to $6,000) each -- in one case, ?12,000 -- who will not get their money back," said Detective Constable Bob Wale of New Scotland Yard, referring to several conferences that were supposed to have taken place last July, August and September.


"We need the victims in Russia to make allegations in person, but they are unwilling to come all the way here to pursue relatively small sums," he said. "And my seniors are unwilling to send me away for weeks to trek around the former Soviet Union and see them all."


Though the defrauding of Russian firms is bad enough in itself, some Britons fear long-run costs in potential loss of good will and future business.


"I smart when I think about it," said Michael Hall, executive director of the Russo-British Chamber of Commerce. He said the unscrupulous telephone sales solicitors undermine efforts "to impress on the Russians that the British are trustworthy in business, and that our word is our bond."


Despite the obstacles, difficult to charge them with crimes.Wale has been trying to look into City Commercial, registered in August under the ownership of one Yury Korotkov, which claims to be planning a prestigious conference in February spread among venues in London, Edinburgh and Liverpool.


"The company phone numbers were usually unobtainable, and when I finally made contact, the man I spoke with was using a voice scrambler and refused to give his name," Wale said. "He admitted that nothing had been organized yet. He refused to give a proper address for the company, and the people he named as directors differ from the names on the foundation documents."


Nevertheless, Wale said, "I cannot even begin to take action against City Commercial now because they have not done anything wrong yet. Even if their conference does not happen in February, they can say it is delayed until April, so there will still be no clear evidence of fraud."


There are signs, however, that some companies may try to recover their cash.


Edmund Wickramapathirana, a Russian-speaking attorney with the London law firm Waran and Co., said he has received inquiries from several Russian firms considering legal action against so-called "telesale" operators.


Wickramapathirana said firms that have contacted his office include Moldova Steel, which claims to have lost $26,000 in a conference scam.


One prominent case involved a firm called Diplomatic Group, which is said to have persuaded several hundred Russian and CIS companies to pay about ?5,000 per person to take part in a November 1994 conference in Monte Carlo.


British newspapers reported that although the conference did take place, more than half of the companies who had paid money were told they could not attend because the event had been oversubscribed. They did not receive refunds.


Those that did attend found no sign of promised participation by such big Western firms and institutions as Barclays Bank and the European Bank for Reconstruction and Development.


In another publicized case, the Russian-language London newspaper Londonsky Kuryer estimated that a company calling itself Morgan Ross took in more than ?1 million in 1994-95 from mainly Russian businesses for conferences that were canceled at the last minute when the firm went into liquidation. The firm's director, Haroon Leghari, reportedly is in Pakistan where he fled to avoid assault threats by angry creditors.


Leghari previously worked for Harrington Kilbride, an established firm in the event-organizing business that was active in CIS telesales in the early 1990s. A company official said Leghari later left after a dispute with management.


The firm has since tried to distance itself from the CIS business, changing its name to Highbury House Communications and indicating it is no longer involved in such operations. The new managing director, Ian Fletcher, declined to discuss details of the firm's CIS-related activities except to say that they are "ancient history."


Like the police, Wickramapathirana said he has been frustrated in efforts to follow up on initial complaints.


"When it comes to initiating court proceedings, the CIS companies back off," he said.


But he added that, "The sums paid by the companies are sometimes in the order of ?30,000 to ?50,000, and if they are not willing to pay an extra ?5,000 for legal costs, they lose the whole lot.


"This is unfortunate, because the cases are clear-cut, and the Russians will recoup their costs if their action is successful."