A Ghanaian exporter, frustrated that a Chinese firm has failed to comply with a ruling by a court in Ghana, is warning companies of the apparent dangers of doing business with unscrupulous individuals who could use Chinese state-owned organisations as fronts for dubious transactions.

The dispute between the exporter and the Chinese importer also highlights some of the potential pitfalls revealed when a transaction starts to proceed outside the specifications of a letter of credit (L/C).

Representations

More than two years after an Accra High Court ordered a Chinese company, Gansu Medicines and Health Products, to pay for goods imported from a Ghanaian company, Getrade Ghana Limited, the Chinese company has not complied with the order.

Getrade has since made representations through Ghana's Ministry of Trade and Industry, it's Ministry of Foreign Affairs and the Attorney General's Department and Ghana's Ambassador in China, asking them for help in persuading the Chinese company to pay up. None of these bodies has persuaded the Gansu to do so.

The case

In 1997, Gansu, acting through its agents, placed an order for the supply of 20 tonnes of Griffonia and simplicifolia seeds from Getrade at a total cost of US$495,000. It followed up and established irrevocable L/Cs on 5 December 1997, drawn on the Bank of China in favour of Getrade for the amount.

Gansu subsequently requested Getrade to airfreight the goods to Beijing Airport, instead of shipping them to Tianjin Port, as stipulated in the L/Cs, and promised to effect the consequential amendments to the L/Cs to enable payment to be made upon supply of the goods.

LC changes

In February 1998, Gansu wrote to Getrade's bankers, ECOBANK, confirming its agreement to changes in the L/Cs, including the change from marine insurance to pre-paid airfreight to Beijing Airport and waiver of the certificate of insurance.

Getrade, apparently convinced that Gansu would act appropriately, airlifted the goods in three lots during January and February 1998. When the goods arrived at Beijing Airport, even though the documents were with the Bank of China, Gansu managed to clear the goods and converted them for its use.

Later, Getrade claimed it realised that Gansu did not make any attempts to amend the L/Cs with the Bank of China, thus making it impossible for Getrade to collect payment from that bank.

Court order

In September 2000, Getrade brought an action at the Accra High Court to compel Gansu to pay for the goods supplied it plus interest.

On 29 January 2001 that court ordered Gansu to pay Getrade US$732,187.50, being the cost of goods supplied to it in 1998 plus interest accrued from the time of delivery up to the day judgment was given.

Getrade is also apparently promoting a campaign asking the Ghanaian business community to be aware of unscrupulous individuals who could use Chinese state-owned organisations as a front for dubious transactions.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.