Georgian food importer Agritechnics Group is suing Brazilian food producer Sadia and its subsidiary Wellax Food Logistics for misappropriation of US$1.4 million based on a fraudulent transaction.

Agritechnics and the Sadia companies dispute which invoices were paid by the proceeds of a letter of credit (L/C).

Agreement

The Georgian importer claims Sadia broke a 2006 agreement that said the Brazilian exporter would deliver to Agritechnics goods worth nearly US$1.4 million.

In return, Agritechnics said it would guarantee Sadia payment via a L/C from Deutsche Bank through VTB Bank Georgia.

Dispute

Sadia was able to obtain payment under the L/C but according to Agritechnics, it never receivedthe goods for which the L/C proceeds were intended.

Sadia does not deny that payment of US$1,392,099 under a L/C issued by Deutsche Bank was demanded, but it says the proceeds were used to clear invoices raised in 2005 that were not settled on their due dates.

Compensation claim

Agritechnics has filed its suit against Sadia at the Civil Chamber of the Tbilisi City Court.

The Georgian importer is also claiming compensation of US$120,000 for additional losses it claims to have suffered in the same matter.

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