Milton Kounnou, was sentenced to two years' imprisonment today at the Central Criminal Court after admitting his part in defrauding banks in the Middle East though the presentation of false shipping documents against multi-million dollar letters of credit for non-existent cargoes of metal.
Outline
Milton Kounnou (DOB 1/4/48), and his son, Stelios Kounnou, (DOB 16/8/77) purported to be metals suppliers. Their London-based companies were Simetal Ltd and Fimetco Ltd. These companies produced falsified shipping documents for presentation to banks in the Middle East against letters of credit opened on instructions of companies in Sharjah, United Arab Emirates, controlled by a Madhav Patel. His companies were Solo Industries and Zeeba Metals.
Documentation (i.e bills of lading, invoices, certificates of origin and packing lists) was created throughout the period of September 1998 to March 1999. relating to cargoes of tin ingots, bismuth scrap, indium tin alloy, nickel scrap, and lead silver alloy totalling to about 450 metric tonnes. The stated shipping ports were in northern Europe (Helsingborg, Gothenburg, Thamesport and Hamburg). The declared destination was Dubai. But the consignments were either phantom shipments, or where there were shipments, they were low value metals such as scrap aluminium or lead ingots, disguised by the documentation as higher value cargoes.
Patel's companies regularly opened letters of credit with Middle East banks; their frequent turnover generating sufficient funds to recycle back to his companies to settle the original debt. This achieved for Patel a positive reputation with the banks as being a businessman who settled debts punctually. Consequently banks became willing to extend more and more credit to him. The fraud snowballed. When the scheme collapsed in April 1999, the banks were owed around $200 million. Twenty banks in the Middle East were affected, principally the Arab Banking Corporation, Arab-African International Bank, Emirates Bank International, Gulf International Bank, Credit Agricole Indosuez and the Albarka Islamic Investment Bank.
The Kounnou-owned firms in London were the beneficiaries to the letters of credit. When they received payment, they would retain some of the money and transfer the remainder to companies controlled by Patel.
Proceedings
The SFO opened its investigation in June 1999 in conjunction with the City of London Police Economic Crime Department after a complaint was received from Citibank in London.
Milton Kounnou and Stelios Kounnou were charged in January 2002 with three counts of conspiracy (with Mahdav Patel) to defraud banks of funds. The Kounnous were aslso charged with fifteen counts of false accounting (i.e. producing falsified documents for accounting purposes).
Madhav Patel's whereabouts are unknown. There is a warrant for his arrest issued by City of London Magistrates.
Milton Kounnou pleaded guilty ahead of trial, scheduled for next month, to fifteen counts of false accounting and today was sentenced to two years' imprisonment on each count, the sentence is to run concurrently. One count of conspiracy was withdrawn and two counts of conspiracy are to remain on the file. The SFO has decided to offer no evidence against Stelios Kounnou.
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