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Commercial Deceit Comes Back to Haunt Natural Resources Company

The consequences of commercial deceit can come back to haunt businesses many years after the event, as a natural resources company discovered to its cost almost 20 years after it perpetrated a $40 million fraud on the Romanian state.

The company had been contracted by the Romanian state oil company (SOC) to deliver 80 shipments of Iranian heavy crude. In the case of 32 of those shipments, what was in fact delivered were blends of various cheaper crudes which resembled Iranian heavy. Romania was suffering shortages of both hard currency and oil at the time and the company’s objective was to increase its profit margin.

The shipments were made between 1993 and 1996 and, almost two decades on, the successor to the state oil company launched proceedings in London. The High Court found that it was a clear case of fraud to which the company had no defence. It was ordered to pay $40,071,913 in damages for deceit, plus interest.