DP Survey Group
Not all legislations and policy conditions are on the same line as to how ‘misappropriation’ should be determined, but the difference with ‘theft’ would be that it concerns unauthorized use of the trader’s or insured’s stock by a contracting party.
Longer soft market periods, often make it so that sales of the purchased goods are deferred by the trader. In such situation, increased vigilance and control would be required and it is exactly these elements that were noted missing in most of the cases investigated by us.
Moreover, most of the time, it concerns goods that are not traceable or identifiable, which makes it difficult to carry out a physical control of the goods in store. This situation is used by the perpetrators to issue double warehouse certification for the same goods. The cases we have handled mainly concern soft commodities such as grains, sugar and juices, but also steel ingots and petrochemical products.
Almost without exception, any validated case of misappropriation is going into litigation in front of a local arbitration court, which is usually a long and difficult process. Proving one’s right is one thing, having the money on the account is usually another matter. It is therefore better to try and prevent than to cure.
Our large experience in the subject matter has given us the occasion to determine a number of consistencies in the way this type of loss usually occurs. Based on this, we may offer our services not only to investigate the claim, but also to audit certain trade procedures with the aim to develop a taylor made strategy to avoid the worst from happening.