Egyptian Official Uncovers Export Fraud

Published Thursday, May 19, 2011 7:00 am

Egypt’s Consul General in Houston, Alaa Issa, explained in a nationwide webinar to chamber executives this week why his government is tightening rules on the export documents known as certificates of origin (COOs). 

In January, four months after he took office, Issa began spot checking some of the 200 COOs that reach his office daily. He found several problematic certificates, including some from chambers that did not exist and certificates that were signed by non-employees of legitimate chambers. Some freight forwarders, he said, simply borrow a chamber seal and use it to “rubber-stamp all the documents they need.” 

COOs are provided to importing countries primarily to show where the product was made and which company made it. By international agreements beginning with the Geneva Convention of 1923, chambers of commerce are charged with verifying the COOs that companies prepare. This takes time, and some companies and freight forwarders skip the chamber step by borrowing a chamber’s seal or by other means. Egypt is one of several countries that inspect COOs in the United States before exports leave American shores. 

To illustrate the seriousness of the problems uncovered in Houston, Issa recounted a case in Egypt involving unfit beef shipped from the U.S. The beef actually came from Latin America, but was shipped to a U.S. port where a COO was issued, fraudulently establishing the U.S. as the source. The case resulted in fines and prison sentences for those responsible.

Speaking to nearly 100 members of the American Chamber of Commerce Executives (ACCE) during the webinar, Issa said that as a result of his spot checks on COOs, his country had “ceased dealing with a number of chambers of commerce because they were too permissive. We can rely only on those that fulfill a rigorous policy.” (A recording of the webinar is at this link.)

For now, Issa has restricted COO processing to only two chambers in each of the 11 states his office serves (Alabama, Arkansas, Colorado, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee, and Texas).  He said that other chambers would be authorized to issue COOs after approval by his office and that he was looking first to members of ACCE and the U.S. Chamber. He said he was also considering electronic verification systems such as eCertify, an ACCE partner.  

Unless he receives proof from other chambers that they are performing their job adequately and not giving out their stamps, his consulate will not accept their certificates of origin as valid. New criteria his consulate requires include that each certificate be notarized and that a letter from the secretary of the state in which the notary resides must verify the legitimacy of the notary, and the certificate must have the stamp, seal and authorized signature from one of the chambers approved by Issa. He said he would also accept documents with appropriate watermarks issued by U.S. federal agencies. The new requirements exceed international standards of certificate approval.  

The restrictive guidelines will affect some of the world’s largest shipping firms. Issa noted that five large freight forwarding/shipping companies handle about 80 percent of the certificates of origin processed by his consulate. He has told these companies that from now on they must only use the chambers he has designated, and they have agreed to do so. 

Consul General Issa has conferred with the other Egyptian consulates in Los Angeles, Chicago and New York, and his embassy in Washington. He indicated that all of them plan to follow similar policies, thus all 50 states are likely to fall under the new restrictions.

In addition, he has put the certificate fraud issue on the agenda of the next meeting of consular officials in Houston.  About 25 countries are represented in these gatherings.  Issa believes that some other countries may pursue similar policies to the one he has embarked on. 

Chris Mead, senior vice president of ACCE, which hosted the call, drew one lesson from the Consul General’s talk:  “Don’t lend out your seal.”  Perhaps the days of rubber-stamped certificates of origin are drawing to a close.

ACCE will keep you up-to-date about this developing issue and provide best practice information and training regarding certificates of origin in the near future.



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