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Diamond Deal

The law of the sea.

Diamond Deal

Postby Cadwaladr » Tue Nov 08, 2016 8:47 pm

Gentlemen:

I've questions on diamonds. African Suppliers from various nations, case by case, can offer a signed FCO for a quantity of diamonds offered. I am an intermediary who passes the FCO to the Buyers representative before me. Buyers ask how to prove the product. In turn the usual procedures begin from Buyer. A broker is on either side of me. I'm just entering this type of negotiations and have yet to engage in a transaction. NCND is signed with the intermediary before me but no others as yet. Are these practical? How to protect against curcumvention? How tro insure the commissions will actually be paid if the deal goes through? And any other advice to avoid trouble is most appreciated.  Thanks.

Buyer insists that Sellers follow his procedures:

1. Submit an UFCO(Un-sanitized Full Corporate Offer)/signed manifest from the seller. 2. UFCO will be reviewed and clarified by the buyer’s legal representative. 3. Upon acceptance of UFCO by buyer, a conditional LOI will be issued subject to required documentation, sale and purchase agreements, and adjusted procedures, if necessary. 4. Proof of Product Letter or current bank statement received from the Seller Bank is REQUIRED. This Proof of Product Letter, or current bank account statement, must state that the commodity is legally obtained and titled and freely tradable, and free from any and all encumbrances, and currently on deposit in an international bank. A copy of this Proof of Product letter will be given to the buyer’s legal representative who will verify the contents of the Proof of Product Letter, or current bank statement, with the Seller’s Bank Officer per the Sale and Purchase Agreement to verify proper source identification. 5. Once this confirmation process is completed, the Buyer Bank will enter into the transaction with the Seller’s Bank Bullion Officer with the full bank responsibility to provide proof of funds and proceed with the transaction to a formal contract closing. Seller has sent a signed FCO and wants a TTM in Ghana, in this case.

The Buyer I am dealing with don't want to travel to Ghana, or anywhere. And ask for a sample from Seller. No reply from Seller, as yet

Other Buyers have offered to meet elsewhere, such as South Africa, Europe, etc. but Seller refuses. You've said in prior answer sections that the NCND/POP/LOI etc type deals are all rubbish. I fear that this deal is the same as Buyers and Seller are asking for these documents. Does this seem like a realistic deal? As I do not have a direct contact with end Buyer and Seller, I am forced to go through other intermediaries. I doubt the Buyer will send a LC into my account as an intermediary. And the Seller will ask for the LOI from end Buyer. Is there a way to remedy the situation to insure commissions, etc. other than blind trust to the other intermediaries on either side of me? How can I obtain URPIB Rules of Trade: Full Version 1988-2007?

I await the reply at earliest. Thanks.

Best regards,

Joe  
Cadwaladr
 
Posts: 47
Joined: Fri Jan 17, 2014 4:35 pm

Diamond Deal

Postby Valdemar » Wed Nov 09, 2016 12:41 pm

Dear Joe

(1) URPIB:Intermediaries shall not trade in Diamonds-

URPIB is available for sale(inexpensive sale) Online soon, and comes already included the publications "The world is yours"-it's not available as a full free online publication anymore-

(2) Now having said the above lets assume that "You have a diamond deal" you cannot refuse-Lets play with that idea.

(3) AS you have already  read- QUOTE: "You've said in prior answer sections that the NCND/POP/LOI etc type deals are all rubbish"

I don't say such things in a world where 99& of traders are plying such edicts-without being 100% sure. I would be in deep hot water very quickly- Now understand  that I have been making such a statement since 2001 online, and except for a few that I like to call "bird brains"- I have not been challenged once by anyone worth challenging- Not to mention the fact that I have International bankers and lawyers as  trained FTN Agents on board-

A true Intermediary - is indeed a rare breed and a very specialized feild of applications-

(4)To begin with if you are dealing in "Conflict diamonds " by accident- Say good-by to the Diamond and money if caught. Having said that now think about it in depth - Diamonds specifically relate to quality ratings in particular,flaws- I.e : Colour White  VSI(very small inclusions)  would have a much higher value that the same size stone which is graded to to lower quality -

So unlike other commodities - A hand full of diamonds worth a million dollars has to be sighted by the buyer- or an Authorized representative of the the Buyer taking possession of such goods-

Thus already - we are in trouble, circumvention is guaranteed-There is no way to secure the deal from the start-So why initiate such a  start..?

Try securing one 5000 MT of cheap sugar or corn or Rice or even bitumen- you'll make a small fortune if you sold it, and done so  without even leaving home- So why even considers such  precarious deal as "Diamonds"-

(5)QUOTE:"Submit an UFCO(Un-sanitized Full Corporate Offer)/signed manifest from the seller"- WRONG:

(a) You are the seller - you have the OFFER from the "supplier " and not another "Seller" unless you are working for the "seller" and not yourself-which means when you find the end buyer , the seller takes over- If the deal closes you get your commission from the seller- NO GOOD :(a) Circumvention will most likely prevail-Especially if the seller is dishonorable and unskilled in closing such  deal anyway-(b) URPIB: Intermediary must not lose control of deal- If you have a quote from another Seller - you cannot make an offer to resell in your name- BUT IF YOU HAVE AN OFFER FROM A SUPPLIER you can make and offer in your own name as "SELLER acting on behalf of an undisclosed principal"- and there you go YOU as a "sourcing Intermediary" you convert to he position of  SELLER - You have full control of the deal-If you know how? and have the required knowledge an skill-

You make an offer as SELLER to YOUR End Buyer means you cannot be circumvented , nor the people you are protecting-

(6)QUOTE: Upon acceptance of UFCO by buyer, a conditional LOI will be issued subject..etc..etc..WRONG:

(a) The Buyer has two options to accepts the Offer or Not accept the offer- If he accepts the offer , Draft contracts are issued , if he wants the offer changed, the original offer is rejected because it has become qualified , and if you can meet with the new demands an New offer is issued accordingly with a new transaction coded- this is called a "counter-offer"- One way or another the offer has to be accepted, and the offer needs to be very detailed indeed to exactly defining what's being offered with Tolerance applied-

(7) QUOTE: Proof of Product Letter or current bank statement received from the Seller Bank is REQUIRED..ec..et..WRONG:

"Proof of funds does not mean Intent to purchase"

Banks cannot become involved in the sales contract "UCP 600 rules - Article 3" make this very clear- and since most Other few Private banks/Financial institutions  have copied or adopted UCP600 DLC issuance  application in one way or another, you'll find that you are also trading in a criically flawed application as far as contract applications  are concerned as well-

BANKS DEAL IN MONEY- THEY KNOW NOTHING OF GOLD, CHICKEN, CANNED TOMATOES, FROZEN FISH, DIAMONDS, UREA, SUGAR AND THE LIKES-

The bank deals in money - PRODUCE the documents as per THE TERMS AND CONDITIONS OF THE CREDIT  And the BANK not THE buyer will IRREVOCABLY guarantee payment-

THATS THE BANK'S  ROLL- IN OTHER WORDS , THE CREDIT SAYS "DIAMONDS" BUT THE SALES CONTRACT SAYS " TUNA FISH"- THE BANK DOES NOT CARE- SO LONG AS DIAMONDS ARE IMPLIED CORRECTLY  ON THE CREDIT AND NOT TUNA FISH IT WILL PAY-IF ALL THE "DELIVERY" DOCUMENTS ARE IN ORDER-(TITLE DOCUMENTS)

(8) And here your biggest problem is met-

No one is going to give you for example 1.2 million dollar DLC so you can transfer to a "supplier" his one million dollars asking price-for"fresh air"- That's not going happen-

The very best situation which may have the smallest chance of success in actually closing, is to ask the BUYER to issues a " UCP600 Pre-advised " DLC- With the Pre advised DLC in your possession- you advise a In house UCP600 supported credit on your own letters head(now allowed since 1st July 2007), declaring that Financial status is ready to be obtained  upon certain conditions prevailing-THE SUPPLIERS BANK THEN AUTHENTICATES THE PRE-ADVISED credit STATUS WITH YOUR BANK-if it all true and correctly authenticated(you fee's), then as PER YOUR contract with the supplier and YOUR CONTRACT with the Buyer - you become a special type of Intermediary -

YOU now MEDIATE on the deal-

The conditions on YOUR CONTRACT to each party will state- a meeting  at a safe  designated place-(YOU arrange as such on your contracts-) You as the third party obtain their passports and hold them in a secured place until the deal is closed-(i.e: Europe , where banks require people using their facilities are required to surrender their passports first)  The Seller  produces the Diamond, the buyer looks st it and  accepts the diamond and  price- You accept the title certificate Numbers of the the diamonds- you go to the the designated bank officer , which is a corresponding bank of the supplier and the buyer-  and cause the pre advised DLC to becomes active,by surrendering the title certificates as a main delivery document-(Your expense, all fee's are yours) to which the Million dollar price tag value is then transferred into the Suppliers account-  after  the title documents has first been endorsed to the buyer bank- Once all documents meets with the buyer credit condition, the buyers bank will allow Collection to occur- You get 200,000 dolars that remains your acount, the supplier gets his million dollars, the Buyers bank has title of the diamond-

So the meeting will last at least 10 days(more expenses) - thats how long it could take- as internal authenticating procedures takes its course-

The supplier check his account- the funds are cleared , the Diamond is handed over in possession of the  Buyer- Passports are returned - and its done-

NOW JOE OBVIOUSLY I CAN ONLY GIVE AN OUTLINE OF SUCH EVENTS assume there is much more in between, BUT SOMETHING LIKE  AS STATED  IS THE COURSE THAT MUST BE APPLIED- ARE YOU GOING TO DO ALL THAT JOE..? ARE YOU PREPARED TO APPLY SUCH EFFORTS JOE...?ARE YOU THAT SKILLED IN ABILITIES TO KNOW EXACTLY WHAT NEEDS TO BE DONE,and  HOW TO ENSURE CONTRACTS ARE TIGHT..?

As for the rest Joe of your question ,it cannot be made to apply- Banks do not deal in such matters- they deal in money, that goes for all commodity dealings as far as an intermediary is concerned-

1///OFFER

2///CONTRACT

3///PRE ADVISED DLC

4///MEETING/CERTIFICATES SURRENDERED.PADLC MADE INTO TDLC

5///DOCUMENTS/PRESENTATION /ACCEPTANCE

6///DELIVERY

7///COLLECTION

8/// PHYSICAL EXCHANGE/POSSSESION

9///PASSPORTS RETURNED-DEAL DONE-

URPIB:Implies- "Intermediaries shall not deal in Diamonds"- Now makes good sense-

I hope the above is of help-

Kind Regards

Davide.G.A.Papa

AGI-Academy of Global intermediaries

www.ftnexporting.com  
Valdemar
 
Posts: 38
Joined: Fri Jan 31, 2014 3:02 am


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