Local businessman warns of highly sophisticated scam

A local businessman has spoken out on the need for individuals and business owners to be extra vigilant after he became the target of a highly sophisticated scam.

Ivan Merrick admits that if the sophisticated scam had been successful, he would have stood to lose close to €100,000 which would have forced him out of business.

Mr Merrick is the managing director of a specialist pump distribution company in Athlone called Fraser Ross Ltd., which provides engineering solutions for the storage, transfer, control and recording of all liquids and gases throughout Ireland.

One of the company's biggest customers is the ESB group, so he admits that he was “not alarmed in any way” when he received a request last month for a quotation for 25 hydraulic pumps, considering the fir had been doing business with the ESB since 1955.

The ESB request for quotation form stipulated that Fraser Ross quote them on a particular brand of pump, so Ivan Merrick did a search on the internet for the brand, and located what he thought was the legitimate specialist pipe company supplier.

He said the company he found had a registered address in Kwazul-Natal in South Africa, so he downloaded the company's 56-page brochure and sent it to the person who contacted him as the supply chain manager in the ESB, he recalls. “At that point, everything seemed to be above board and legitimate, so I thought.”

The net cost of each individual pump was €3,090 and the total cost of the order purported to be placed by the ESB Group Limited with Fraser Ross Ltd. was for €95,017.50.

The purported ESB order came “totally out of the blue” and Ivan Merrick said he was “delighted” to get such a big order and saw it as a great opportunity for his company.

He then began corresponding simultaneously with what he thought was the ESB Group and the South African-based pipe supply company in relation to the order in an effort to sort out issues such as payment, transportation and shipping and initially he had “no reason whatsoever” to believe that he might be about to fall victim to a sophisticated scam.

However, when he was told by the South African suppliers that their trading terms were “50% with order and 50% before dispatch” he was forced to go to his own bank to try to raise funds to pay for the pumps.

“I began asking myself why I should have to go round and try to source funding for this order when I was dealing with a big semi-State company like the ESB so I decided to ring the ESB and ask for the person I had been corresponding with.”

That phonecall to the ESB Group head office in Dublin revealed that no person of that name worked for the company, so Ivan Merrick again contacted the pipe suppliers in South Africa by email to inform then that he feared the inquiry he had received was a scam. “I asked them if they had any inquiry from Ireland for these types of pumps and the quantity and the response I received confirmed my suspicions that it was indeed a scam,” says Mr Merrick.

The company came back to Fraser Ross to say “we supply to many companies in Ireland and we do get orders above the requested quantities most of the time.” The email also warned Mr Merrick to “please be vigilant.”

The email set off alarm bells.

“The pump in question is highly specialised and is only used now for steam-generated power stations, which are almost a thing of the past, so why would Irish companies be placing order for multiples of these pumps?” he explained.

While conducting a detailed trawl through all his email correspondence with both the ESB Group and the company in South Africa, Ivan Merrick noticed that the supply chain address for the ESB was .com, instead of .ie but admits that he had not noticed this before.

He also did a google street view search of the address in Kwazulu-Natal in South Africa which was the purported headquarters of the pipe supply company, only to discover that it was the address of a packaging company.

However, he points out that the 56-page brochure which he downloaded from their website on the specialist pumps ordered by the ESB was “an exact replica” of the brochure from another company based in India, who are the legitimate suppliers of the pump in question.

“Basically, the scammers were operating at both ends of the transaction and they cloned both the ESB website and the brochure for the pumps, so it was an extremely sophisticated scam,” says Ivan.

Merrick subsequently got in touch with the ESB to enquire if it has a fraud department and says he is “still waiting on a return phonecall” and he also reported the incident to the Garda fraud division in the Phoenix Park.

“They told me that they couldn't do anything to assist me unless I had actually been scammed, and I found their attitude to be alarming and very disturbing, to be honest,” he says, adding that it was “a bit like closing the door after the horse had bolted.”

Mr Merrick is heavily involved with the Midland Business Network and said he has already outlined the circumstances of the near-miss to his fellow members.

“I think everyone needs to be much more pro-active as the scams are getting more and more sophisticated and daring all the time” he says.

“There is no way a small company like mine could have absorbed a loss like that, I would have had no option other than liquidation, that's how close it was,” he told the Westmeath Independent.