PXL/HO/Cir-004/2022-23 Date: 25.04.2022
Subject: Trade complaints against KAFKAZ Finans and Mugam Bank, Azerbaijan
Council is in receipt of communication from our Indian Embassy in Baku, Azerbaijan wherein they have received multiple complaintsfrom Indian companies dealing with different products about alleged cheating by local(Azerbaijan) entities i.e. Mugan Bank and KAFKAZ Finance in Azerbaijan. The Indian companies complained to embassy that they sent the required CAD (Cash Against Document) and SWIFT messages to MuganBank in order to collect the amount from buyer (KAFKAZ Finans) before releasing the documents, however Mugan Bank released the documents without receiving the due amount.
On receiving the documents, KAFKAZ Finans got the consignment released and did not pay the amount to the relevant Indian company on one pretext or another. The Indian companies claim that there is a nexus between Mugan Bank and KAFKAZ Finans to cheat the exporters as they have been repeatedly following up with KAFKAZ Finans to release their dues; however the same remains unpaid as on date. As per the feedback from Indian companies, it is understood that Mugan Bank releases the documents to KAFKAZ finans without honoring the terms and conditions mentioned in the LC and without informing the Indian bank about any shortfall in documents.
Our Indian mission in Baku, Azerbaijan has also written to Mugan Bank, Central Bank of Azerbaijan and Azerbaijani Ministry of Foreign Affairs (MFA) however there is no positive response on the subject matter. As per a recent response from MFA, it has been advised that the company may appeal to an arbitration court in accordance with the procedure established by the law which would be a troublesome procedure.
Member companies dealing in the Azerbaijan market are requested to take note of this important information and be careful while dealing with such companies / banks. The above information is being issued in favor of Indian companies to avoid such unpleasant situations in bilateral trade.