Case of the empty crates

Fraudulent use of letters of credit has run rampant in Libya amid a chaotic civil war. We look at cases in this opaque corner of the trade finance market to better understand how fraudsters are exploiting a financial instrument that helps drive global trade but also opens doors for wrongdoing.

In the early to mid-2000s, Libyan authorities started to notice a strange phenomenon at the country’s ports all along its Mediterranean coast. Ships were delivering containers that were either empty or filled with rotten goods or heavy substances like sand. This was certainly odd and concerning for a nation that desperately needed to import a whole range of basic goods from medicine to food during an ongoing and bloody civil war. But the country’s financial regulator — the Libyan Audit Bureau (LAB) — had few doubts about who the culprits were and why this was happening.