A word of warning to those in search of sponsorship

The large amounts of money that move around in motor racing circles have been known to attract a range of people, from those who are happy to cut a few corners to others who see the potential for a sting. We hear on the Formula 1 grapevine that a rather nasty sting is being perpetrated at the moment.

The story is as follows: an approach is made to a racing team - be that in F1, GP2, A1 Grand Prix or even sports car racing. There is a big unnamed sponsor with an urgent need to spend six million Euros. There is a plausible enough explanation, relating to tax efficiency, and there are hints from the sponsor's representative that that this could be the start of a much bigger long-term deal. The plan is for the sponsor to pay 40% of the money immediately, with 60% at the end of the company's financial year in 2007. The only proviso is that the team must agree to pay the sponsor's marketing agency a fee, of around 30% of the money it receives. This is all totally legal.

The sponsor says that it will provide half the first payment in cash, in Swiss Francs. And requests that half of the fee to the marketing agency also be paid in cash - in Euros. The deal is that the remainder of the money will be sent by wire transfer once the contract is signed and before any cash is exchanged. The plan put forward is for a meeting at a bank in northern Italy. The team is asked to bring an invoice, a sponsorship contract and, let us say, 360,000 Euros in cash. The sponsor says he will appear at the meeting with 1.9m Swiss Francs, half the first sponsorship payment. It has been arranged that both parties will have the ability to use the banks counting machines to verify that the rights amounts of cash are being exchanged. The sponsor says that the other 1.9m Swiss Frances will be sent by wire transfer after the contracts are signed and before the cash is exchanged. The team will be able to wait until it receives confirmation that the wire transfer has arrived at its bank, then, and only then, will the team and the sponsor exchange their cash.

The sponsor's representative goes on to say that the brand and the contracting sponsor's vehicle will all be revealed at the meeting, identities will be confirmed by passports, and all relevant details can then be included in the contract and the invoice.

For a student of racing sponsorship deals, this sounds like the sort of deals that were rumoured to have been around motor racing back in the 1980s, which allowed companies to move money in and out of countries which had currency restrictions, using a double invoice scheme. The team may suspect that the deal is slightly dodgy but the money is tempting. The team sends its marketing people to the bank with the cash. The contract is signed. The wire transfer instructions are given by the sponsor. Within the hour the bank provides a copy of a telex confirming safe receipt, and the cash, once counted, is exchanged. Everyone departs as friends.

The problem is that no money has been wired. The sponsor has a man on the inside of the bank who has faked the wire transfer. When the team tries to contact the sponsor, they discover that the contact numbers no longer work and that the IDs provided were also fakes. The 1.9m Swiss Francs they have turns out to be counterfeit money. Swiss Francs are not easy to counterfeit but there are, apparently, some very good copies now coming out of Asia.

The team decides that it is probably best not to tell the police because the deal was a little on the dodgy side and thus a perfect crime has been perpetrated with the bandits getting away with 360,000 Euros.

There is, apparently, a twist to the scam that ensures that the crooks get the money no matter what. Once the team commits to the meeting, the crooks keep an eye on them. If there are signs that the team is suspicious the party carrying the cash will be mugged before the meeting. If the team asks for checks to be made on the cash at the bank and decides not to get involved, the party will be mugged on its way home.

The only way to stop such a scam is to publicise it - without naming names.

Which is what we are doing here.

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