Case study · Investigations
The Customer That Didn't Exist Yet
A logistics company signed a credit contract with a customer a week before it was incorporated, and paid the customer's sister company to move goods that may never have moved.
- Sham counterparties & fictitious transactions
- Proxy, front & related-party vendors
- Undisclosed conflict of interest
- Overbilling & inflated invoicing
- Kickbacks
- Fund siphoning & round-tripping
- Forgery & document fabrication
- bad-debt exposure
- ₹1+ Crbad-debt exposure
- personal benefit estimated
- ~₹27 lakhpersonal benefit estimated
- of freight advanced against unverified movement
- ~80%of freight advanced against unverified movement
- employees implicated
- 2employees implicated
01The situation
The company financed both sides of a trade, and was left holding the receivable.
A management audit of a freight brokerage flagged a customer with a large unpaid balance and a transporter that had received heavy advances for the same lanes. The key account manager handled both. Management asked us to find out what had happened.
How it came to us
Exception patterns found during a routine management audit.
02How it worked
- 01A known transporter brought the key account manager a new customer. The customer and the transporter shared a director.
- 02The company signed the customer on 30-day credit terms and engaged the transporter, paying about 80% of freight in advance.
- 03Movement was evidenced by loose, unsigned and partly fabricated consignment notes.
- 04Goods effectively moved between related entities while the logistics company financed the trade. The customer then stopped paying.
- 05In parallel, the manager inflated vendor quotes before circulating them internally and earned commission through a freight firm in his spouse's name.
Swipe sideways to see the whole diagram.
- Outside parties
- Insiders involved
- The organisation
- Where the money ended up
- Channels & documents
- Repeats / feeds back
How it was hidden
One person created consignment notes, booked sales and approved vendor bills. His superior approved without reading the trail. The agreement was backdated, documents were never signed, and the side firm ran from home in the spouse's name.
03The challenge
Establish whether the customer, the transporter and the movements were real, using only the company's own records, with no access to the counterparties.
What made it hard
- Two group companies
- Counterparties with shell-like features and wide directorship networks
- Poor documentation and editable invoices
- No access to counterparty records
Red flags that were there to see
- Agreement dated before the customer existed
- Common director across customer and transporter
- Supporting documents inconsistent with the counterparty's status
- Movement records that did not look genuine
- Service continued after the contract expired
- Credit to the customer and advances to the transporter at once
04Our approach
- Workstream 01
Document and transaction review
Contracts, consignment notes, invoices and ledgers across both group companies.
- Workstream 02
Corporate and tax records
Directorships, incorporation dates and registration status of every counterparty.
- Workstream 03
Transaction analytics
Tested the movement records for consistency with genuine activity.
- Workstream 04
Personal financial review
Source-and-application analysis of the manager's accounts.
- Workstream 05
Address and background checks
Verified counterparty premises and principals.
The breakthrough
Corporate-record checks showed the customer signed its agreement before it legally existed, through a person who later became a director of the transporter. Transaction analytics showed the paperwork could not reflect genuine movements.
05What we found & did
- A related customer-transporter arrangement was financed by the company.
- The customer agreement was backdated and signed before incorporation.
- Consignment notes were deficient or fabricated, with overloading overcharges.
- An undisclosed side business in the spouse's name was run from office systems.
- Vendor quotes were inflated before internal circulation.
- Smaller payments also reached him from transporter-linked firms.
06The impact
Management received a clear account of how the receivable was created, the personal benefit to the employee, an approval lapse by his superior and a second employee moonlighting with vendors, with recommended onboarding and segregation controls.
- bad-debt exposure
- ₹1+ Crbad-debt exposure
- personal benefit estimated
- ~₹27 lakhpersonal benefit estimated
- of freight advanced against unverified movement
- ~80%of freight advanced against unverified movement
- employees implicated
- 2employees implicated
07Lessons for your business
The controls that would have stopped this, or caught it sooner:
- Verify every new customer and vendor before the first load.
- Never let one person create consignment notes, book sales and approve vendor bills.
- Release advances only against independent proof of movement.
- Stop service when a contract expires.
~₹5 Crundue benefit quantified
The CEO's Three Vendors
A subsidiary CEO routed a rural retail rollout through vendors fronted by his own associates. The money trail led back to him.
- Procurement reconstruction
- Corporate and statutory records
- Ground intelligence
- Funds-flow tracing
US$4.7M+diversion traced to the founder
Zero Skin in the Game
An investor funded a road-construction contractor. Within months, the founder's own contribution had quietly gone to zero and the diversion had begun.
- Records digitisation
- Funds-flow reconstruction
- Personal wealth analysis
- Corporate and property records
~1Memails and documents reviewed
The Fortune That Wasn't There
Shareholders suspected their managing director of hiding a fortune. On the data available, the money trail did not support that suspicion, and it surfaced employee frauds instead.
- Digital forensics
- Source and application of funds
- Related-party mapping
- Market intelligence
Client names and identifying details are withheld to protect confidentiality. Specific references and client experiences can be shared on request, with the client’s consent.
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