Tempo LTD

May 18, 2018 Business

In this case Fatih Terim is trying to decide whether or not to enter a barter trade with North Koreans in which he would send Turkish chemicals in exchange for kereste (Lumber). Because of trade sanctions between Turkey and North Korea this transaction would not be legitimate because there would be some bribing and other extracurricular activities to complete the deal. Terim tried to justify going through with the deal because he concluded that if he did not make the deal then someone else would.

If it were me in this situation, I would not pursue the deal no matter how substantial because there are some significant risks involved. If caught he would have to pay a fine of double the sum of the value of goods entering the country. If Terim had much of a business after that, he might have a hard time gaining the trust of potential customers and suppliers in the future because they would be aware of his shady business tactics. On the other hand if the deal works out then Terim could become very rich and have a large new customer with which he can do business in the future.

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I would suggest passing on this opportunity because there are too many variables where problems can arise and make this a “no sale”. The total cost to get the goods to Turkey through Romania would include $42,000USD for shipping from North Korea to Romania, $10,211USD to generate false documents, $6,250USD for handling fees at the Liman (port), $3,100USD for Suez Canal charges, and $15,000USD for trucking the goods into Turkey for a total cost of $76,561USD which does not include the cost of the chemicals which was not given.

The lumber should sell for $500,000USD once inside of Turkish borders. This would take 43 days. The total cost to get the goods to Turkey through Syria would include $33,000USD for shipping from North Korea to Syria, $50,000USD for the rusvet or bribe at the border, $6,250USD for the handling fees at the Liman (port), $3,100USD for Suez Canal charges, and $12,000USD for trucking the goods into Turkey for a total cost of $104,350USD which does not include the cost of the chemicals which was not given.

The lumber should sell for $500,000USD once inside the Turkish borders. This would take 22 days. Terim would have to decide if he wants to go with the less expensive option that will take longer which would leave more time for things to go wrong and less time for him to sell the lumber in order to pay for the chemicals. He could decide to go with the more expensive option that will get him the lumber faster which leaves less chance that he will face transportation issues and more time for him to sell the lumber to pay the chemical suppliers.

I would probably choose the second option because I would not feel comfortable having my product in transit twice as long as if I chose another option. I would be adding more risk to an already risky situation so I would want my goods as quickly as possible to be able to sell them and keep my suppliers and customers happy in case I wanted to do similar business in the future. Some of the other costs that might need to be discussed that were not mentioned in the case would be the cost of the chemicals that Terim is using to barter. Also what costs are associated with transporting those goods to North Korea?

Terim would need to know if he would have to make false documents or make bribes to get the goods out of Turkey the same way he would need to do it to get them in the country. Some risks involved would be someone finding out about the illegitimate deal and turning him in or wanting a piece of his profits from the lumber. What if some of the lumber is stolen while in transit because the carrier is aware of the illicit nature of the deal and knows Terim couldn’t go to the authorities to resolve the issue? How much does George Hagi the Romanian connection expect to make from this deal?

How much would Terim have to pay to entertain and accommodate the North Korean bureaucrats when they come for ‘inspection’? Will this transaction affect Terim’s business in the future? Bribes should not be included in the supply chain, but that does not mean it will not take place. If people want something bad enough and offer the right people the right compensation then deals that are suspicious can happen. I would assume bribes are only involved in illicit dealings because if you were not doing anything wrong, then there would be no reason to pay somebody off with money or whatever allows the transaction to be completed.

Offering or accepting bribes shows a lack of integrity, and I know I would not want to do business with people like that because they only care about themselves not your business or your customers. The fact that Terim is even considering making this deal is alarming for me. I guess things just work differently in other parts of the world because bribing or forging documents should not be part of anyone’s business practices. He might make a lot of money on this deal but it can also cost him a lot if he is caught. To me no amount of money is worth going to jail or ruining my reputation.

Also what if North Korea is not using the chemicals for fertilizer, but rather using it to make chemical weapons to use for War? Terim would be directly responsible for aiding terrorists because he wanted to make some money. There is obviously a reason that Terim’s country Turkey has trade barriers with North Korea, and he should respect and honor those rules or laws rather than trying to circumvent them. With such corruption it is hard to imagine this deal being completed without it costing more than Terim has projected.


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