Kalily E. P.

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Questions & Answers
Here you may find answers to some of your questions.
If your question is not listed please contact us.


How can I be sure that you have the fuel and that you are a real Seller?
Please use your intelligence and a bit of logic. Most banks have changed their view on the oil business due to worldwide AML regulations and the fact that petroleum is a strategical ressource meanwhile. Especially the US and the FED have all their eyes on it due to terrorism financing through fuel sales in the Near East. If we start a deal with you we have to provide our bank all documents they are asking for - and believe us - there are a lot of documents they want. Our banks work with us since many years, we have running operations on these banks in size of billions. Once we provide them our documents which prove the fuel being in place they will sign fully responsible for the goods and our performance. They know us very well, our funds, our refineries and our ability to deliver. Some banks even send authorized persons to get physical evidence of the fuel we signed for in the SPA.

If you send any Bank Guarantee to a "good" bank these days without a valid contract and for a "good & real" deal they have to reject the  SWIFT. Otherwise they risk their reputation and more. We also insist on official  SWIFT in order to make the central banks aware of the deal. All has to be official and transparent.

There is no way that a good bank confirms any instrument assigned to a real deal (with lodged SPA) if something is wrong or missing from our side!

Full Bank Responsibility - What does this mean?
In order to involve banks deeper into the sales process for both sides of the deal for highest possible security, credibility, reliability and avoidance of paper jam and potential fraudulent documents, we – the Seller – hand over the complete process before the first delivery to our bank. Before we dive deeper into the process details here we also have to accept the plus and the minus as usual:

(plus) the major and midsize (top) banks we use strictly follow international laws, regulations and compliance procedures of their jurisdiction. We never use "obscure banks" (http://www.kalily.com.br/obscure--banks-.html). In order to avoid any chance for fraud these banks have their tools for the compliance process which no trader or financier has. This results in a 100% security for Seller and Buyer – no other procedure has this degree of security from the beginning when it starts costing you money.

(minus) banks may be slow and bureaucratic; they have their procedures and you will not know each internal detail of the bank-to-bank process. It simply takes the deal out of our both hands and control until the instrument is confirmed. We also have no influence on the timelines; we only know it will be done in a correct and lawful way.

And before you start reading the next lines: Just think about if we would use this complex and (for us) expensive procedure if at the end we would not have any fuel for you and we risk our bank account (and the fees we paid) due to a fraudulent financial action? Wouldn’t it be easier, if we send you just good "drafted" (Photoshop) documents like all scammers do instead getting into this complex bank-to-bank process? Isn’t this alone enough evidence of our authenticity?

Once the buyer has the FCO signed and sent us the BCL letter we select our sister company and one of its banks which has room for the particular trade and the bank is willing to work with Buyer’s bank (best case: they work already close together).

We transfer to our bank the signed FCO, Buyer’ CIS and the BCL. Now our bank makes the compliance check on the buyer. We are not telling them how to do this. This alone prevents us from most fraudulent approaches from Buyer’s side.
Result >>>> Our bank gives us green light for the deal.

Until now the Buyer may not have spent a dime on his side; maybe a few hundred bucks for the BCL. With 30 million in his account for the minimum amount of 500,000 Barrel kerosene his bank should not charge him much. It is our turn now to spend money – a lot of money. What we accept, as the confirmed BCL Letter shows us the buyer’s real financial background.

We have to send our bank the complete product passport and all related documents for the fuel now. Our bank checks it and they even check the fuel in tanks through their service provider companies at site (i.e. Rotterdam or other loading ports we use). As a result they confirm that the fuel is there ready for the lift. And they do not allow us to sell it to someone else.

We also have to furnish our trading account with at least the value of 4 deliveries (in USD) to warrant to our bank our ability to perform; that we are able to pay all fees, SGS and whatever comes up here. And of course our banks know our performance due to the past and ongoing deals with them since years. They know our refineries, our swap partners, our loading ports and our pipeline and shipping contracts. And we do not use their credit lines – it is all cash what we move. This makes us independent from their mercy.

For all "traders" and "know-it-all" buyers saying that banks do not do this – our banks do it as we pay them to get their full involvement in the deal – means their "Full Bank Responsibility". And for real buyers: when does your bank send a cash backed SBLC with "Full Bank Responsibility"? Correct: when the buyer has sufficient cash in his account. Isn’t it easy to understand? In fact per international banking rules Seller’s bank cannot even accept the MT799 from Buyer’s bank in case there is no solid contract lodged in both banks.

Now our bank is prepared to receive the MT799 from Buyer’s bank with "Full Bank Responsibility"; they have the complete trade-box ready and it has cost us a lot of money already. And they can exchange this with Buyer’s bank through secured lines and screen sharing utilities – whatever both banks agree on. But if the Buyer and/or his bank now play some dirty tricks our bank will user their "Full Bank Responsibility" to attack the other bank and the buyer and his intermediaries by legal and bank authorities and the word "Interpol" becomes a real meaning to fraudsters from here.

But let us only take the positive fast lane here. The MT799/Pre-advice from Buyer’s bank answered by MT799/Acceptance from our bank (sometimes MT999) followed by MT760/SBLC from Buyer’s bank and again our Bank’s official confirmation is normally an easy going transaction without our influence or intervention. Our bank informs us, we get copies, Buyer gets copies and Buyer and seller exchange these copies. The banks strictly follow the SPA procedure which has been signed by the Seller and the Buyer.

Why is this process under normal conditions easy going? Because Banks use the "Full Bank Responsibility". There is no question of verifying docs, no question of verifying funds anymore – it all has been done upfront.

The "Full Bank Responsibility" does not end with the confirmation of the instrument. Our bank usually orders an inspector for the loading process as they want the fuel sold securely and then get paid. Only after this has been completed and the buyer has paid the fuel we get our money from our bank free for our use. Our bank watches the deal based on the underlying SPA – ongoing with "Full Bank Responsibility".

For all "traders" and "know-it-all" buyers saying that we could use their bank guarantee for a private placement: Do they think that our bank under "Full Bank Responsibility" allows us to use the guarantee for anything else than as collateral for the deal? Ask yourself and ask your (hopefully experienced) banker. What Bank in the world would loan funds ( for a PPP’ use for example) against an immediately callable instrument ? No Bank would be in the position to lose his collateral instrument overnight . As most people know all SBLCs and BGs that are used for financial loans and the ones that are used to be placed in trading platform are all NON callable for a year and a day / month.

If both sides rely on each other due to the fact that this procedure exists, that banks use it strictly and therefore funds and product must be in place, then it is a pleasure to process the deal. And nobody should have any second mistrust or bad feeling until it is done.

Why can't we visit your refinery for verification?

We don't want visitors running around in our refineries. We also do not visit your bank to see the funds in place. We saw people in our refineries trying to circumvent us to get better prices from the refinery directly. This is strictly forbidden in Russia without official invitation and leads to huge problems for both sides. The Certificate Of Origin will show the real buyer the source. Without us no Buyer will be able to get the fuel out of Russia.

Why don't you believe in our good documents?
We see too many CorelDraw artists in this business. Everything can be and will be faked. Why spending time and money on verifications each bank-to-bank procedure can avoid?

I am afraid you will trade my bank guarantee in a private placement.
We will never use any guarantee provided by our buyers for trading. It is collateral for a trade, nothing else. What Bank in the world would loan funds (for a PPP’ use for example) against an immediately callable instrument ? No Bank would be in the position to lose its collateral instrument overnight . As most people know all SBLCs and BGs that are used for financial loans and the ones that are used to be placed in trading platform are all NON callable for a year and a day or month.

Why do you need a BCL/RWA letterfrom my bank?

Over the last years we have received more than 100 signed SPAs from Buyers which then never issued any guarantee. Every single approach has been recognized by our banks. And we have been charged for these failed operations and we had to invest a lot funds to keep these accounts operational. Every experienced Trader or Producer knows that banks do not like failed transactions. For these reasons our banks gave us a strict guideline: "No bank account data to any Buyer before we have his complete CIS and any BCL from his bank in hands." We have to shut the doors against non-performers.
As we want to keep our accounts and maintain the excellent relationship to our banks we follow strictly their rules. If the buyer has cash on his account for the guarantee each bank will issue this letter without any problem. This will only stop attempts from Flippers to receive a valid SPA from us in order to shop around for buyers.

By sending us a bank signed BCL/RWA letter the buyer confirms and authorizes our bank to contact his bank. Otherwise the BCL letter is worthless.

Why do you need the Customer Information Sheet (CIS) filled out?
Banks do not accept instruments in regards to petroleum operations without having the  CISof all attending parties in hands for their due diligence. Petroleum is a strategical resource and authorities and especially central banks are watching it carefully. Additionally payments are done in USD - so the FED is also involved in every deal. Our banks know us since decades, but they do not know our new buyers "Kalily Empreendimentos E Participações LTDA.2 and "brap – Brazilien Products Export"or financiers for the guarantees.

Why don't you send me PPOP after I signed the contract?
We all know that more than 95% of players in the field of petroleum trades are Flippers which do not have the funds to buy with own money. They use our docs for shopping around to find a real Buyer. We are not willing to support this.  We have to be absolutely sure that the Buyer has the funds and is willing to buy form us. Otherwise producing the POP - especially the SGS certificates - does not make any sense.
Once Buyer's bank shows us that funds are real with  MT799 our Bank gives Buyer's bank the evidence that we own the product and guarantee our performance by confirmation to the Instrument.  (Our bank will not confirm to the deal if they do not have evidence of both in their hands). After we received the guarantee as SBLC/BG by SWIFT MT760 we will send the full POP as in the  Shipping List already in the name of the Buyer to Buyer's bank. At this point we also give the ATS and Dip Test allowance to the Buyer - who might be a reseller.

What is the difference between "Kalily Empreendimentos E Participações LTDA." and "brap – Brazilien Products Export"?
Both are names are the same company. In Brazil a company can have two names. We use "Kalily Empreendimentos E Participações LTDA." for our trading services outside Brazil and "brap – Brazilien Products Export" for trades inside Brazil. But it is one company.

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