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I would love to see dollar values or ratios and the timing on this type of scheme. If they pay $80 million in "cash" for a steel plant and then turn around and
by crusty 5y ago
I would love to see dollar values or ratios and the timing on this type of scheme.
If they pay $80 million in "cash" for a steel plant and then turn around and ask a legitimate bank for a loan with the plant as collateral, how much can they realistically get for the loan? Any amount is going to be a lot and the lender is assuming that risk, so one would think that due diligence would consider the unique depreciation that could occur in an asset that requires massive maintenance inputs to maintain sustainable operability and hold it's capital value, and that they would build in some contractual mechanism to monitor the value of the asset and enforce it's upkeep.
Even a car dealerships does this with leased vehicles to ensure that the value of the car they get back at the end of the lease matches their projections closely enough that they can sell it off again.
- skybrian 5y agoWhen laundering money, "clean" money is worth more to them than "dirty" money, so substantial losses would be part of the plan. And yes, banks try not to be defrauded. "Due diligence" is about catching problems like this or at least reducing them to manageable levels. But I don't know the details; I just read a book about fraud.