SFS Chapter 356 Flood
Chapter 356 Flood
(Two chapters today~)
Wednesday, November 14, 1990.
Osaka, Kitahama.
The fax machine in the finance department of Sumitomo Bank's Osaka headquarters started ringing at 9:06 a.m.
The first person to walk over was a young employee who had been with the company for three years. He originally thought it was another set of supplementary materials sent by Sumitomo Chemical, and he was still holding the "Foreign Exchange Position Review Form" that he had just prepared the night before.
He still vividly remembers the ashen face of Managing Director Yasui yesterday; surely nothing worse could happen today?
But when he tore off the thermal paper and looked up, his finger paused at the edge of the paper.
[Sumitomo Metal Corporation Secretariat]
He subconsciously looked at the first line of the text.
[Notification Regarding Preliminary Review of Documents Related to Export Transactions with POSCO, South Korea]
The young employee's back stiffened slightly.
The amount is clearly stated in the amount column.
Seven million four hundred thousand US dollars.
A steel export transaction between Sumitomo Metal and POSCO in South Korea.
The entire notice was only one page long, with a neat format and restrained wording.
[Given the risks associated with recent overseas settlement transactions regarding shipping schedules, letter of credit terms, and foreign exchange settlement timing, to ensure the stability of transaction fulfillment, our company has commissioned Saionji Trading's Osaka office to conduct external document pre-screening and letter of credit term review of relevant export documents.]
This notification is merely a transactional copy of the risk diversification arrangement and does not affect your existing business relationship as the primary bank.
The young employee froze when he saw the words "transactional copy".
Feeding...no way?
The original documents were not delivered.
None of the following documents were delivered: commercial invoices, packing lists, draft letters of credit, or correspondence with the buyer's bank.
Sumitomo Bank's Osaka headquarters only received a copy of the notification.
In other words, Sumitomo Metal did not request the finance department to review the application.
They simply informed Sumitomo Bank.
OI! I've already handed this over to someone else!
The young employee, carrying a fax paper, hurried toward the executive office.
At 9:11, Yasui received the first notification.
He didn't speak immediately.
The only sound in the office was the soft rustling of papers being turned.
The young employee stood in front of the desk, his hands pressed against the seams of his trousers, even his breathing was slowed down.
Yasui finished reading that page of the fax, and then read it again from the beginning.
On the second pass, his gaze lingered for a long time on the three sets of terms: "external document pre-approval," "risk diversification arrangement," and "transactional copy."
These words are all very clean.
So clean that you can't find any fault with it.
Sumitomo Metal didn't accuse Sumitomo Bank of negligence, Osaka headquarters of deliberate delays, or threaten to sever ties with its parent bank. They even preserved Sumitomo Bank's dignity in their final statement.
However, sometimes dignity is more hurtful than criticism.
Accusations imply that there is still room for debate.
Being dignified means that the other party has given up on arguing with you.
He laid the fax paper flat on the table.
"Have we arrived at the plum orchard yet?"
The young employee immediately replied, "We've already notified them; the deputy minister is coming over from the foreign exchange management department."
Yasui did not speak again.
Surprisingly, this time he didn't feel anything, and he couldn't even muster the energy to be angry.
The other party is too large; not only are they well-funded, but their background is also impeccable.
On our side? Not to mention Ito Man's messy affairs, his own family is also stabbing us in the back.
Oh, right, they haven't even played their political cards yet, and we're already at a disadvantage on our side...
This is a game that is destined to be lost.
……
At 10:32 a.m., the second fax machine rang.
This time, several employees in the financing department looked up almost simultaneously.
The female employee in charge of receiving mail walked to the fax machine, tore off a piece of paper, glanced at it, and her expression changed.
[Sumitomo Electric Industries, Ltd. Secretariat]
[Notification Regarding the Review of Soft Clauses in Letters of Credit Related to Singapore Cable Export Business]
The amount is four million one hundred thousand US dollars.
The language used in the main text remains restrained.
[Our company has commissioned Saionji Trading Co., Ltd. to conduct external confirmation regarding the correspondence between the letter of credit soft clauses and insurance clauses, as well as the alternative advising bank path for this transaction.]
[These arrangements are risk diversification measures based on transaction security and shipping schedule stability, and are hereby copied to your bank.]
Alternate notification line path.
Meichang stood in front of the fax machine, looking at these words, and the muscles on his face twitched slightly.
This statement from Sumitomo Electric Industries is even more scathing than that from Sumitomo Metal Industries.
They not only sent the documents to Saionji Commercial for preliminary review, but also confirmed the alternative notification route.
This means that if Sumitomo Bank continues to use "technical review" to block the letter of credit notification or discounting process, Sumitomo Electric Industries can at any time remove its business from Sumitomo Bank's channels and switch to Citibank, DBS, HSBC, or even other foreign banks.
Yes, they did not publicly break off relations.
They simply prepared an extra option for every transaction.
Umeba suddenly remembered the word that Yasui had mentioned a few days ago.
flood.
Water never comes in by breaking down a door.
It seeped in through the crack in the door first.
Then there's the corner.
Then comes the floor.
By the time the people finally looked down and saw the water, the entire house was already soaked.
At 1:07 PM, the third notification was delivered.
[Secretariat, Sumitomo Light Metal Industries, Ltd.]
The amount is one million nine hundred thousand US dollars.
The business involves the procurement of aluminum processing equipment.
[Our company has commissioned Saionji Trading Co., Ltd. to conduct a preliminary review of the payment terms, letter of credit route, and shipping documents for the imported equipment. The original copies of the relevant documents are currently held by our Foreign Trade Management Department. If your company requires further confirmation, please contact our Secretariat.]
This time, no one in the financing department spoke.
Even the youngest employee understood it.
Sumitomo Light Metals closed the door even tighter.
They opted to exclude all original documents from the financing department.
"Please contact the secretariat for confirmation."
This means that these businesses have moved beyond the ordinary financing process and are now under the joint supervision of the president's office and the company's legal department.
When Umeba walked into Yasui's office with the third fax, Yasui was looking at the two notices he had received that morning.
Three sheets of thermal paper are laid out side by side on the table.
Sumitomo Metal.
Sumitomo Electric Industries.
Sumitomo Light Metals.
In addition, Sumitomo Chemical, which has already successfully completed its research and development process.
All four manufacturing companies were mobilized.
Or rather, they all betrayed them through "non-cooperation."
Yasui looked up at the plum field.
"Where is the original document?"
The sound from the plum field was very low.
"They didn't come in."
"What about the Foreign Trade Management Department?"
"Sumitomo Metal said that the original documents will not be lent out during the preliminary review period. Sumitomo Electric Industries stated that the draft letter of credit is being externally reviewed. Sumitomo Light Metals told us to contact their secretariat."
Yasui's fingers slowly pressed down on the table.
"How long can Ito Man hold out?"
Mei Chang did not respond.
Yasui stared at the three faxes and suddenly let out a long breath.
"Well, whatever. Let fate decide..."
……
4-chome, Honmachi, Chuo-ku, Osaka City.
The fourth floor of the Second Beauty Building.
After nine o'clock in the morning, the six fax machines in room 401 were almost constantly running.
The machine closest to the window receives Sumitomo Metal materials, the one next to it connects to Sumitomo Electric Industries, and the third connects to Sumitomo Light Metal. The remaining three machines are connected to the Tokyo headquarters, the Citibank Tokyo branch, and the foreign bank windows in Singapore, respectively.
Paper is continuously ejected from the paper output slot.
The smell of thermal paper permeated the air, creating a tense and busy atmosphere in the small office.
Nagata stood in the center of the office area.
He wasn't wearing a coat today; the cuffs of his white shirt were rolled up to his forearms, and his tie clip had been removed and placed on the corner of the table.
In front of him was a temporary whiteboard with six lines drawn on it in black marker.
Letter of Credit Terms
【Insurance】
[Bill of lading and shipping company endorsement]
Foreign exchange exposure
[Genuine Trade Verification]
[Contact with Foreign Banks]
Below each line, a name and a deadline are displayed.
"Sumitomo Metal, POSCO, seven million four hundred thousand US dollars." Nagata picked up the first stack of fax papers and handed it directly to a gray-haired man on his left. "Mr. Saeki, please review the soft terms first. Especially the buyer's inspection certificate, the pre-shipment quality confirmation, and the payment trigger conditions."
"clear."
Saeki used to be the letter of credit manager at Ataka Sangyo's steel division. Three months ago, he was still queuing at the job placement agency in front of Osaka Station.
Today, he sat back down at his desk, picked up a red pen, and circled two problems on the first draft of the letter of credit in just four minutes.
"The buyer reserves the right to raise further quality objections within ten business days after shipment." Saeki didn't look up. "This is unacceptable; it's tantamount to giving the other party a loophole to refuse payment. Let's change it to using a third-party inspection certificate as the standard, and objections will not affect immediate payment."
Nagata nodded.
"Include the revision comments."
He turned and handed the second stack of papers to another middle-aged woman.
"Ms. Horiguchi, could you please process the invoices for this batch of Singapore cables from Sumitomo Electric Industries?"
"Remember to carefully review the insurance terms to confirm whether there are any loopholes between the starting point of insurance liability and the port of loading."
Horiguchi adjusted his glasses.
She used to be in charge of Southeast Asian cable trade insurance for a bankrupt mid-sized trading company. Later, the company went bankrupt after volume regulations were implemented, and her name disappeared from everyone's contact list.
She flipped through three pages and stopped at the insurance policy section.
"The insurance coverage starts at the point of departure from the factory," she said quickly. "But the bill of lading lists Kobe as the port of shipment. The land transport segment is not explicitly insured, so in case of an accident, the buyer's bank has grounds to request additional information."
"Solution?"
"Have the insurance company issue an extended endorsement covering the period from the factory to the port of loading. We should receive the fax by 3 p.m. today."
Nagata wrote the time on the whiteboard.
[Sumitomo Electric Industries/Insurance Endorsement/15:00]
At the third table, a short, stout man was on the phone.
His surname was Ohashi, and he used to work in shipping at Maruhishi Bussan. On the day the company went bankrupt, he personally turned off the last fax machine in the office.
Now, he holds the phone between his shoulder and ear, flipping through a list of shipping company agents while drawing lines on a piece of paper with a pencil.
"The Singapore agent can sign," he said into the receiver, "but the endorsement page must clearly state the relationship between the actual carrier and the issuing agent. Don't just stamp it with the agent's seal; the bank will pick and choose."
He hung up the phone, turned around and shouted, "Mr. Nagata, if Sumitomo Metal's batch of steel is shipped from Kobe, the shipping company's agent can cooperate to change the departure point, but the cargo space needs to be confirmed before 5 o'clock today."
"Make a note of it."
On the other side, two younger employees were breaking down Sumitomo Light Metals' equipment procurement contract into payment milestones.
One of them came from a once-dominant machinery trading company in the Kansai region, specializing in importing German equipment. He looked at the German price list and frowned slightly.
"The prepayment percentage is too high. Thirty percent upfront, sixty percent upon receipt of shipping documents, and ten percent upon acceptance. This is disadvantageous to the buyer."
"suggestion?"
"The prepayment needs to be reduced to 15%, and the remaining balance should be split into payment upon presentation of the bill of lading and payment upon installation and acceptance. At least a performance guarantee is required."
After listening, Nagata turned around and wrote on the whiteboard:
[Sumitomo Light Metals / Payment Terms Renegotiation / Performance Guarantee]
There was no extra noise in the office.
These people, who were once thrown out of the system by the overall regulation of banks and the wave of bankruptcies of trading companies, simply sat back down at their desks and used red pens, telephones, faxes, and the pitfalls they had learned over the decades to break down, correct, and connect transactions that were about to be dragged down.
At 11:46 a.m., the first comparison table was generated.
[Sumitomo Chemical's Raw Material Procurement in Malaysia: Technical Review Checklist for Settlement Process]
The table is divided into five columns.
[Sumitomo Bank's reason for rejecting the application]
[Revision Opinions on Saionji Commercial Affairs]
[Actual confirmation time from the issuing bank]
[Estimated Business Losses Due to Delay]
[Is there any technical review without reasonable basis?]
Nagata picked up the form and read through each column.
Sumitomo Bank's reason for returning the application: The place of issuance of the bill of lading is inconsistent with the jurisdiction clause in the contract.
Saionji Corporation's proposed amendment: The document should now be issued by the shipping company's Singapore agent, and a supplementary explanation of the agency relationship should be provided.
Actual confirmation date: November 7th, DBS Singapore registration completed.
Delay loss estimate: One notice of suspension of shipment from the supplier, plus potential space change costs and default risks.
The last column.
Further verification is necessary.
Nagata put the form down.
"Three copies."
The staff member next to him immediately stood up.
"One copy each for the Sumitomo Corporation's Legal Department, the corresponding Corporate Secretariat, and the Tokyo Headquarters."
Nagata added a sentence.
"For cases involving potential damages, seal a copy and give it to an external lawyer. Don't include it in regular business files."
"Yes."
At 2:25 p.m., Sumitomo Metal's first preliminary review opinion was completed.
At 3:08 PM, the Sumitomo Electric Industries insurance endorsement arrived via fax.
At 4:22 PM, Sumitomo Light Metals' German equipment supplier replied that they could discuss a performance bond in lieu of part of the prepayment.
By 5 p.m., Room 401 of the Second Meiyuan Building had completed three preliminary comparison tables, eleven document corrections, confirmation of the foreign bank route, and two loss estimate documents to be prepared for lawyers' review.
The flood is raging.