Crude oil and petroleum products sellers, and their brokers and agents, who operate in the so-called “secondary market” of the international oil market today, do not usually speak about this, or like to do so. Or like the fact about this to be known. Indeed, many of them would rather that it be kept obscured, or simply misrepresented. But, the fact is that one distinctive part of their business “reality” is this: as a group, they frequently close no deals nor make any sales for the oil product they purport to have available to sell, and, in fact, the vast majority of them often go for months, even years, or perhaps forever, without ever landing even a single sales contract or deal. It is probably what might simply be called “the open secret” of the oil selling industry!
C. Keila Nakasaka, a California attorney and real estate investor and entrepreneur, who conducted extensive market research and investigations into the D2 diesel oil trade to see if he could prudently recommend taking up the commission broker’s job to his clients, says he came away from his research greatly disillusioned and disappointed. According to him, the “stories that these brokers concoct are that the seller has some direct connection with a refinery. Some even claim that the seller is, in fact, one of the leading energy companies in Russia… [but] what bothered me [the most] is that almost every one of these brokers failed to be forthcoming. They often misrepresented themselves as mandates, direct representatives, and even buyer and sellers.”
Probably the principal and most sensitive thing about which most such sellers and intermediaries (the agents, facilitators, mandates, brokers, etc.) are least “forthcoming” and “misrepresenting” about, is concerning the number and volume of sales deals they have ever closed, if any, or the income they have earned in the trade, if any. Simply put, almost all of these operatives generally close no deals and earn almost nothing. Most of them go for months, even years – or forever – without successfully closing any sales deals, not to speak of earning even a dime in commission income!
As Nakasaka put it, describing his findings: “Another factor which I thought was odd was that most of the brokers I spoke with never closed a D2 deal despite their months and sometimes years in this business. There was one broker who claimed that he had pending deals and two who stated that they did, in fact, close these deals. However, I did not find them credible.”
Why is this so – that they make no sales or income? Many factors account for it. They could roughly be summed up as follows:
1. MOST SELLERS (and their intermediaries) ARE FAKE, anyway, WITH NO CRUDE OR OIL PRODUCT TO SELL
A fact that is by now well-established and not subject to any disputation whatsoever among credible experts in the industry, is that the overwhelming majority of selling offers peddled by crude oil and petroleum product “sellers” in the so-called “secondary” oil markets, and their brokers, agents, and other intermediaries, are fake and bogus. Indeed, some objective studies and research have put its extent at a whopping level of some 99.999999 percent of all offers presented for sale. Probably the only thing of much redeeming value that could be stated about this, is that with particular respect to those who act as foreign brokers and intermediaries in the business, some of them may often be engaged fraudulently in the business but innocently and unwittingly, mistakenly believing that the deal or selling operation is authentic and legitimate, when it actually is not.
2.LACK OF PROPER TRAINING, SKILLS OR KNOWLEDGE IN THE FUNDAMENTALS OF THE BUSINESS
bPut very simply, perhaps nowhere is the saying that “we live in a wide interconnected world” more applicable today than in the world of the international buying and selling of crude oil and petroleum products. For the most part, virtually all that one needs in order to become a “seller” of crude oil or petroleum product, or his agent, legitimate or not, who are operating out of any part of the world, is simply to have an access to a computer and an Internet connection. That’s just about all! Unfortunately, however, one dire negative effect of this so-called “revolution of the Internet” (among many others), has been that many who now claim to be, or operate as, “sellers” or the sellers’ “brokers” or “agents,” are largely uneducated or semi-illiterate, untrained and unskilled, and are lacking in any knowledge of the proper fundamentals of international oil trading.
Kamal J. Southall, one of the foremost experts on the subject, whose book, “Trade Fraud, Financial Fraud, and the Joker Broker,” is one of the most authoritative texts on the phenomenon, puts it this way:
“Have you noticed that as you’ve searched Google and libraries, and looked high and low, finding bits of information here and there, you encounter interesting phenomena: very little practical information on the art and science of dealing in International trade as an independent trader exists in any comprehensive way. Certain practices, documents, and procedures; mysterious acronyms such as “NCND” or “MPA,” are thrown back and forth, badly corrupted model documents and forms may filter your way, but the reality is that most attempted home based traders, brokers – or, more properly, intermediaries – learn through highly expensive ‘trial and error,’… often re-inventing the wheel each time, in that ever-elusive search for a deal and knowledge on how to close that deal.”
Southall estimates, citing another expert’s calculation, that out of some one million individuals currently trying to make it as brokers or trade intermediaries in the world, “perhaps no more than 1% has the training and skill needed to ever close a deal… [meaning that] the overwhelming majority, are trading blindly, [hence] deals are collapsing… and more to the point, [oil dealers are] being defrauded – sometimes massive..”
Mr. R. Ambardar, a broker of over 10 years of wide experience in international market development and advisory services, calls “lack of experience and knowledge” one of the principal reasons why many brokers and facilitators fall in crude oil endeavors. “Many people are attracted into this business because of [the tales they hear about the] kind of money one can earn on account of successful deals. Many agents fail, [however], to understand that requirements to succeed in this business are very demanding, [and that] Only those who have years of hands-on experience and thorough knowledge of the industry can strive to do well as middle-men.”
A great many numbers of brokers, Ambardar adds, forget that “To become a ‘Facilitator’ in the oil business,… what you actually need is right knowledge and expertise [since this is what will help] you hook up genuine buyers and sellers. One should be in the industry for long to have acquired knowledge related to the dynamics of this business.”
Consequently, one fundamental way in which this general lack of competence or knowledge about the basics of the oil trade manifests itself, is the inability of the average person among the string of brokers and agents and intermediaries that operate in the trade, to craft good deals and successfully close sales deals even after several months or years in the business.
3. BYE AND LARGE, MOST BROKERS AND AGENTS LEARN THEIR CRAFT FROM THE INTERNET, AND THIS HAS SOME SERIOUS DRAWBACKS
There is, for the average contemporary seller’s agent or broker, one other serious shortcoming and negative consequence that emanates directly out of the fact that the primary source of their education and training by which they learn the workings of the oil trading business, is essentially the Internet. Again, Kamal J. Southall sums up these negative consequences this way:
“The expertise in recognizing a questionable trade lead or tender request from a strong one is generally lacking through the Internet, [and] there is no critical filtering of the leads you end up reading. Anything that can be put out there, is put out there, from the genuine to the questionable, to the fraudulent. Moreover, the nature of the “broker network” is such that information is often passed about with little critical filtering, lack of knowledge of proper trading procedures and the general tendency of information to become corrupted as it trades hands, [and this] leads to dangerous results.”
4.LONG STRING OF BROKERS, AGENTS, AND MIDDLEMEN, MOST OF WHOM UNDERCUT EACH OTHER.
Partly as a result of the virtual lack of any objective requirements for qualification as an agent or middleman in the trade, and the ease of entry into it, these operators generally tend to function in a climate of little or no rules or standards, and of loose or no ethics, in which the “dog eat dog” mentality seem to prevail – a climate in which each broker, agent, or mandate, being only selfishly concerned with just his own personal gains and self-interest, is constantly trying to undercut and circumvent the other in deals. Thus, often leading to the ultimate detriment of ALL the parties involved in an offer, as ALL of them, as a whole, and not just one party or the other, invariably wind up the losers since NO deal at all is had with any buyer.
“[One] reason why it’s difficult to ascertain the truth [concerning the oil product market],” reported C. Keila Nakasaka, the California attorney and entrepreneur who investigated the industry in 2010 for possible recommendation of the trade to his clients, “is that there are multiple brokers involved in any given transaction; and they’re all afraid of circumvention. Hence, it’s almost impossible to know the end buyer or seller. Now, I understand that sometimes it requires teamwork to put a large transaction together, but what bothered me is that almost every one of these brokers failed to be forthcoming. They often misrepresented themselves as mandates, direct representatives, and even buyer and sellers.”
THE “JOKER BROKER” CHARACTER
Sure, admittedly, there’s no question that the phenomenon of having a lengthy string of players, including brokers, agents, and intermediaries, in a business transaction, is a necessary aspect of international business. Even more so, especially, in today’s Internet world in which we are all so interconnected globally. Certainly, in oil sales transactions, it should come as no surprise or anything unusual to anyone that such operations, because they often tend to involve huge sums of money and elaborate logistics, would sometimes require teamwork to put the transactions together. And hence, should sometimes involve multiple numbers of parties – traders, agents, intermediaries, brokers, mandates, buyers, distributors, etc – to conclude a deal. However, what is different here, is not so much the fact that in the Internet crude oil dealings one encounters a string of too many brokers and middlemen. Rather, it is the fact that most of these brokers and middlemen or intermediaries that get involved in it, typically act and behave in the detrimental manner of what is known as the so-called “Joker Brokers.”
As Kamal J. Southall put it, “But the experience of the underground string of international brokers trading meaningless offers and circumventing each other left and right illustrates well the term “Joker Broker” and resembles, often, a Zoo full of monkeys.”
Adding that “the character, [which is] often scorned as ‘the Joker Broker,’ is one thing most people encounter very quickly in their forays into the world of trading,” Southall, the author of a classic on the “Joker Broker” character, gives a definition and explanation of the essence of this “Joker Broker” behavior, this way:
“Defined in the first instance as a bit of a time waster, the joker broker is an individual who knowingly or unknowingly peddles and plies deals and products that, in the vast majority of instances, are non-existent, or badly defined. Characterized by a tendency to bluff his way through transactions, the Joker Broker is one… [who goes about] playing deals often involving a string of brokers from one end of the planet to another, and yet not a single one has verified the very existence of the goods at hand.”
.One significant result of this?
With a multiplicity of brokers and chain of agents often involved in a trade, and each party operating selfishly and undercutting and sabotaging each other in a working environment in which each party is untrusting of the other in a transaction, and is scared of being circumvented by the other; most deals which the “secondary” market sellers and their brokers and agents undertake, are automatically doomed to failure, even from the very beginning. And often do fail.
5. PERVASIVENESS OF “The Joker Broker” MENTALITY AMONG THE INTERNET BROKERS, AGENTS & OTHER INTERMEDIARIES
However, probably the most fundamental and central factor which accounts for why most intermediaries involved in the “secondary” oil market are generally not able to, and do not, close any sales deals or earn any income or commission as brokers and agents even after several months or years of peddling their oil product, could simply be condensed into one broad term: namely, the powerful pervasive grip that the “The Joker Broker” mentality has come to have for the brokers and agents, most of whom today are merely Internet-based brokers and agents.
What Is meant by this?
Put very simply, many brokers and agents, driven and limited by the fact that they generally lack much training or knowledge in the fundamentals of international trading, and by the fact, in today’s Internet era, that their only “qualification” for assuming the mantle of being a “broker” or “agent” in the oil business, is simply that they have an access to the Internet and a computer, often behave in their conduct of the oil selling operation, in a manner that “resembles, often, a Zoo full of monkeys” – in the words of Kamal J. Southall, the author of a classic on “‘the Joker Broker” character. A common characteristic of these brokers and agents, is that they peddle, knowingly or unknowingly, crude oil deals and products that on the face of it, are in most instances seemingly non-existent or questionable, or at least badly defined, while yet acting as though all is well with the product they offer, and that there’s absolutely nothing for the prospective buyer to worry about concerning it. They are mostly blinded by greed and false belief that they “are going to be super rich next week or next month” by doing nothing, other than, just shoving around a few copied documents on the Internet usually passed down to them from other jokes, none of which any of them has usually verified as to the very existence of the goods they purport to be selling.
Apart from the fact that a good many of them would, whether they do it knowingly or not, frequently try to push fake deals on the Internet, they generally act out of many misconceptions and beliefs which are simply not true, usually passed down to them from other jokers. Many times, mainly concerned with “making a quick, fast buck,” they are innocently and naively trying to close a deal for someone who they believe or merely hope to be real, but who is, in fact really not. But oftentimes, they are too proud or conceited to simply accept or concede that their own beliefs and procedures are simply incorrect, refuse to change their ways, and continue to waste their time and others’ time for months and years still trying to push deals – until, perhaps, it finally begins to dawn on them that for so long no deals have been closed, or are likely to be closed, and not a dime of income has been, or would be, earned.
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