How a chemical company lost $60million to an internet scam

Orion S.A., a global chemical company headquartered in Luxembourg, has fallen victim to a sophisticated internet scam, resulting in a staggering loss of approximately $60 million.

The company, known for its production of carbon black—a key ingredient in various everyday products like tires, textiles, and printing ink—was targeted by fraudsters who orchestrated multiple fraudulent wire transfers to accounts controlled by unknown third parties.

The scam was directed at an Orion employee, who, although not a senior executive, was responsible for authorizing the wire transfers. 

The fraudulent activity led to significant financial losses for the company, which may have to record a one-time pre-tax charge of $60 million if the funds are not recovered.

In a filing with the U.S. Securities and Exchange Commission (SEC), Orion disclosed the incident, stating that the company is cooperating with law enforcement and is exploring all legal avenues, including potential insurance coverage, to recover the lost funds. 

The company reassured stakeholders that, so far, no additional fraudulent activity has been detected, and the business operations remain unaffected.

"On August 10, 2024, Orion SA determined that a Company employee, who is not a named executive officer, was the target of a criminal scheme that resulted in multiple fraudulently induced outbound wire transfers to accounts controlled by unknown third parties," the filing reads. 

"As a result of this incident, and if no further recoveries of transferred funds occur, the company expects to record a one-time pre-tax charge of approximately $60 million for the unrecovered fraudulent wire transfers."

The Form 8-K also explicitly noted that there was no break-in into its systems, nor has any of its data been compromised.

Although Orion has not confirmed the exact nature of the scam, it is suspected that the attack may have been a Business Email Compromise (BEC), a common form of cyber fraud where criminals use compromised email accounts to deceive companies into transferring large sums of money.

The incident highlights the growing threat of cyber fraud in the corporate world, with BEC scams becoming increasingly prevalent. 

According to the FBI’s 2023 Internet Crime Report, BEC scams are among the top causes of financial losses, second only to investment scams. 

However, efforts by law enforcement agencies, such as Interpol and the FBI’s Recovery Asset Team, have seen success in freezing fraudulent accounts and recovering stolen funds.

Orion’s experience serves as a cautionary tale for businesses worldwide, emphasizing the need for robust cybersecurity measures and vigilant internal controls to prevent such costly scams.