Let’s Be Frank: “Counterfeiters' Blues”

Throughout history, counterfeiting has been a means of political and economic warfare, specifically counterfeiting the financial tools of an enemy in order to destabilize their economy, and/or to shore up friendly economies with more buying power. Operation Bernhard was the codename given to the Nazi German plan to forge British banknotes and flood their economy with them. Near the end of the war, the Germans had also completed the “artwork” for the plates to counterfeit American currency as well, although this never got to the scale that the counterfeiting of British Pounds did.

During the Vietnam War, the US government counterfeited North Vietnamese currency out of a top-secret print shop in Okinawa (they also turned out propaganda leaflets at this location). These were of such a high quality that they still get found today in collections of supposed “real” North Vietnamese Dong.

Counterfeiting has obviously also been used by criminal elements, even up to this day, as a get-rich-quick scheme. Sometimes laughably so. Frank once got a load of change from breaking a hundred dollar bill to buy $15 worth of goods from a corner store. One of the fives felt strange, and upon closer inspection, it appeared to be very poorly printed on what was definitely not banknote-quality paper. It looked suspiciously like someone sent watercolor-grade paper through a high-end laser printer. At least try a little harder.

The counterfeiting I want to talk about though is specifically the counterfeiting of materials and parts that can end up in the facilities we run. Frank thought this problem would have been done with by now, but it seems to rear its ugly (fake) head in cycles, and it never fully disappears.

In the early 2000s, Frank was part of a working group that updated a guide to counterfeit fasteners. I am not sure if you are familiar with the counterfeit fastener problem, but it has been an ongoing industrial problem since at least the 1970s. What happens is that shady manufacturers or suppliers apply material and manufacturing markings meant to identify the grade (and therefore strength, temperature, and corrosive service usage) on substandard fasteners. If you have never had to deal with this problem, consider yourself lucky. There’s nothing like thinking you are installing ASTM A320 Grade L7 bolting for low-temperature service when you are actually installing nice-looking “garbage” material with counterfeit stamps on the heads—that also has impact properties like glass at room temperature.

If QC personnel are only checking stamps on fasteners to ensure the right specification in the right service, then falsified identifiers become a big problem that will only be found when a failure occurs. Unless this problem has been your problem, then you probably perform some kind of spot check Positive Material Identification (PMI) on random samples of incoming fastener lots, or get your suppliers to do that (although sometimes the suppliers, and not the manufacturers, are the source of the counterfeiting).

It has been about 12 years since I last had an issue with counterfeit parts and materials on a larger scale, but I am now seeing it again, showing up in the petrochemical and energy manufacturing sector. Frank’s question to all you fine readers is, will your systems catch counterfeit parts and materials? Let me give you some examples from my career to give you some things to mull over.

Frank has seen hundreds of counterfeit fasteners. While working in a metallurgical lab, I had the pleasure of identifying approximately thirty fake fasteners from various supply chains. These fasteners were dimensionally correct, the right manufacturer and specification stamps were present, and they came mixed in with lots of legitimate fasteners. Unfortunately, the materials and manufacturing techniques did not meet the codes of construction. One of the worst was fasteners, which were supposed to be forged high-alloy steel, but actually turned out to be cast, plain low-carbon steel material. It was not going to behave anything like what was specified in the design.

This surge of counterfeit fasteners in the early 2000s energy boom was a big issue, and led to my involvement in the updating of the “Fake Fastener Guide.”

Frank also had the dubious pleasure of dealing with a failure on drilling rigs that turned out to be a counterfeit issue. About 10 years ago, a large drilling rig manufacturer secured a “really good deal” on large cast components, specifically the cast housings for the Kelly Drive and Top Drive, and the Bails and Blocks castings. These components started failing in service very quickly, causing injuries, damage to equipment, and significant interruptions to drilling operations. It was found that the materials were total garbage and did not come close to any existing cast material specification. In this case, the manufacturer’s insurance company found out how hard it is to sue companies under the Chinese state umbrella. In fact, once legal action started, the original manufacturing company just vanished, leaving a North American Supplier holding the bag.

How about piping going into your facility? Frank has seen “fake” piping end up in multiple refinery process streams. One of the most interesting was a lot of pipe purchased in North America for use in a refinery. A lot of around 100 pipe lengths had come in, with all the right paperwork and MTRs (Material Test Report, or Mill Test Report if you are a little older) showing that the material had been tested and met all requirements of the ASTM specification.

An observant QC inspector doing walk downs of a finished circuit prior to insulating saw “scabs” and other signs of rolling defects on the surface of a pipe. Further volumetric investigation (radiography and ultrasonic testing) found rolling defects, including delamination up to 4 feet in length, in this section of pipe. The heat and lot numbers were identified and traced through the plant’s QC documentation. It was found that some of this same pipe was already in hydrocarbon service in other parts of the facility as part of routine repairs and revamps.

Obviously, this required follow-up. It was found that about 30% of this heat run had massive issues, and some live lines had to be shut down with the pipe segments getting cut out and replaced. The paperwork showed it originated in a steel manufacturing/pipe rolling mill in Russia, had been bought by a European supplier, and transferred to their North American division. The shutdowns and repairs required to change the out-of-spec pipe were quite costly (relative to the low cost of the pipe itself), so the lawyers got involved.

This is where Frank found it got really interesting. Turns out the rolling mill had not manufactured this pipe for hydrocarbon service. It was meant to be lines in a low-pressure water treatment plant, and the original purchase contract had said the buyer was willing to accept failed lots from hydrocarbon piping production runs at a discount. Someone in the supply chain had faked all the paperwork to show these pipes met the requirements for hydrocarbon service to ASTM and API specifications. The original heat documentation from the rolling mill was quite clear, and the version we had been supplied when it was purchased had obviously been edited. The counterfeiting had most likely been done by the supplier, although the last Frank heard, no resolution had yet been found for who was responsible.

One day, Frank received two 30-foot lengths of 316 stainless steel 6-inch schedule 80 pipe that showed up on his desk after failing PMI on receiving. The material did not meet 316 austenitic stainless-steel specifications. In fact, it did not match any specification and could best be described as someone getting creative with nickel, chrome, and carbon when manufacturing a lot of steel. There were also trace amounts of some really strange elements that pointed to very poor manufacturing techniques and likely a recycling run gone haywire. In this case, the supplier couldn’t even trace where it originated from and blamed “untrained warehouse personnel” and quietly took the pipe back.

Frank has also seen the “shopping around” of substandard and counterfeit parts. If you caught it on receiving? We will just take it back and ship it to a different company’s facility and see if they catch it…

Makes me want to go live in a cabin on a mountain and quietly forget all of this.

Frank doesn’t want to point fingers, but in Frank’s experience, counterfeit parts and materials have tended to come from three main parts of the world: China, former Soviet Bloc countries, and South Africa. I have seen counterfeit materials originating from other sources, but not on the scale that I have from these three locales. Frank has also seen completely acceptable parts and materials come out of these same locations.

You may want to look into what your supply chain is being fed from, and whether or not they have the checks and balances in place. Any place where large volumes of money are changing hands, counterfeiting can rear its ugly head. Don’t catch a bad case of those “Counterfeiter’s Blues.”

“There seem to me an awful lot of charlatans round here

And hustlers, cheats and anglers, fixers, sharps and mutineers

The factory and subterfuge and corporato cheat

Conspire to fast reduce us to the stamping of our feet

The lords of mass producto mass product at quite a pace

It won't be long these counterfeit blues'll run the whole damn place”

- "Counterfeiters' Blues" by Corb Lund