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- 09 Feb '23 at 8:50 am #53164MoneyNeverSleepsParticipant
Trafigura Group, one of the largest commodity traders in the world may have been defrauded as much $577 million in a fraud involving nickel and compan
[See the full post at: Trafigura May Have Been Fleeced for $577 Million in Nickel Fraud]27 Feb '23 at 1:01 pm #53993TradersComKeymaster
Updating Trafigura alleged $500mn Swindel by Prateek Gupta via Court Documents/FT
1. Spring 2022 #nickel prices Soar, Citibank providing $850mn line of credit to Trafigura started to become concerned about size & settlement time of Gupta group buybacks
2. Trafigura’s head nickel trader, Sokratis Oikonomou also worried. “It came to my attention that the UIL entities had stopped entering any buyback transaction and stopped making any payments to Trafigura,” he wrote in court testimony.
3. Trafigura alleges that 43-year-old Gupta was the “controlling mind” behind linked company network involved. Includes TMT Metals, UIL Malaysia and UIL Singapore, all of which are defendants in the case.
4. Trafigura/Gupta trading relationship began around 2014 with domestic zinc transactions in India and grew to global trades in nickel and aluminium.
By 2022 most of the deals between #Trafigura & #Gupta’s groups were “buyback transactions”.
Trafigura providing trade financing.
5. Citi terminated its credit line to Trafigura alarmed by the “red flags” its due diligence turned up, and Trafigura started to fund the cargoes from its own balance sheet.
6. Trafigura’s Oikonomou arranged for a physical inspection of cargoes to take place on November 9 in Rotterdam. On November 7, two days before the inspection, Gupta said in a WhatsApp message to Oikonomou that he had suffered a heart attack.
7. Gupta wrote “I’m just closing terms for a large reduction,” in the size of Trafigura’s nickel exposure with his companies. “However, I would need you to stall inspection,” he added, in order “to avoid any issues between us”.
8. Oikonomou in his written testimony. “My priority at the time was ensuring that the inspection . . . went ahead,” When the containers in Rotterdam inspectors instead found carbon steel i.e. contain nickel.
9. Gupta tried to strike a deal with Trafigura, and implied that he would buy them back as soon as he had the funds to do so. His collateral a wind farm and a steel mill in India, a Singaporean energy company called Ultravolt, and an engineering group, Hangji Global.
10. He offered up letters of credit from Silver Bank, a small lender in Mauritius. He tried to raise money by issuing bonds from TMT Metals Group. He claimed to have one Swiss family office prepared to invest €100mn and a SWF from “a very respectable country” invest $100mn
11. It gets better.. Trafigura said in court documents Gupta and his network had arranged the buyback deals to the third-party clients who then got in touch with Trafigura noticing it wasn’t nickel!
12. Oikonomou and Gupta meet near London’s Heathrow airport in early January, Gupta gives Oikonomou a handwritten note outlining a repayment plan. He proposed paying $200mn by the end of March, with the remainder to come over the following two years.
13. Trafigura’s management team met on January 10. Management pursued a fraud claim and sought a worldwide freezing order of the defendants’ assets. By now clients Xiamen, Argentem, Mind ID and Axiom had all contacted Trafigura about the carbon steel & not nickel in crates
14. Gupta stalling for time, paid Trafigura $5mn in late January as he continued to try to raise more money.
Gupta through a spokesperson said he was “preparing a robust response to the allegations from Trafigura and intend to share that soon”.
15. One wonders at Trafigura’s compliance procedures (lack of) court documents show a failure to require analysis certificates and ignoring incorrect customs codes. “The reality is Trafigura does not know what is in the containers,” said Oikonomou in his written testimony.
16. Out of an estimated 1,100 containers involvedonly 156 containers had been inspected by February 6. Some contained carbon steel, some other types of steel and iron products, none so far has contained nickel or nickel alloy.
7. Trafigura is in talks with the customers. Some cargoes still at sea, with the latest due to arrive by May. Let’s see what the next stage of the hearing unveils.
One imagines #Netflix, #Amazon and #Disney will be bidding for the rights, Trafigura hoping for $575Million 🙂
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