Trafigura supplied $15mn from alleged nickel fraudster utilizing Mauritian financial institution

Indian enterprise tycoon Prateek Gupta supplied to pay Trafigura $15mn utilizing financing from a Mauritian financial institution below scrutiny for its ties to the accused fraudster, in accordance with court docket paperwork obtained by the Monetary Instances.

Trafigura, the world’s largest personal metals dealer, this month secured a $625mn freezing order towards Gupta and his enterprise empire in one among London’s greatest ever commodities lawsuits.

The buying and selling home has accused the Dubai-based businessman of perpetrating a “systematic fraud” towards it involving pretend nickel cargoes, forcing it to take a $577mn writedown.

Gupta’s metals buying and selling empire spans Europe, the Center East and Asia, whereas Trafigura additionally claims that he seems to have pursuits in a spread of different companies together with vitality and engineering firms.

The fallout of the case has additionally unfold to Mauritius, the place banking regulators are examining Silver Bank, one of many nation’s small lenders that has hyperlinks to Gupta.

Silver Financial institution has denied the metals dealer is one among its shareholders and this week informed the FT it “has no direct or oblique publicity to Mr Gupta or linked firms and people”.

Nevertheless, the lender is more likely to come below extra scrutiny over its hyperlinks with the businessman.

In an affidavit filed to London’s Excessive Courtroom this month, Trafigura’s former head nickel dealer Sokratis Oikonomou detailed how Gupta supplied up financing from Silver Financial institution as a part of a number of proposals aimed toward “repairing the quickly deteriorating buying and selling relationship”.

The connection began to deteriorate when Trafigura first found in November that some nickel containers it had bought contained far much less worthwhile metallic as a substitute.

Trafigura, one of many world’s important conduits for metals buying and selling, has to this point inspected about 156 out of 1,104 containers associated to the alleged fraud. None of them comprises materials compliant with the contracts, it stated.

Oikonomou said Gupta “supplied to supply two letters of credit score totalling $15mn from Silver Financial institution” on January 11, earlier than later that month revising it all the way down to $7mn.

Oikonomou added that the pair “subsequently mentioned some draft wording for the needs of the letters of credit score”.

Letters of credit score are one of many key financing instruments that underpin international commerce, offering sellers of products with an assurance {that a} monetary establishment will cowl any shortfall if a purchaser fails to pay.

The affidavit additionally reveals that Gupta claimed to have supplied additional letters of credit score to the buying and selling arm of Indonesia mining firm Thoughts ID.

The miner had turn out to be ensnared within the fiasco when it bought cargoes purporting to comprise nickel from Trafigura that had originated from the metallic dealer’s firms.

“Now we have verbally supplied them Silver Financial institution lc [letters of credit] resolution,” Gupta informed Oikonomou in a January WhatsApp message quoted within the affidavit.

In a separate affidavit, a lawyer performing for Trafigura argued that this collection of presents “means that Mr Gupta considers that Silver Financial institution will act at his path”.

Silver Financial institution, Gupta and Thoughts ID didn’t reply to requests for remark.

A consultant for Gupta stated on Friday that he’s getting ready a “sturdy response” to Trafigura’s allegations and plans to “file an utility to take away the freezing order on or earlier than April 6”.

Silver Financial institution’s sole shareholder is the Cayman Island funding agency Silver Star SPC, which acquired the lender out of conservatorship in October 2021 and injected $40mn of capital to bolster its stability sheet.

Trafigura’s lawyer additionally argues in his affidavit that “Mr Gupta could have some curiosity in Silver Star and/or train management over it” as a result of the metals dealer additionally supplied up safety over quite a lot of its property.

Gupta supplied Trafigura safety over Singaporean renewable vitality firm Ultravolt Energy, whose sole shareholder is Silver Star, in accordance with Oikonomou’s affidavit.

Different property have been additionally proposed as a part of a large ranging safety package deal, together with a “mission worth chain options firm known as Hangji World Restricted”.

Company filings in Cyprus, the place Hangji’s thinly traded shares are listed, present that Gupta integrated the corporate in 2015 earlier than its shares have been transferred to a number of offshore automobiles.

Silver Star, Ultravolt and Hangji didn’t reply to requests for remark.