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One of the accused entities in Trafigura’s alleged $590mn nickel fraud has claimed that the global commodity trader’s losses were caused by its “own mischiefs and unlawful conduct”.
New Alloys Trading, a Singapore-based commodity trader, contested that it had conspired to defraud Trafigura and denied Trafigura’s accusation that it was controlled by the scheme’s alleged mastermind Prateek Gupta, in a defence obtained by the Financial Times on Monday.
Like the first five defendants — Gupta and four companies that he admits he controls — New Alloys Trading alleges that Trafigura knowingly took part in the scheme to trade materials besides nickel that would be presented to its lenders as containers full of the valuable metal used in stainless steel production.
“The losses suffered by Trafigura were from their own mischiefs and unlawful conduct,” New Alloys Trading said in its filing.
The defence adds fuel to the fire for a showdown in London’s High Court between Gupta and the commodity trading giant, which has insisted that none of its employees were complicit in the fraud.
Trafigura said in a statement that it would continue to “vigorously” pursue its claim.
Trafigura obtained a worldwide freezing order on Gupta and seven companies in February after discovering more than 1,100 containers containing non-existent nickel, which led to $590mn of writedowns.
Trafigura has come under fire for compliance mis-steps such as failing to check the contents of the containers, shipping documents or require analysis certificates — factors that eventually set off alarm bells for its lender Citibank.
“They bypassed know-your-client requirements, they did not follow contractual requirements of checking bills of lading, seeking [a] certificate of analysis before releasing payments,” New Alloys Trading’s defence said. “All these [show] ulterior motives of Trafigura.”
Manoj Menon, the sole shareholder and director of New Alloys Trading, denies Trafigura’s allegation that Gupta was the “controlling mind” of his company.
The FT has reported that Menon’s name was listed on an internet domain record as the registrant for udtradinggroup.com, which shares its name with one of Prateek Gupta’s businesses, UD Trading Group.
Menon said he had not registered the domain name and the email address used on the registration record was not his.
New Alloys Trading said in the filing seen by the FT that it was only able to file a “bare defence” with few details since it has been unable to appoint lawyers as a result of the “draconian impact” of Trafigura’s worldwide freezing order.
Gupta’s defence filed last week claimed that the introduction of three companies including New Alloys Trading to the trading arrangement was a suggestion of Trafigura’s that was intended to reduce suspicion by trading with companies other than ones owned by Gupta.
