The man accused by Trafigura Group of being behind a $590 million nickel fraud finally responded to the allegations, claiming that Trafigura itself “devised and proposed” the scheme.
In a defense filed to a London court on Wednesday afternoon, lawyers for Prateek Gupta said Trafigura employees had proposed an arrangement whereby the two sides would agree contracts for nickel but in fact trade other material.
The claim is the latest twist in a case that shocked the metals industry, when Trafigura in February revealed it had lost more than half a billion dollars buying cargoes of nickel from Gupta’s companies only to discover that they contained much lower value materials.
Gupta said in the filing that Trafigura had approached him in 2019 seeking to significantly increase its nickel trading with his companies.
‘Some Resemblance’
According to Gupta’s account, during a meeting in June 2019 at a hotel on Dubai’s Palm Jumeirah, he discussed trading metals that “bore some resemblance to nickel” as if they were actually nickel with Socrates Economou, Trafigura’s then head of nickel, and Harshdeep Bhatia, a senior Trafigura trader based in Mumbai.
The two Trafigura traders “stressed to Mr. Gupta that the actual purity, specification, and value of the materials in fact being traded was unimportant to Trafigura,” Gupta claims.
It’s unclear what evidence Gupta has to support the claim beyond his own recollection of the meeting.
The filing says that some of the shipping receipts showed a code used to identify the goods indicated that nickel alloy — rather than nickel — was being shipped.
Trafigura in February secured a freezing order against Gupta. In its court filings at the time, the trading house acknowledged shortcomings in its own controls, including paying for cargoes despite a lack of HS code in the shipping documents, or the absence of a “certificate of analysis” verifying the contents of the cargoes.
A Trafigura spokesperson said on Wednesday the company “does not consider the defense to be credible and will vigorously continue to pursue its claim.”
Both Economou and Bhatia have left Trafigura in the wake of the alleged fraud, Bloomberg has reported. Trafigura has consistently said it doesn’t believe that any of its employees was complicit.
Economou declined to comment and Bhatia didn’t immediately respond to requests for comment.
(Adds Trafigura response, additional detail starting in eighth paragraph)
