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The London High Court ruled decisively in Trafigura’s favour, finding Prateek Gupta personally liable for a “fraud on a grand scale” worth around $500 million.
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Trafigura lost roughly $600 million financing fraudulent nickel “buyback” trades begun in 2022, where supposed nickel cargoes were in fact containers of scrap metal.
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The judgment brings to a close years of litigation in London and Dubai.
In a judgment handed down just a few hours ago, the London High Court ruled in favour of Trafigura in its years-long case to recover hundreds of millions it lost as part of an elaborate fraud involving Indian businessman Prateek Gupta.
Trafigura v Gupta had been gripping the global commodities industry for months. Today’s judgment delivers a conclusive win for the commodities giant, clearing its name of any wrongdoing and putting an end to the saga that saw it lose over half a billion dollars financing metals transactions that later turned out to be fraudulent.
The court found that Gupta had perpetuated “fraud on a grand scale” to the tune of $500 million, which the businessman is personally liable for.
It rejected any claims that top Trafigura traders Harshdeep Bhatia and Sokratis Oikonomou were involved in the fraud, finding that “they knew nothing of the fraud, and are themselves in a sense victims of Mr Gupta’s fraud through having been falsely accused in this case of being parties to it.”
The judge also found that Gupta had lied to the two former traders about his medical issues, including having been hospitalised after a serious heart attack.
This judgment is a major win for Trafigura, which had been embroiled in a range of court cases in London and Dubai since 2023 in relation to this fraud. Gupta is also liable for all legal costs incurred by Trafigura.
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The fraud, which began in 2022, resulted in Trafigura losing $600 million through ‘buyback trades’ involving nickel that didn’t exist. Trafigura effectively became the trade financier for these transactions, lending from its own resources after Citibank, its initial lender, withdrew its credit facilities due to questions about the legitimacy of the deals.
In November 2022, Citibank grew concerned about the unusual nickel transactions it was financing and requested that Trafigura inspect the nickel cargo, but withdrew its financing before any inspection could take place. Trafigura then began funding the shipments directly, but soon discovered that what appeared to be high-quality nickel cargo was actually containers filled with worthless scrap metal.
The trial has featured compelling testimony from senior Trafigura traders and Gupta himself, revealing details about the frequently opaque world of commodities trading and finance.
Trafigura, the Swiss-based oil and metals trading firm, began buying zinc from India through one of Gupta’s companies in 2014. By 2022, Trafigura was serving as a trade financier for TMT Metals and other Gupta-owned entities; Trafigura was receiving an $850 million credit line from Citibank to finance these operations.
In these “buyback transactions,” Trafigura would purchase nickel for export at its origin point, own it during transit, and sell it back to the original company upon arrival at its destination for a markup. In spring 2022, however, nickel prices became so volatile due to Russia’s invasion of Ukraine that the London Metal Exchange halted trading for a week, fearing total market collapse.
This disruption caught Citibank’s attention regarding the unusual nickel deals it was backing, which involved massive transaction volumes – enough to fill more than half an industrial container ship – and extended travel times. In November, Citibank requested that Trafigura inspect the nickel cargo, but withdrew its financing before the inspection occurred. Trafigura then began funding the shipments itself, but soon discovered that what appeared to be high-quality nickel cargo were actually containers filled with worthless scrap metal.
Court testimony and documents revealed in the case are providing more insight into what transpired leading up to the fraud’s discovery, and into how the world’s largest commodity trader was deceived in a nearly billion-dollar scam. In the first two weeks of what appears set to be a lengthy trial, here’s what has emerged.
