Trafigura’s former top nickel trader denies he colluded on $600 million fraud

Audio By Carbonatix

Enlarge

By Eric Onstad

LONDON (Reuters) -Trafigura’s former head nickel trader denied allegations by Indian businessman Prateek Gupta on Monday in a London trial that he helped devise a $600 million fraud to swap expensive metals for cheap or worthless ones.

Geneva-based Trafigura sued Gupta over two years ago, alleging he was the mastermind of a fraud in which he and his companies agreed to provide high-quality 99.8% pure nickel but delivered steel or scrap instead.

Gupta, based in Dubai, has retorted that Trafigura staff devised the scheme, coming up with a complex merry-go-round of transactions that would appear to inflate its standing in nickel trading.

“I did not devise, know of, or participate in any such arrangement,” Sokratis Oikonomou, who became head of nickel trading at Trafigura in 2017, told a London High Court trial in a written witness statement.

“I am insulted by the suggestion that I would sacrifice my integrity and jeopardise my career to devise and propose such a plan.”

Trafigura terminated his employment in January 2023 after around 16 years with the company.

EVIDENCE AND INTERNAL PROBE

In December 2023, Gupta and his lawyers produced chat exchanges and emails with Trafigura staff that he alleges are proof that he was not alone in the operation.

Trafigura has previously said it looked into whether staff colluded with Gupta, but was satisfied by their denials.

Gupta said Oikonomou proposed in May 2019 to boost nickel trading between Trafigura and Gupta’s firms to 50,000 metric tons a year, but Gupta said he replied that there was not enough high-grade nickel and proposed to include scrap and alloys.

Oikonomou rejected trading low-grade nickel in the open, because Trafigura’s bank Citi would only finance high-grade nickel, Gupta said.

Citi has declined to comment on the fraud case.

Gupta alleged that Oikonomou proposed a “transit financing” operation, in which some Gupta-owned or linked companies would sell nickel to Trafigura and other Gupta-associated firms would buy them back when they arrived at ports to ensure others did not discover the substitution.

Trafigura has acknowledged that the two parties operated a transit financing operation, but denies it was devised to surreptitiously trade low-grade nickel or cheap metals.

Trafigura has also acknowledged it paid for what it thought was pure nickel without verifying its authenticity, but said the lack of valid documents, commodity codes and testing was an oversight.

Gupta remains subject to a freezing order on his assets, which Gupta unsuccessfully sought to lift in December 2023.

(Reporting by Eric Onstad, Editing by Louise Heavens)