By Eric Onstad
LONDON (Reuters) -A letter sent by Trafigura to Prateek Gupta’s company warning it not to raise suspicions at financing bank Citi about nickel cargoes provides evidence that the commodity trader was aware of fraud, Gupta alleged in a court document.
This is the latest twist in a long-running case in which Geneva-based Trafigura filed a lawsuit against Indian businessman Gupta in February 2023, alleging it had been the victim of a $600-million fraud involving nickel cargoes.
Gupta has previously said in his defence that Trafigura staff devised the scheme at the centre of the case. The new letter appeared in an amended defence document, filed last week and released by the court, in which Gupta’s lawyers sought to add weight to his case.
Trafigura, a major industrial metals and oil trader, has consistently denied that its employees knew about the alleged fraud in which low-value materials such as scrap were substituted for high-grade nickel.
Trafigura declined to comment on Thursday.
Geneva-based Trafigura booked an impairment charge in 2023 of $590 million for losses it suffered in connection with the case, which is due to go to trial in November.
Citi provided as much as $850 million for a complex “transit financing” operation in which cargoes of nickel would be purchased from Gupta by Trafigura, repurchased by Citi and eventually resold to Gupta’s firms, the document says.
The new defence document alleges that Trafigura’s and Gupta’s staff worked together to lengthen voyage times to extend the period of credit offered by Citi and lessen the possibility of inspections at port warehouses that would reveal the cargoes true contents.
Citi declined to comment.
The letter, dated January 2022, cited in the defence document, from a Trafigura employee based in Mumbai to a Gupta employee, allegedly warned that banks would not find it logical to see a transit time of 95 days for a voyage from Taiwan to mainland China that would usually take a couple of days.
“Luckily Citi accepted this one, with little suspicion, but we might not get as lucky in the future,” the letter said.
In December 2023, Gupta failed in his attempt to get a London court to lift a global freezing order on his personal and business assets.
Gupta’s lawyers alleged Trafigura did not disclose important information, an argument a judge rejected.
Currently, the two sides are going through a disclosure process for further documents and witness statements ahead of trial.
(Reporting by Eric Onstad; editing by Barbara Lewis)
