A dramatic trial has opened at the High Court in London, over two years after Trafigura Group revealed it lost more than half a billion dollars in an alleged nickel fraud. The case involves Indian businessman Prateek Gupta, who Trafigura claims orchestrated the scam.
In 2023, Trafigura shocked markets by announcing that containers of metal it had purchased did not contain the expected nickel. Investigations suggest Gupta and several associated companies carried out a systematic fraud. Gupta has denied all charges.
The trial nearly faced delays when Gupta’s lawyers withdrew, only to be reinstated at the last minute. He is scheduled to testify via video link from the UAE, while former Trafigura nickel head Socrates Economou will also appear as a witness.
On Monday, Trafigura’s lawyer Nathan Pillow stated that the company earned less than $10 million from selling the contents of roughly 100 cargoes left after its dealings with Gupta fell apart. The iron briquettes inside were “essentially worthless,” whereas their LME-grade nickel value would have been over $500 million.
| Number of Cargoes | Revenue (USD) | Expected Value (USD) |
|---|---|---|
| 100 | 10,000,000 | 500,000,000 |
The case is part of a series of metal market scandals, raising concerns about the vulnerability of warehousing and shipping networks. Previous incidents saw nickel inventories reduced to worthless stones.
Trafigura had financed these deals with Citigroup Inc., buying nickel in cathode and briquette form from Gupta’s companies, with agreements to buy back later or sell via nominated buyers. The arrangement generated a fixed fee, equivalent to 4%-6% interest, described as “transit finance.”
The fraud was discovered when Trafigura inspectors opened a container in Rotterdam just before Christmas 2022 and found lower-value materials.
The losses have strained Trafigura internally, with tensions between metals and energy units intensifying. Several metals traders resigned post-scandal, though the company denies any staff involvement. An internal audit later revealed another alleged fraud in Mongolian oil, exceeding $1 billion.
In late 2023, a court rejected Gupta’s attempt to lift a freeze on his assets, citing insufficient evidence that Trafigura staff were aware the cargo contained no nickel. Gupta has struggled to pay legal fees and lost multiple sets of commercial lawyers.
Gupta’s firms have a troubled trading history; previous partners, including Gunvor Group and TransAsia Private Capital, reported losses. Banks and counterparties have also expressed unease over his dealings.
Meanwhile, Trafigura recently enjoyed its most profitable period ever and appointed Richard Holtum as CEO.