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Trader accused by Trafigura says there was ‘no deception’
Trafigura’s office in Mumbai. Credit: Trafigura Images | Flickr, under Creative Commons licence CC BY-ND 2.0.Prateek Gupta, the man who Trafigura Group says defrauded it of almost $600 million in an enormous nickel scam, said that executives at the trading house were aware many of the cargoes shipped to it did not contain the goods they were supposed to.
“There has been no deception of Trafigura by me,” Gupta said in documents filed for trial at a London court, where he is testifying publicly for the first time by video link from Dubai.
Trafigura sued Gupta in London as it looks to recoup some of the losses it incurred. The trading house says it discovered the fraud in 2022, after opening cargoes it bought from Gupta’s firms that were supposed to contain London Metal Exchange brand nickel cathodes. Instead, it found much less valuable materials.
Gupta continues to allege that Harshdeep Bhatia and Socrates Economou — who were at the time Trafigura’s senior metals trader in India and the head of its nickel trading book, respectively — knew that what they were buying was not LME brand nickel. That’s something Economou has repeatedly denied in court this week.
Gupta said Bhatia and Economou had instructed his firms to “keep the arrangement quiet.”
“We were all careful not to record details of the arrangements in written communications,” Gupta said. “They did not want it to be exposed, and we went along with that at their request.”
Trafigura’s lawyer Nathan Pillow rejected the suggestion. During questioning he told Gupta, “you knew you were keeping a secret from Trafigura and it was dishonest.”
When asked why it was important to keep the alleged arrangement secret, Gupta replied that he was just following instructions.
Trafigura has said it doesn’t believe that any of its employees were complicit in the alleged nickel fraud, though the company has acknowledged shortcomings in its processes and has pledged to learn from the experience.
Bhatia isn’t testifying in the trial, but Economou has always denied he was party to an “arrangement” and continued to do so while testifying in a London court this week.
“I am insulted by the suggestion that I would sacrifice my integrity and jeopardize my career to devise and propose such a plan,” Economou said in a court filing.
Although Trafigura had traded with Gupta for years, their relationship expanded dramatically starting in around 2019. Under an arrangement that Trafigura describes as “transit financing,” the trading house would buy cargoes of nickel from companies connected to Gupta as they were loaded on to a vessel, with the understanding that once they reached their destination 90-180 days later, another Gupta-linked company would buy the cargo back for the same price.
Trafigura would pocket a fee equivalent to an interest rate of about 4% to 6%.
Pillow, Trafigura’s lawyer, brought up instances of other firms, including broker Sucden Financial and trader Kataman Metals LLC, claiming to also have been duped after buying or being pledged nickel cargoes — that turned out not to contain the metal — from companies linked to Gupta.
“It’s the same thing you did to Trafigura,” Pillow said.
(By Archie Hunter, Jonathan Browning and Jack Farchy)
Prateek Gupta, the man who Trafigura Group says defrauded it of almost $600 million in an enormous nickel scam, said that executives at the trading house were aware many of the cargoes shipped to it did not contain the goods they were supposed to.
“There has been no deception of Trafigura by me,” Gupta said in documents filed for trial at a London court, where he is testifying publicly for the first time by video link from Dubai.
Trafigura sued Gupta in London as it looks to recoup some of the losses it incurred. The trading house says it discovered the fraud in 2022, after opening cargoes it bought from Gupta’s firms that were supposed to contain London Metal Exchange brand nickel cathodes. Instead, it found much less valuable materials.
Gupta continues to allege that Harshdeep Bhatia and Socrates Economou — who were at the time Trafigura’s senior metals trader in India and the head of its nickel trading book, respectively — knew that what they were buying was not LME brand nickel. That’s something Economou has repeatedly denied in court this week.
Gupta said Bhatia and Economou had instructed his firms to “keep the arrangement quiet.”
“We were all careful not to record details of the arrangements in written communications,” Gupta said. “They did not want it to be exposed, and we went along with that at their request.”
Trafigura’s lawyer Nathan Pillow rejected the suggestion. During questioning he told Gupta, “you knew you were keeping a secret from Trafigura and it was dishonest.”
When asked why it was important to keep the alleged arrangement secret, Gupta replied that he was just following instructions.
Trafigura has said it doesn’t believe that any of its employees were complicit in the alleged nickel fraud, though the company has acknowledged shortcomings in its processes and has pledged to learn from the experience.
Bhatia isn’t testifying in the trial, but Economou has always denied he was party to an “arrangement” and continued to do so while testifying in a London court this week.
“I am insulted by the suggestion that I would sacrifice my integrity and jeopardize my career to devise and propose such a plan,” Economou said in a court filing.
Although Trafigura had traded with Gupta for years, their relationship expanded dramatically starting in around 2019. Under an arrangement that Trafigura describes as “transit financing,” the trading house would buy cargoes of nickel from companies connected to Gupta as they were loaded on to a vessel, with the understanding that once they reached their destination 90-180 days later, another Gupta-linked company would buy the cargo back for the same price.
Trafigura would pocket a fee equivalent to an interest rate of about 4% to 6%.
Pillow, Trafigura’s lawyer, brought up instances of other firms, including broker Sucden Financial and trader Kataman Metals LLC, claiming to also have been duped after buying or being pledged nickel cargoes — that turned out not to contain the metal — from companies linked to Gupta.
“It’s the same thing you did to Trafigura,” Pillow said.
(By Archie Hunter, Jonathan Browning and Jack Farchy)
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