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A worldwide freeze on the assets of Indian businessman Prateek Gupta will remain, a London high court assess ordered on Friday, in a success for commodity trader Trafigura in a $600mn legal battle over a nickel fraud.
In WhatsApp messages and emails revealed in court last week, Gupta said the Singapore-based group, which obtained the freezing order in February, asked him to be complicit in the fraud.
Trafigura had accused Gupta of masterminding the fraud after it found more than 1,000 containers bought from his network of companies were full of almost worthless materials rather than the valuable metal.
Gupta said Trafigura came up with the fraudulent arrangement to fill containers with worthless materials to boost revenues, credit lines and profits. The commodity trader insists it was misled on the contents.
In his attempt to have the order lifted, Gupta accused Trafigura of failing to furnish “full and frank disclosure” centred around his allegation that its employees sought out his collaboration in covering up a fraud.
Gupta, who lives in Dubai, produced WhatsApp messages and email threads that his lawyers argued appear to show Trafigura’s traders concealing the scheme from its lender Citibank, which provided a $850mn financing line to the company.
Mr Justice Bright wrote that the materials presented by Gupta’s lawyers did not furnish “any real uphold for their case, for the purposes of this application” but added that “my conclusion has no bearing on what will happen at trial”.
He said the communications with Trafigura employees presented by Gupta “smacked of” internal tensions between traders and the risk management and finance teams “rather than knowledge of fraud”.
In a statement, Trafigura said it was pleased the assess “found in its favour” and that the court decision noted that “emails and messages by Trafigura staff did not imply knowledge of the fraud”.
Gupta said he had always strongly denied Trafigura’s claim in the main proceedings and “the court’s decision to continue the freezing order is not a ruling on that claim and has no bearing on it”.
The trading relationship between the two parties started in about 2014, expanding from zinc in India to global trades in nickel and aluminium before souring last year.
Trafigura’s nickel fraud scandal comes as commodity traders come under fire for corruption and bribery — issues that have dogged the sector in the past.
On Thursday, rival group Freepoint Commodities made a $98mn settlement with the US Department of Justice for its involvement in a scheme to bribe Brazilian government officials.
The Connecticut-based commodity trader said the resolution stemmed from activity by individuals before they had joined Freepoint.
Switzerland’s federal prosecutor charged Trafigura with bribing foreign officials in Angola this month. Trafigura said it would defend itself in court against the charges.
