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Commodities trader says it is victim of massive nickel

fraud

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Gupta claims Trafigura came up with scheme at centre of

trial

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Five-week trial expected to hear evidence from Gupta and

former

Trafigura executives

By Sam Tobin and Eric Onstad

LONDON, Nov 17 (Reuters) - Trafigura's $600 million case

against Indian businessman Prateek Gupta over fake nickel

cargoes began at London's High Court on Monday, with the

commodities trader saying it was the victim of a fraudulent

"Ponzi scheme".

Geneva-based Trafigura alleges that Gupta was the mastermind

of a fraud in which he and his companies agreed to provide

high-quality 99.8% pure nickel but delivered low-value or even

worthless materials instead.

Gupta accepts that he did not deliver high-grade nickel cargoes

but says 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. Court filings from

Gupta's lawyers say the scheme involved more than 500 trades

valued at $3.3 billion.

The trial, at which Gupta and former senior Trafigura

executives are expected to give evidence, is the culmination of

events that began in November 2022, when Trafigura first

received complaints about cargoes it had sold.

'SYSTEMATIC FRAUD'

After concerns were raised, Trafigura inspected some

containers in Rotterdam that were supposed to contain high-grade

nickel. Its lawyers say the inspections found that the

containers held carbon steel worth a fraction of the value of

nickel.

The discovery prompted Trafigura to carry out further

inspections, book a $590 million charge and then sue Gupta and

his companies in February 2023 for what it then described as

"systematic fraud".

Trafigura's lawyer, Nathan Pillow, told the High Court on

Monday: "Trafigura paid for rubbish and was left with hundreds

of millions (of dollars) of losses."

Trafigura has been left with metal "worth around 2% of what

we paid for it" after recouping about $10 million from trades

worth more than $500 million, Pillow said.

GUPTA DEFENDING THE CASE

Gupta's lawyers say that Trafigura executives were always in

on the agreement to use financing from Citi to "make money

'borrowing' cheap money from Citi and 'advancing' it to (Gupta

and his companies) at a higher interest rate".

His lawyers argued in court filings that "so long as the

circle kept turning" the parties involved all gained and "nobody

suffered".

They said the COVID-19 pandemic and Russia's 2022 invasion

of Ukraine sent nickel prices soaring and the scheme unravelled

when Citi started pushing for the cargoes to be taken back.

Trafigura denies there was any such agreement, with the

company's lawyers saying Gupta and his companies' defence is "a

fiction conceived after the event by admitted fraudsters".

Gupta remains subject to a freezing order on his assets,

which Gupta unsuccessfully sought to lift in December 2023.