Trafigura Staff Flagged Gupta’s Nickel Deals Years Before Alleged Fraud

Trafigura Group’s own trade-finance staff raised red flags about its nickel deals with businessman Prateek Gupta more than two years before the trading house revealed it was facing hundreds of millions of dollars in losses, Bloomberg reported.

In an internal email from September 2020 submitted to a London court on Monday, trade finance specialist Thibaut Barthelme warned that Trafigura had effectively become “the bank” to Gupta’s companies and that the business might not be able to secure funding elsewhere if the trading house pulled back, Bloombergreported.

The message, sent to senior figures on the trade finance desk, also described Gupta’s model as a “strange business strategy” involving long voyage times, high interest costs and irregular sales, and flagged that Credit Suisse and Deutsche Bank had declined to process payments to his firms, the news agency said.

The email was submitted as evidence as Gupta’s lawyers questioned former nickel chief Socrates Economou, who oversaw the trades at Trafigura.

While a person close to the company told Bloomberg that Trafigura did seek to limit its exposure after the warnings were raised in 2020, the correspondence shows that senior staff were aware of concerns about the relationship well before it collapsed. One of the recipients of the warning, Stephan Jansma, is now Trafigura’s chief financial officer, Bloomberg reported.

Trafigura, the world’s biggest metals trader, stunned markets in early 2023 when it announced it had uncovered what it alleges was a large-scale fraud linked to Gupta’s companies, leading to an expected loss of around $600 million.

The group said it discovered that more than half a billion dollars’ worth of cargoes it had bought—containers supposedly filled with nickel—actually contained stainless steel, aluminum and low-value iron briquettes instead, according to Bloomberg. Lawyers for Trafigura last week characterized the arrangement as “a sort of Ponzi scheme.”