Trafigura recently discovered a systematic fraud committed by a group of companies connected to and apparently controlled by Mr Prateek Gupta including TMT Metals and companies owned by UD Trading Group. Trafigura has commenced legal proceedings against Mr Gupta and the companies involved. The fraud concerns containerised nickel in transit during 2022 and involved misrepresentation and presentation of a variety of false documentation. The fraud is isolated to one specific line of business. We have seen no evidence to suggest that anyone at Trafigura was involved or complicit in this illegal activity.A thorough review is ongoing. Since late December 2022, a small proportion of the containers purchased from these companies have been inspected as they reached their destination, and were found not to contain nickel. The majority of the shipments remain in transit awaiting further inspection. Nonetheless, the Group recorded a USD577 million charge in the first half of 2023 for Trafigura Group Pte Ltd., estimated to be the maximum loss exposure related to this fraud. The Group’s net profits in the first half of its 2023 financial year are expected to exceed first half 2022 net profits, notwithstanding this impairment.Though Trafigura’s statement did not specify the exact type of document fraud it was exposed to, trade-fraud typologies can broadly be categorised into the following four categories, according to MonetaGo’s recent whitepaper:Duplicate financing – multiple banks across multiple jurisdictions will unknowingly finance the same trade transaction due to customer confidentiality, anti-competition and regulatory rules hindering information sharing.Fraudulent documents – banks might not be able to validate the authenticity of documents which are accepted as proof of ownership or transport in a trade finance transaction. Documents could include: e-bills of lading, shipping documents, warehouse receipts, trust receipts, accounts receivable, or any other bills, documents or receipts similar in nature.
Trafigura recently discovered a systematic fraud committed by a group of companies connected to and apparently controlled by Mr Prateek Gupta including TMT Metals and companies owned by UD Trading Group. Trafigura has commenced legal proceedings against Mr Gupta and the companies involved. The fraud concerns containerised nickel in transit during 2022 and involved misrepresentation and presentation of a variety of false documentation. The fraud is isolated to one specific line of business. We have seen no evidence to suggest that anyone at Trafigura was involved or complicit in this illegal activity.A thorough review is ongoing. Since late December 2022, a small proportion of the containers purchased from these companies have been inspected as they reached their destination, and were found not to contain nickel. The majority of the shipments remain in transit awaiting further inspection. Nonetheless, the Group recorded a USD577 million charge in the first half of 2023 for Trafigura Group Pte Ltd., estimated to be the maximum loss exposure related to this fraud. The Group’s net profits in the first half of its 2023 financial year are expected to exceed first half 2022 net profits, notwithstanding this impairment.Though Trafigura’s statement did not specify the exact type of document fraud it was exposed to, trade-fraud typologies can broadly be categorised into the following four categories, according to MonetaGo’s recent whitepaper:Duplicate financing – multiple banks across multiple jurisdictions will unknowingly finance the same trade transaction due to customer confidentiality, anti-competition and regulatory rules hindering information sharing.Fraudulent documents – banks might not be able to validate the authenticity of documents which are accepted as proof of ownership or transport in a trade finance transaction. Documents could include: e-bills of lading, shipping documents, warehouse receipts, trust receipts, accounts receivable, or any other bills, documents or receipts similar in nature.
