By Eric Onstad
LONDON (Reuters) -Trafigura’s former head nickel trader denied allegations by Indian businessman Prateek Gupta on Monday in a London trial that he helped devise a $600 million fraud to swap expensive metals for cheap or worthless ones.
Geneva-based Trafigura sued Gupta over two years ago, alleging he was the mastermind of a fraud in which he and his companies agreed to provide high-quality 99.8% pure nickel but delivered steel or scrap instead.
Gupta, based in Dubai, has retorted that 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.
“I did not devise, know of, or participate in any such arrangement,” Sokratis Oikonomou, who became head of nickel trading at Trafigura in 2017, told a London High Court trial in a written witness statement.
“I am insulted by the suggestion that I would sacrifice my integrity and jeopardise my career to devise and propose such a plan.”
Trafigura terminated his employment in January 2023 after around 16 years with the company.
EVIDENCE AND INTERNAL PROBE
In December 2023, Gupta and his lawyers produced chat exchanges and emails with Trafigura staff that he alleged were proof that he was not alone in the operation.
Trafigura has previously said it looked into whether staff colluded with Gupta, but was satisfied by their denials.
Gupta lawyer Louise Hutton suggested to Oikonomou that a message from former Trafigura Indian-based trader Harshdeep Bhatia mentioning “red flags” in trading with Gupta showed that both men knew about the fraud.
“That is not true,” Oikonomou said, adding that Bhatia must have been referring to day-to-day issues resulting from the COVID-19 pandemic, which caused disruptions to many clients.
Bhatia did not respond to an emailed request for comment.
Oikonomou said in his witness statement he discovered in November 2022 Trafigura staff had not insisted on certificates of analysis before paying for cargoes and that some of the documents did not include the correct codes for pure nickel.
“I was surprised when I found out about this because it
indicated that the operations team had not followed protocol.”
He added, however, that shipping codes in most of the trades with Gupta were not relevant due to a transit financing arrangement with him and analysis was only needed for delivering to the London Metal Exchange or other customers.
Gupta said Oikonomou proposed in May 2019 to boost nickel trading between Trafigura and Gupta’s firms to 50,000 metric tons a year, but Gupta said he replied that there was not enough high-grade nickel and proposed to include scrap and alloys.
Oikonomou rejected trading low-grade nickel in the open, because Trafigura’s bank Citi would only finance high-grade nickel, Gupta said.
Citi has declined to comment on the fraud case.
Gupta remains subject to a freezing order on his assets, which Gupta unsuccessfully sought to lift in December 2023.
(Reporting by Eric Onstad; Editing by Louise Heavens and Emelia Sithole-Matarise)
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