Trafigura Accuses Gupta of Fraud in $600 Million Nickel Case

In a significant legal confrontation, lawyers representing Trafigura have accused Indian businessman Prateek Gupta of having a history of fraudulent activities prior to his alleged involvement in a $600 million metals scam. This accusation surfaced during Gupta’s testimony in London’s High Court on Wednesday, marking his first public statement regarding the allegations.

Gupta, who acknowledged an ongoing investigation for fraud in India, firmly denied any wrongdoing while addressing the court. Trafigura, a commodity trading giant based in Switzerland, initiated the lawsuit against Gupta over two years ago, claiming he orchestrated a scheme where he and his companies promised to deliver pure nickel but instead provided steel or scrap metal.

Details of the Allegations and Gupta’s Defense

During the proceedings, Trafigura lawyer Nathan Pillow presented evidence of two prior fraud cases linked to Gupta’s companies, where nickel was allegedly substituted with lower-value metals. In response, Gupta asserted he had no knowledge of such practices occurring. Pillow challenged Gupta, saying, “The reality is that dealing in fraudulent bills of lading is an expertise of yours,” while Gupta testified remotely from Dubai, where he currently resides.

Gupta is under investigation in India concerning Ushdev International Ltd, a company related to his UD Group. He acknowledged that Ushdev faced significant financial difficulties, ultimately leading to its bankruptcy in 2018. Trafigura’s initial dealings with Gupta began in 2014 through Ushdev.

In his defense, Gupta claimed that the increase in nickel trading was part of a strategic plan devised by Trafigura staff. He stated that in 2019, he was instructed to significantly increase nickel trading under the leadership of then-head nickel trader Sokratis Oikonomou. Gupta alleged that Oikonomou aimed to position Trafigura as a dominant force in the nickel market, describing him as “aggressive in his trading approach and outlook.”

Counterclaims and Management Changes

Oikonomou has denied any involvement in the alleged fraud, asserting that the trading volumes with Gupta were modest compared to Trafigura’s overall nickel operations. Trafigura terminated Oikonomou’s employment in January 2023, amidst the ongoing legal proceedings.

According to Gupta, a Trafigura trader based in India, Harshdeep Bhatia, indicated a target to raise nickel trade to 50,000 metric tons annually, approximately triple the previous volume. Gupta noted that sourcing such a large quantity of pure nickel, valued at around $625 million at that time, would be challenging and could pose issues related to credit insurance limits.

To navigate these challenges, Gupta claimed that during a meeting in Dubai in June 2019, Oikonomou suggested broadening the trading scope to include other metals, including nickel alloy and scrap. Gupta stated that this would require keeping the true nature of the metals secret since Trafigura’s financing bank, Citi, would only provide funding for pure nickel. Citi has not commented on the ongoing fraud case.

The trial continues to unfold, as Gupta’s testimony raises questions about the integrity of the transactions and the responsibility of both parties in the alleged scheme. The outcome may significantly impact the reputations and financial standings of those involved.