Trafigura lawyers claim Gupta had history of fraud before alleged $600 million nickel scam
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LONDON :Trafigura lawyers accused Prateek Gupta of having had a history of fraudulent dealings before he allegedly organised a $600 million metals scam with the commodity group, as the Indian businessman gave evidence for the first time on Wednesday.
Gupta acknowledged he was being investigated for fraud in India, but denied the allegations as he took the stand in a trial in London's High Court.
Switzerland-based Trafigura sued Gupta over two years ago, alleging he was the mastermind of a scam in which he and his companies agreed to provide pure nickel but delivered steel or scrap instead.
Trafigura lawyer Nathan Pillow cited two other fraud cases involving Gupta's companies in which nickel was substituted for low-value metals, but Gupta said he was not aware that was taking place.
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"The reality is that dealing in fraudulent bills of lading is an expertise of yours," Pillow told Gupta, who was testifying remotely from Dubai where he lives.
Gupta is under investigation for bank fraud in India in connection with Indian company Ushdev International Ltd, part of Gupta's UD Group, he acknowledged.
Trafigura's first metals trades with Gupta in 2014 were with Ushdev, which later had financial difficulties, was declared bankrupt in 2018 and is currently being controlled by insolvency professionals.
Gupta has countered that staff at Trafigura devised a secret scheme, saying he was asked in 2019 to sharply boost nickel trading under then head nickel trader Sokratis Oikonomou.
"Oikonomou was aggressive in his trading approach and outlook and... wanted to expand Trafigura's nickel trading operation to a position of dominance in the market," Gupta said in a court document.
Oikonomou has strongly denied he was involved in the fraud and said the increased trading volumes with Gupta were modest compared to Trafigura's overall nickel operations. Trafigura terminated Oikonomou's employment in January 2023.
According to Gupta, India-based Trafigura trader Harshdeep Bhatia said Trafigura aimed to ramp up trade to 50,000 metric tons of nickel a year, about triple the volume previously.
Bhatia, who no longer works for Trafigura, did not respond to an emailed request for comment.
That large quantity of pure nickel, worth about $625 million at the time, would be difficult to source and also prove problematic in terms of credit insurance limits, Gupta said.
To get around those issues, Oikonomou proposed expanding the scope of trading to other metals at a meeting in Dubai in June 2019, Gupta said.
The real identity of those metals, including nickel alloy and scrap, would have to be kept secret because Trafigura's financing bank Citi would only provide funds for pure nickel, Gupta said.
Citi has declined to comment on the fraud case.
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