Trafigura Group, the Dutch commodities trader, is facing a $577 million loss after discovering that shipments of nickel it bought did not contain the nickel it was supposed to have purchased.
This systematic fraud in nickel shipments, which has been under internal investigation for two months, has been carried out by several companies linked to Indian businessman Prateek Gupta. Trafigura, following the news, announced that it has initiated legal proceedings against the businessman and the companies involved, including TMT Metals and subsidiaries of UD Trading Group.
Trafigura's nickel scam
This collusion began to unravel when investigators from the Dutch multinational arrived at the port of Rotterdam in the Netherlands before the end of 2022 to check the contents of a container that was supposed to contain nickel. However, when they opened it, they found that it was full of materials of a much lower value than it was supposed to contain.
Trafigura's internal investigations have indicated that this fraud may relate to nickel shipments throughout 2022, for which false documentation was submitted. As such, the company has already calculated the losses from the scam to be as high as $577 million. Moreover, these investigations have revealed that no one in the company appears to have been complicit in the fraud, even though Socrates Economu, Trafigura's head of nickel and cobalt trading, has resigned from his position.
Despite these facts, Trafigura, one of the most powerful groups in the sector, concluded that its financial results and net profit will exceed in the first half of 2023 what it achieved in the 2022 period.
Nickel: popular metal among fraudsters
One of the most popular metals among fraudsters is nickel because of its high value (a full container can be worth up to $500,000). It also happens to be traded in fairly large volumes, but without the rigorous security that can accompany other precious metals such as gold.
In 2022, other traders and operators have been involved in problems with nickel for different reasons, and the metal was affected by large price swings that put the London Metal Exchange in check.
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