Trading giant Trafigura Group is being sued by billionaire shipowners the Reuben brothers as part of a huge nickel fraud scandal.
Legal filings seen by Bloomberg News reveal the publicity-shy UK-based Simon and David Reuben have two cases proceedings against the commodities group relating to missing shipments on a number of vessels.
Trafigura said earlier this year it expected to lose nearly $600m in what it called a “systematic fraud” perpetrated by Indian businessman Prateek Gupta.
Gupta's representatives have previously said they would provide a robust response to the allegations.
The Reubens run Reuben Brothers, which controls bulkers and a huge property empire.
Their Hyphen Trading company has launched the legal action.
The first case, in Singapore, relates to Hyphen’s purchase of a little over $10m of nickel from the London Metal Exchange.
This was loaded onto several ships.
But Trafigura’s lawyers told Hyphen the trading house was the rightful owner of the cargo instead.
Both companies claim to have the original bills of lading.
The other case in the UK High Court focuses on a 404-tonne cargo that Hyphen bought from Trafigura in September last year for $8.4m.
No delivery in Rotterdam
The cargo was loaded in Kaohsiung, Taiwan, onto Cosco-owned OOCL’s 4,578-teu container ship OOCL Jakarta (built 2010).
Hyphen aimed to take delivery of the cargo when it arrived in Rotterdam.
The deal was financed via a repurchase agreement with ICBC Standard Bank.
The containers arrived in Rotterdam in mid-November on a different ship, but Hyphen was not told.
The boxes remained on the ship for its return trip to Asia, before they were finally unloaded in Jeddah, Saudi Arabia, according to the court filing.
“On 16 December, Hyphen asked for information concerning where the goods had been stored at Kaohsiung (before shipment). Trafigura did not reply,” Hyphen claims.
Trafigura did later respond to the demand for an inspection, but allegedly refused, citing “logistical complications”.
Hyphen then visited the Singapore offices of OOCL to present the original bills of lading it had received from Trafigura.
But OOCL pointed out a discrepancy. Hyphen’s bills of lading just listed Trafigura as shipper, while the copy of the documents in OOCL’s system also included the name of a Singapore logistics company, Techies Logistics, as “forwarding agent”.
Hyphen alleges that it was Techies that ordered the cargo to be sent back to Jeddah after it had already arrived in Rotterdam.
’Not genuine’
Hyphen then went to Rotterdam and demanded to take physical delivery of its cargo. OOCL refused.
On 5 April, OOCL’s lawyers said Hyphen had paid Trafigura $8.4m and received a bill of lading that was not genuine.
Trafigura has continually insisted that none of its employees were complicit in the alleged fraud.
And it acknowledged, in its lawsuit against Gupta, that it had sold cargoes bought from his companies to several third parties – including Hyphen – and was “potentially exposed to a claim by them in the event (which now of course seems likely) that those cargoes did not contain nickel”.
It even raised the possibility that some of the bills of lading involved might not be genuine.
Hyphen is seeking the $8.4m, plus costs and interest from Trafigura.
None of Trafigura, the Reuben brothers, Techies or ICBC Standard Bank is commenting.
