A Jefferies-run fund claims evidence of alleged fraudulent conduct by iron ore traders Radiant World and Sapphire Minmetals in receivables-financing deals with a face value of almost $900 million. The claim, made in an affidavit by lawyer Christopher Bushell, significantly expands the known scale of the alleged fraud, previously reported as one of the biggest in the commodities industry since Enron Corp. This $900 million comes on top of about $500 million alleged fraudulent by other banks and creditors including Mizuho Financial Group, Deutsche Bank, Intesa Sanpaolo and Incomlend Pte. Bushell states the companies "fabricated and falsified" legal and financial documents "on an industrial scale." Both Radiant World and Sapphire Minmetals are part of a group of legally separate but closely connected companies that have repeatedly denied wrongdoing.
A London court has granted the fund a $499 million freezing order against the global assets of Radiant, Sapphire and their majority owners Pinkesh Nahar and Rakesh Sethi. Point Bonita's LAM Trade Finance Group II LLC fund is currently owed more than $610 million under financing deals, with over $550 million linked to purported sales to Glencore Plc and Vitol Group. Both Glencore and Vitol have provided evidence that documents related to the sales had been falsified and told the fund they have no outstanding obligations.
The fund has evidence that Radiant World and Sapphire Minmetals falsified documents for at least 50 receivables totaling nearly $900 million. Point Bonita is Radiant World's largest single creditor, but Jefferies' direct exposure is limited at 5.9% stake. A spokesperson for Radiant World didn't reply to a request for comment.
Sethi, Sapphire's chairman, didn't reply to a request for comment. Glencore and Vitol declined to comment.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing