A British high court judge ruled on Wednesday in favor of broker ED&F Man in a claim against Singapore commodities trader Straits and four other defendants about fraudulent warehouse receipts for nickel stored in Singapore.
Justice Calver said in a written judgment that the defendants were liable for $283 million because they committed deceit and unlawful conspiracy in providing fake documents to ED&F Man.
The amount of claims for each defendant will be determined later, he added.
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The practice of using metal as collateral in warehouse financial deals came under increasing scrutiny after a $3 billion fraud in 2014 at Qingdao port in China.
“Straits had actual knowledge from possibly as early as January 2015 but certainly by February 2016 that…(the defendants) were engaged in a scheme to obtain finance fraudulently,” Calver said in the judgment.
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Straits said in a statement that it was disappointed and did not agree with the judgment. “We are studying the grounds of the decision carefully and we are currently taking urgent legal advice, including as to appeal.”
ED&F Man Capital Markets (MCM) and Straits agreed that warehouse ownership documents provided to MCM in 2016 were forged, but they disputed who was responsible.
MCM is a unit of private commodities merchant ED&F Man, which brought civil cases in London against the defendants to recoup the cash it paid for the warehouse receipts.
MCM accused Straits (Singapore) PTE Ltd of providing scanned warehouse receipts to two Hong Kong based companies which MCM said later sent fraudulent documents based on them to MCM.
“Today’s judgment is an important victory for ED&F Man,” chief executive Rafael Muguiro said in a statement.
“We have always maintained that we have been the victim of a carefully constructed fraud, and that we would take all means possible to recover any losses.”
Straits Singapore is a unit of Straits Financial, itself owned by logistics group CWT International Ltd 0521.HK.
When MCM originally filed the case in 2017, it sued two Hong Kong firms, Come Harvest Holdings Ltd and Mega Wealth International Trading Ltd, which provided 92 warehouse receipts to MCM.
MCM later added Straits and other defendants to the lawsuit, which along with the two Hong Kong firms had all denied responsibility for fraudulent activity.
Only MCM and Straits participated in the London trial.
Reuters could not immediately identify representatives of the Hong Kong firms and other defendants to request comment.
(Reporting by Eric Onstad; editing by Jason Neely, Kirsten Donovan)
Related:
Topics Fraud
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