Gupta loses bid to lift freezing order in Trafigura fraud case

By Eric Onstad

LONDON (Reuters) -Indian businessman Prateek Gupta on Friday failed in his attempt to get a London court to lift a global freezing order on his personal and business assets in a fraud case brought by Trafigura about nickel cargoes.

Trafigura filed a lawsuit against Gupta in February and a London court imposed the freezing order after the Geneva-based commodity trader alleged seven companies owned or linked to Gupta carried out a systematic fraud.

Gupta has said in his defence that Trafigura staff devised the scheme at the centre of the case to substitute low-value metals such as scrap for high-grade nickel. Trafigura and its employees have denied knowing about any such fraud.

During a two-day London court hearing last week Gupta asked a judge to lift the freezing order, alleging Trafigura did not disclose important information.

“There was no failure to disclose,” Justice Robert Bright said in a ruling. “It follows that the application fails.”

Hundreds of pages of new documents were released in connection with the hearing including WhatsApp messages and emails that Gupta says show Trafigura staff, including head of nickel trading Sokratis Oikonomou, came up with the fraud.

Reuters was unable to contact Oikonomou for comment, who has denied the allegations and no longer works for Trafigura.

“I am not satisfied that the materials shown to me… should have put Trafigura on notice that there was a real possibility that Mr Oikonomou was involved in or knew about the alleged fraud,” Justice Bright said.

Bright also said, however, the ruling on the freezing order will have no bearing on the trial. “By that stage, the evidence available may present an entirely different picture.”

A spokesperson for Gupta said: “We now look forward to advancing our case and proving at trial the involvement of senior Trafigura representatives in the alleged arrangement.”

Trafigura said in a statement: “We are pleased that the court found in our favour. In particular, the court decision notes that none of the evidence indicated knowledge by Trafigura that the contents of the containers was not nickel.”

In court papers submitted previously, Trafigura had said it began to suspect in October last year that around 25,000 metric tons of metal sold by Gupta’s firms may not be high-grade nickel, and started inspecting more than 1,000 shipping containers, some of which contained carbon steel, worth a fraction of the price of nickel.

(Reporting by Eric OnstadAdditional reporting by Sam Tobin Editing by Jason Neely and Mark Potter)