Prateek Gupta's Alleged Nickel Fraud Caused $577 million Loss for Trafigura
PRATEEK GUPTA, WITH AN ALLEGED HISTORY OF FRAUD, IS SUED BY TRAFIGURA FOR NOT DELIVERING ON A NICKEL CONTRACT
This article, first published February 11, 2023, is being re-published since Global Indian Times has also begun posting on Substack.
February 11, 2023*
Last week, Trafigura Group announced legal proceedings alleging fraud against Prateek Gupta and TMT Metals and companies owned by UD Trading Group, that are ”connected to and apparently controlled” by Gupta. The alleged fraud involved “misrepresentation and presentation of a variety of false documentation” about nickel shipments during 2022, Singapore-based Trafigura said in a statement.
In December 2022, a small proportion of the shipments inspected by Trafigura were “found not to contain nickel”. Most of the questionable shipments, which remain in transit, await further inspection. Trafigura, a major global commodities group, recorded a $577 million loss related to the alleged fraud. So far, Gupta, who is reportedly a resident of Dubai, United Arab Emirates, TMT and UD have not commented on Trafigura’s allegations.
Apparently, Trafigura is seeking to be a major player in the trading of nickel, which is in big demand as a key ingredient in batteries for electrical vehicles. Currently the metal is mainly used in the production of steel.
Operating in 156 countries, Trafigura sources, stores, blends, and delivers a wide variety of materials, from crude oil to ores, concentrates and refined metals. Its industrial assets include oil storage facilities, fuel service stations, ships, warehouses, and mines. The group, which is owned by 1,100 senior employees, was founded in 1993. It has more than 12,000 employees in 61 countries.
During its last fiscal year ending September 2022, Trafigura’s trades included 23 million metric tons of non‑ferrous metals; 91 million metric tons of bulk minerals, primarily iron ore; and an average of 7 million barrels of oil and petroleum products per day. It earned a net profit of $7 billion on $319 billion in revenues in fiscal year 2022.
Given Trafigura’s size, the loss, on account of Gupta’s alleged fraud, is a relatively minor hit to its finances. The surprise for many executives in the commodities trade was not the missing nickel but that Trafigura was “still doing business with a man that others had long since backed away from,” Bloomberg reported.
In July 2022, India’s Central Bureau of Investigation (CBI) opened a fraud investigation against Ushdev International, a Mumbai-based private company, and its directors Prateek Gupta, 43-years-old, and his mother Suman Vijay Gupta. This followed a complaint by a consortium of Indian banks, led by the government-owned State Bank of India, about an alleged $174 million loss causing by Ushdev and its directors.
The investigation was about their “allegedly diverting or siphoning funds, showing sales to overseas dormant entities and manipulating books of accounts,” according to the Indian Express. So far, the CBI has reportedly not filed any charges.
In 1996, Prateek Vijay Gupta began as a trainee with Ushdev International. It was part of the Ushdev Group, founded by his father, which traded metals and was in the business of windmill power generation. In 1997, he took over as the Vice President of the company, “under a carefully laid out succession plan,” according to an interview with him in India Infoline News Service.
In 2008, Gupta started running Ushdev International as the Managing Director. “We are the third largest metal trading company in India. We have a 100% growth rate for the past few years,” Gupta told India Infoline. In the metal business, “We don’t face any kind of downside. Our… profit margins are also stable.” At its peak, the company had a market value of about $250 million.
Ushdev filed for bankruptcy in 2018. It’s revenues in 2022 were $1.5 million, according to MoneyControl.com, down from $17 million in 2018. The stock of Ushdev, which is listed on the Bombay Stock Exchange, recently traded at Rs.1.43 (2 cents) down from a peak of Rs.42 (54 cents) in 2011.
Jonas Rey, Chief Executive of Athena Intelligence, based in Geneva, Switzerland, told Reuters, “We provided intel to multiple clients on TMT’s involvement in what we called a carousel fraud…You have one cargo in the middle…(which) gets financed 10 times. It’s like a financial musical chair. Eventually everything comes crashing down.”
From 2018 to 2020, Ian Milne worked at TransAsia Private Capital, trying to recover debts owed by Gupta’s companies. He told Bloomberg, that when he read about Trafigura being a victim of alleged fraud by Gupta’s companies, he “had to rub my eyes a couple of times…It’s very well known in the market that these guys have a highly dubious reputation.”
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