Trafigura vs. Prateek Gupta: London Trial Opens in $577M Nickel Fraud Scandal
More than two years after Trafigura Group revealed that it had lost over half a billion dollars in an alleged nickel fraud, a high-profile trial has begun in London as the global commodities trader seeks to recover the money from the man it accuses of orchestrating the scam.
Trafigura’s Multi-Million Dollar Losses
Proceedings opened Monday at the High Court, where Trafigura—one of the world’s leading commodity suppliers—is pursuing claims against Indian businessman Prateek Gupta.
The company shocked markets in early 2023 when it announced that nearly $600 million worth of shipping containers it had purchased did not contain the nickel they were supposed to hold.
Trafigura alleges a total loss of approximately $577 million, contending that it spent months uncovering what it believes was a sophisticated, long-running fraud. Gupta has consistently denied the accusations.
A Trial Almost Delayed
The trial, expected to run for more than a month, was nearly postponed after Gupta’s legal team briefly withdrew before being reinstated.
Gupta is scheduled to testify via video link from the United Arab Emirates later in the proceedings. Socrates Economou, Trafigura’s former head of nickel trading, will also appear as a witness.
“A Sort of Ponzi Scheme”
In opening arguments, Trafigura’s lawyer, Nathan Pillow, told the court that Trafigura recovered less than $10 million from selling the contents of roughly 100 cargoes—mostly stainless steel and aluminum ingots.
Had the shipments contained London Metal Exchange–grade nickel as contracted, their value would have exceeded $500 million.
Trafigura still holds some cargoes filled with “essentially worthless” iron briquettes.
Pillow characterized the alleged scheme as “a sort of Ponzi scheme” in which Trafigura was the sole victim, surviving only “so long as the music continued to play.”
Gupta’s lawyers, however, argue there was a mutually beneficial commercial “arrangement” between both parties, functioning as long as the business cycle “kept turning.”
A Market Shaken by Scandal
The case is one of several major incidents that have rattled global metals markets and highlighted vulnerabilities in warehousing and shipping systems.
Other examples include LME warehouse inventories found to contain bags of stones instead of nickel, and trading firms receiving cargoes later revealed to be worthless rubble.
In the arrangements between Trafigura and Gupta’s companies, the trader purchased nickel cathodes and briquettes using financing from Citigroup. The materials were meant to be repurchased by Gupta’s entities or sold on the open market.
Prices were structured so Trafigura earned a fixed fee—effectively functioning as a lender at a 4%–6% interest rate. Trafigura refers to these transactions as “transit finance.”
The scheme unraveled in December 2022 when Trafigura investigators inspected a container in Rotterdam and found not nickel, but significantly cheaper material.
Internal Fallout at Trafigura
The losses triggered significant internal tensions at Trafigura, particularly between its metals and energy divisions. Several members of its metals trading team involved in the transactions departed the firm shortly after the scandal. Trafigura maintains that none of its employees were involved in fraudulent activity.
One key figure who left was Harshdeep Bhatia, the trader responsible for managing Trafigura’s relationship with Gupta. He is not set to testify—something Gupta’s legal team criticized, noting that Bhatia was their client’s “main point of contact.” They suggested he “got cold feet” as trial dates approached.
Trafigura has also said that an internal audit linked to this case helped uncover a separate alleged fraud involving more than $1 billion in Mongolian oil.
Gupta’s Financial and Legal Struggles
Gupta previously sought to lift a court-ordered freeze on his assets, but a judge rejected the attempt in late 2023, citing insufficient evidence supporting his claim that Trafigura employees knew the cargoes did not contain nickel. Gupta has since struggled to fund his legal defense and has gone through multiple sets of commercial lawyers.
His business history has long raised concerns in the trading world. Previous dealings with firms such as Gunvor Group and TransAsia Private Capital resulted in losses, and other banks and counterparties have at times distanced themselves from his trading operations.
Trafigura Moves Forward Under New Leadership
Despite the scandal, Trafigura is emerging from the most profitable period in its history and entered 2024 under a new chief executive, Richard Holtum.
The outcome of this trial now represents a major test of both its internal controls and legal strategy after one of the biggest commodity trading fraud cases in recent memory.
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