Mizuho has alleged that troubled commodity trader Radiant World fabricated communications with resources giant Glencore in an attempt to prevent the bank from demanding repayment of almost US$100mn in financing.
Radiant World has faced mounting legal challenges in recent weeks following reports the company allegedly provided banks with fake invoices to obtain trade finance for its iron ore trading business.
Last month, Mizuho applied for Radiant World’s Singapore entity to be placed under judicial management. In a document filed as part of that application and seen by GTR, the bank said it believes the company “has fabricated email correspondence with Glencore”.
Radiant World did not immediately respond to a request for comment from GTR on Mizuho’s claims.
Mizuho had an exposure of US$95.5mn to Radiant World in the form of five receivables the bank had purchased from the trader in June for sales of iron ore, which it believed would be repaid by Glencore, the document shows.
On July 31, Bloomberg reported that top traders such as Vitol, Cargill and Glencore had stopped doing business with Radiant World because it had allegedly provided fake invoices to some lenders.
Following Bloomberg’s report, Radiant World copied Mizuho into an email to Glencore seeking confirmation that Glencore would make payment for the iron ore receivables, Mizuho said in the court filing. Radiant World then sent Mizuho a purported reply from Glencore confirming that payment would be made.
Suspicious about why Glencore had not copied the bank into its reply, Mizuho directly contacted Glencore to thank them for the email, the document shows.
However, Glencore replied that it had never received the email from Radiant World and had no record of the receivables in question, Mizuho claims.
In subsequent communications with the bank, Glencore said its analysis was that the emails “were generated fraudulently”, according to the bank’s filing.
Mizuho did not respond to a request for comment. Glencore declined to comment.
Following an urgent hearing requested by Mizuho on August 28, Singapore’s Supreme Court ordered Radiant World not to dispose of any property of the company “other than in good faith and in the ordinary course of business of the company”, nor to transfer any share in the firm or pass a winding up resolution, a second document shows.
A further hearing in Mizuho’s judicial management application is scheduled for September 23.
Further documents filed by the bank show Deutsche Bank, Intesa Sanpaolo, KBC, Rio Tinto and Glencore are also parties to its application.
Mizuho’s action is one of several legal claims facing Radiant World.
Trade finance platform Incomlend is seeking repayment of US$31.7mn in financing and damages. The company said in court papers that Glencore had told it in August that some paperwork underpinning US$31.7mn in financing was not genuine, Bloomberg reported earlier this month.
Incomlend previously told GTR it is “pursuing the claim on behalf of the relevant funder on its platform and taking all necessary steps to protect its interests”.
A trade finance fund managed by Jefferies has also reportedly obtained a worldwide freezing order against Radiant World and its founder Pinkesh Nahar. Such orders heavily restrict the ability of companies and individuals to use funds.
Radiant World said in a July 31 statement in response to “media speculation” that the claims about it “are inaccurate and unsubstantiated”.
“Radiant World conducts its business to the highest commercial and legal standards and complies with all due diligence requirements with its lending partners,” the company said.
“As a longstanding policy, we do not comment publicly on confidential commercial relationships or the business of our counterparties. We therefore will not comment on purported discussions involving specific customers, suppliers, lenders or other market participants.”
