The former director of a collapsed UK commodities trading company has hit back at claims by UBS that he allowed company funds to be siphoned off to family members after it became insolvent.

UBS alleged in a UK High Court suit last year that Vincom Commodities director Anil Kumar breached his fiduciary duties by supplying commodities to a firm owned by relatives without requiring payment, and transferred US$5.5mn to another firm owned by relatives without any commercial purpose. The Swiss lender is seeking US$14.1mn from Kumar.

UBS signed a master credit agreement with Vincom in 2014. It was placed into liquidation in January 2018 after a petition was filed by another lender, Israel Discount Bank.

Vincom engaged in about 180 transactions, worth US$330mn, whereby it bought goods from a company owned by Kumar’s brother and immediately sold them on to Donald McArthy Trading, a Singapore company controlled by another of Kumar’s brothers and a sister-in-law, according to Kumar’s defence, filed on March 7.

In the defence, Vincom rejects allegations by UBS that in eight transactions between 2014 and 2017, Vincom provided US$7.7mn worth of commodities at no cost to Donald McArthy.

In each case, the cargo was rejected for quality reasons and instead of seeking payment from Donald McArthy, Vincom issued credit notes. But UBS argued the credit notes were invalid because they were dated the same day as the cargoes were shipped and well before they were inspected on arrival in Singapore.

In his defence, Kumar says Vincom’s policy was for the dates on the credit notes to be the same as those of the bills of lading, and the actual date the credit notes were raised in each case was about six weeks later, after the cargo was inspected.

Kumar claims that for each transaction, the cargo was inspected by the financing banks – Banque de Commerce et de Placements, Sberbank, UBS and Zürcher Kantonalbank – which all agreed that the goods had been properly rejected.

Kumar also claims that UBS’ suit paints a misleading picture of the overall business between his firm and Donald McArthy, because the eight transactions identified by the lender constitute just 1.98% of the $390mn in overall business conducted between the two companies.

“[UBS] has unjustifiably cherry-picked a selection of transactions in which credit notes were raised on transactions between the company and [Donald McArthy],” Kumar argues.

He says UBS “unjustifiably seeks to infer from the family relationship between the defendant and the directors of [Donald McArthy] that these credit notes were raised improperly… this inference breaks down when the [Donald McArthy] transactions are seen in the content of the company’s trading as a whole”.

UBS also alleges that Vincom transferred around US$5.5mn to AST Metals, the second company controlled by one of Kumar’s brothers, which Vincom’s liquidators could not establish a commercial reason for. The payments occurred after Discount Bank’s wind-up petition had been filed on November 10, 2017.

But Kumar says in the defence that the amounts were payment for five invoices for scrap nickel purchased from AST, which was then sold on to a company called Du Trade Apac Pte Ltd for a profit of US$18,200.

Kumar also says he only became aware of the petition over Christmas 2017, several weeks after it had been filed. He also denies that the company ever defaulted on its obligations to Discount Bank or that he ever saw a statutory demand the Israeli lender is alleged to have served the company with in mid-2017.

In knowing whether or not the company was insolvent, the claim says Kumar was entitled to rely on the company’s accounts for the year ending March 2017, which showed a profit of £393,000 and net assets of £12mn.

Kumar also rejects UBS’ claim that it didn’t know AST and Donald McArthy were controlled by Kumar’s relatives.

UBS “did carry out due diligence into those transactions,” the defence says. “Such due diligence could and did extend to the identity of the counterparty to the transactions and the identity of the individuals who owned and/or controlled that counterparty (which was publicly available in Singapore).”

UBS declined to comment. Kumar, who is arguing that he does not owe any money to UBS, did not respond to a request for comment sent through his solicitors, Edwin Coe.

Filings by liquidators in the years since Vincom’s collapse show that another of Vincom’s creditors, Credit Suisse, elected to collect debts of some US$18.7mn outside of the liquidation process.

Efforts by the company’s liquidators to recover almost US$16mn in debt owed to Vincom by four companies in India and Singapore were unsuccessful, according to the reports.

The liquidators had to manually recreate Vincom’s book ledger because a flash drive Kumar claims he sent with the relevant information was never received.