An alleged US$31mn debt to non-bank financier Artis Finance and a stockpile of nickel that turned out to be almost worthless steel are among the separate legal challenges facing metals trader TMT Group ahead of a blockbuster trial next month over fraud allegations brought by Trafigura.
Trafigura accused TMT entities connected to businessman Prateek Gupta of a “systematic fraud” in early 2023 after losing more than US$570mn buying cargoes of nickel that later turned out not to contain the metal. TMT and Gupta have denied fraud and alleged that Trafigura helped orchestrate the trading arrangement.
An estimated five-week trial is set to commence in London’s High Court on November 14, in proceedings that are likely to dissect the trading relationship between the global commodities giant and the TMT Group. But court documents, some newly published, have also revealed details of separate claims against Gupta and his companies.
TMT companies in the UK and Switzerland are also facing an ongoing claim from non-bank trade financier Artis, which says it is owed just over US$31mn by TMT Metals UK and other companies the firm traded with.
Artis Loanco 1, a subsidiary of Artis Finance, claims the sum is owed under a receivables finance facility it extended to TMT Metals in 2021, and which the trader allegedly failed to repay, according to previously unreported court filings.
Artis Loanco 1 also claims to be owed US$40.8mn from companies that bought metals from TMT Metals and which Artis financed through the facility. The 10 companies “dishonoured” bills of exchange drawn upon them by TMT, Artis Loanco alleges.
Artis Finance went into administration in March, and Artis Loanco followed in June, partly due to “significant amounts outstanding and overdue from borrowers”, according to public records.
Grant Thornton, the administrators for Artis, said in a June report that they expect to realise less than half the company’s US$238.7mn trade loan book. A spokesperson for Grant Thornton told GTR it will continue “pursuing recovery of the debt due from TMT”.
In a separate case facing TMT, broker Sucden Financial claims the trader provided a bill of lading for a shipment of “high value” nickel stored in a Shanghai warehouse as security for margin calls of US$8.38mn, which arose after nickel prices spiked in early 2022.
According to court documents made public last week, Sucden claims that when the containers were inspected – many months after the broker accepted the bill of lading as security – they were found to contain steel with nickel content of just 0.2%. Sucden later sold the cargo for just US$52,000.
Sucden claims it is still owed US$6.7mn as of July this year.
TMT and Gupta have not denied that the goods did not reflect the details on the bill of lading, but claim culpability lies with Mine Craft Limited, the company from which it purchased the cargo.
“No representation was made as to the actual contents” of the containers, the defendants argued, because the bill of lading said only that the containers were “said to contain” nickel.
“TMT did not make any representation knowing it to be untrue,” the company and Gupta said in a joint defence. “Nor was it reckless as to the representations it made.”
Sucden claims that Gupta was the “de facto” legal controller of Mine Craft, and that it was operated by the head of another of Gupta’s trading companies. Gupta and TMT deny having any control over Mine Craft, arguing it is an unrelated company that has a “longstanding trading relationship” with TMT Group companies.
Gupta mounted a jurisdiction challenge against the proceedings, but this was rejected by the court in June this year. At a hearing in early October, a judge refused the defendants permission to appeal.
The proceedings are ongoing despite a summary judgment being entered in favour of Sucden last year.
US trader Kataman Metals LLC also filed a suit against TMT Metals UK in November 2023. Reuters reported that Kataman was claiming nearly US$1mn in interest for sales involving Mine Craft.
Legal representatives for TMT and Gupta did not respond to requests for comment. Sucden declined to comment.
