ED&F Man, Straits Point Fingers In $284M Metal Fraud Trial

Broker ED&F Man and Singapore commodities trader Straits wrapped up a metals fraud trial on Friday, blaming each other after warehouse receipts for nickel stored in Singapore worth $284 million were discovered to be fraudulent, Channel News Asia (CNA) reported.

Photo Insert: Volcafe is one of the businesses owned by the broker.

The practice of using metal as collateral in warehouse financial deals came under increasing scrutiny after a $3 billion fraud in 2014 at Qingdao port in China. ED&F Man Capital Markets and Straits agreed that warehouse ownership documents provided to MCM in 2016 were forged, but they disputed who was responsible.

MCM is a unit of private commodities merchant ED&F Man, which brought civil cases in London against 10 defendants to recoup the $284 million it paid for the warehouse receipts.

MCM accused Straits (Singapore) PTE Ltd of providing scanned warehouse receipts to two Hong Kong-based companies which MCM said later sent fraudulent documents based on them to MCM.

Straits Singapore is a unit of Straits Financial, itself owned by logistics group CWT International Ltd.

"It's not only a question of lying, but entering into a highly suspicious series of transactions, we say, which have been camouflaged by the use of sham contractual documents," MCM barrister Huw Davies told the court.

Straits knew that fraudulent activity was occurring or at least turned a blind eye, MCM alleges. Straits said that providing scanned warehouse receipts is common industry practice to show potential buyers what is on offer.

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