(Sept 22): Glencore plc last month told Mizuho Bank Ltd that it believes Radiant World fraudulently generated email correspondence purporting to show that the Switzerland-based commodities trader planned to pay back the Japanese lender nearly US$100 million (RM407.5 million), according to a legal filing obtained by Bloomberg News.

Details of the email exchange were outlined by Mizuho as part of a lawsuit in Singapore, where it has accused Radiant World of an alleged fraud linked to iron-ore receivables that Glencore appeared to owe Radiant. The bank is one of several lenders to have launched legal proceedings against Radiant World since Bloomberg in July first reported concerns that the trader had been raising money using falsified documents.

Spokespeople for Mizuho, Glencore and Radiant World declined to comment. Radiant World has previously denied wrongdoing and has said that the accusations stem from a commercial dispute with Glencore.

The filing provides a detailed account of how — over the course of a week in August — Mizuho came to the conclusion that it had been defrauded on US$95.5 million in loans it had extended to Radiant World less than two months earlier. The financing deal was underpinned by invoices for five iron ore cargoes that Radiant World appeared to have sold to Glencore International AG.

On Aug 5, Radiant wrote to Mark Francis, Glencore’s iron ore operations manager, seeking confirmation that Glencore would pay the receivables, copying in a Mizuho banker at the latter’s request, according to the filing.

The following morning, Radiant World forwarded the banker an email attachment of a purported reply from Francis confirming Glencore would make payment, the filing said. The Mizuho banker became suspicious because he had specifically asked to be included in correspondence between Radiant and Glencore.

He contacted Francis directly, initially to thank him for confirming payment, but Francis told him he hadn’t received Radiant’s Aug 5 email and hadn’t sent the reply, according to the filing. After further checks, Glencore told Mizuho on Aug 11 that the five underlying transactions and the invoices submitted by Radiant World did not exist. Glencore’s analysis was that the communications had been “generated fraudulently”, according to the filing.

In an affidavit filed in the Mizuho case that was seen by Bloomberg News, Radiant World founder Pinkesh Nahar argued that Mizuho’s claim of fraud was wholly reliant on Glencore’s confirmation that it had no record of the trades. 

“The trades were genuine, and Glencore recognised, confirmed to financiers, and paid the receivables over many years,” he said. “Radiant does not accept Glencore’s denial and intends to pursue its claims against Glencore.”

In its lawsuit, Mizuho is seeking to place a key operational unit of Radiant World under judicial management, with the claim due back in court on Wednesday for a case conference. It’s part of a widening series of disputes over receivables financing provided to Radiant World, which became one of the world’s largest iron ore traders in a rapid expansion over recent years.

A spreadsheet submitted by founder Pinkesh Nahar in separate court proceedings shows the company has about US$870 million outstanding to six receivables-finance creditors, led by Jefferies Financial Group Inc and Intesa Sanpaolo SpA. Mizuho’s exposure was listed at US$97.28 million.

Multiple lenders have accused Radiant in legal proceedings of providing falsified documents. Jefferies’ Point Bonita trade-finance unit financed billions of dollars of receivables for Radiant and closely related trader Sapphire Minmetals, including invoices bearing the names of Glencore and Vitol Group. The companies named on some of those invoices later denied they were genuine, and a lawyer for a Jefferies fund has accused Radiant in a London court of being part of a “very large scale fraud”.

Meanwhile, Radiant and Sapphire have sued Glencore for about US$2 billion in Singapore, and claimed that the latter had acted as a “senior partner” in supporting the rise of its smaller trading rivals. Glencore has called the lawsuit “meritless” and said Radiant deceived it and multiple financial institutions.

In a statement of claim filed in Singapore’s High Court and certified by Radiant World’s founder Pinkesh Nahar, the iron ore trader alleges that discrepancies with Glencore’s records don’t necessarily mean the underlying trades were fictitious. It says Glencore often used oral communications and WhatsApp, and routed some transaction documents in “non-standard ways”, meaning its formal records didn’t fully reflect their trading arrangements.

The allegation that Radiant fabricated the Glencore email was previously reported by industry publication Global Trade Review. 

Uploaded by Tham Yek Lee