ED&F Man succeeds against Straits in metals fraud case (updated)

CWT International

16/02/2022 11:22

(Adds details, background)
    By Eric Onstad
    LONDON, Feb 16 (Reuters) - A British high court judge ruled
on Wednesday in favour of broker ED&F Man Capital Markets in a
claim against Singapore commodities trader Straits and four
other defendants about fraudulent warehouse receipts for nickel
stored in Singapore.
    Justice Calver said in a written judgment that the
defendants were liable for $283 million because they committed
deceit and unlawful conspiracy in providing fake documents to
ED&F Man.
    The amount of claims for each defendant will be determined
later, he added.
     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.   
    "Straits had actual knowledge from possibly as early as
January 2015 but certainly by February 2016 that...(the
defendants) were engaged in a scheme to obtain finance
fraudulently," Calver said in the judgment.
    Straits did not immediately reply to an email seeking
comment. 
    ED&F Man Capital Markets (MCM) 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 the defendants to
recoup the cash 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  0521.HK . 
    When MCM originally filed the case in 2017, it sued two Hong
Kong firms, Come Harvest Holdings Ltd and Mega Wealth
International Trading Ltd, which provided 92 warehouse receipts
to MCM. 
    MCM later added Straits and other defendants to the lawsuit,
which along with the two Hong Kong firms, had all denied
responsibility for fraudulent activity.
    Only MCM and Straits participated in the London trial.
    Reuters could not immediately identify representatives of
the Hong Kong firms and other defendants to request comment.

 (Reporting by Eric Onstad; editing by Jason Neely, Kirsten
Donovan)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))