The chef and sandwich shop owner at the center of Trafigura’s fraud case

Located in an alleyway near Hong Kong’s busy Tsim Sha Tsui shopping district, Sandwich Hub has a logo along the lines of adult entertainment site Pornhub, as well as the tagline: “Sandwiches that will make you want to come”.

The owner of the hole-in-the-wall Indian food joint, Aman Chaurasia, a jovial 30-year-old with a baby-faced smile, is upbeat about its offerings, which include low-priced entrees like paneer aloo toast and masala chai. Recipes included.

But he is also allegedly embroiled in an international fraud worth half a billion dollars. Last year, another business registered in his name sold cargoes of nickel to Trafigura, which upon examination turned out to contain the much cheaper metal.

Spring Metal is one of seven companies accused by a Singapore-based trading group in London’s High Court of fraudulently buying more than a thousand shipping containers of non-existent nickel. Trafigura paid companies $535mn for competing cargo, equivalent to more than 7 per cent of its record $7bn net profit in 2022.

The episode has raised questions about Trafigura’s due diligence, including how it may have ignored several red flags concerning its counterparts. Court filings indicate that it contained very few details about the owners of three of the seven companies, and that all three do not appear to have lawyers to defend them in the case. Yet he received more than half the disputed payments in total.

Public records reviewed by the FT and conversations with people familiar with the operations of the accused shed light on the collection of characters at the center of the scandal that rocked the global commodities industry.

the mastermind?

Trafigura says it uncovered the “systematic” fraud late last year when it inspected a set of containers at the port of Rotterdam, including some bought from Spring Metal.

The company claims that the person behind the seven companies was Prateek Gupta, a Dubai-based metals trader who was accused by New Delhi authorities in 2022 of defrauding the State Bank of India. Gupta has challenged the probe.

The four companies she is suing openly have links with Gupta, either through shareholding or directorship. Gupta, who denies wrongdoing, and the four companies have hired Mishcon de Reya, one of London’s most high-profile law firms, to act for them.

Trafigura alleges that Gupta has “de facto” control of others – Spring Metal, New Alloys Trading and Mine Craft Ltd. All three companies are listed individually as plaintiffs in court records, meaning they will represent themselves in court.

Trafigura appears to have had little knowledge of its current owners and claims to have relied heavily on Gupta and an operations executive he appointed to handle the business. Trafigura alleges in a court filing that Gupta also had access to Spring Metal’s email account.

Trafigura declined to comment, citing the ongoing litigation.

A spokeswoman for Gupta said she and the other defendants represented by Mishcon would file a “vigorous defense” this week, adding that it would be “inappropriate to share its contents” before it is filed with the court. It will “address all of the issues raised in Trafigura’s claim,” including “relationships” with Spring Metal, Mine Craft and New Alloys, “to the extent relevant,” he said.

In an affidavit filed in February by Sokratis Oikonomou, Trafigura’s former head of nickel trading, the company indicated it was “continuing to investigate” the ownership structure of Hong Kong-based Mine Craft Ltd.

Corporate filings reviewed by the FT show its ultimate owner is a man whose now-deleted Facebook page identified him as a chef at the Palm Jumeirah, a glistening palm-shaped man-made archipelago in Dubai.

repurchase

According to court filings, Trafigura’s relationship with Gupta dates back to 2014, after the company entered into business with seven defendant companies.

Initially, Trafigura only bought metals from them and sold them to its customers. But most of the business until 2022 involved “buyback” transactions in which it bought metal cargoes from companies and then sold them back to the same entities or others designated by it.

Trafigura said in court filings that the prices at which Trafigura bought and sold cargo were “calibrated so that it would earn a return equal to the interest on the value of that nickel during transit”.

For companies, it was actually the cost of the short-term borrowing arrangement that brought in the cash. Oikonomou said that sometimes the “travel period”, or the time frame before companies are repaid, was “deliberately maximized” so that the companies could keep the money paid by Trafigura for as long as possible.

Citibank financed the trade by providing a repurchase facility to Trafigura, which was valued at $850 million by 2020. Oikonomou said this set-up involved the US investment bank temporarily buying cargoes while they were in transit, before selling them to Trafigura.

Commodity traders typically did not physically inspect shipments until Citi began insisting on checks in October, according to Oikonomo. He added, Trafigura did not always insist on providing documents from the manufacturer of the metal, known as a “certificate of analysis”.

Citi stopped funding the trades in October. A spokeswoman for Citi said its only customer and counterparty was Trafigura.

know your Customer

According to Oikonomo’s affidavit, the seven companies were “inducted as trading counterparties in accordance with Trafigura’s internal KYC (Know Your Customer) procedures”.

When they first started doing business with Trafigura, Mine Craft and New Alloy were subsidiaries of an Emirati metal trading company. By the time of the disputed transaction with Trafigura they had split up and were operating under different ownership.

According to corporate records, Chaurasia incorporated Spring Metal in January 2015 in the low-tax, high-secrecy Malaysian offshore center of Labuan, three years before Sandwich Hub was founded, when he was in his twenties.

Their vision, as stated on Spring Metal’s website, was to be a “decisive influence in the metals industry both locally and internationally”. In 2022 he created another electronics and scrap metal trading company that describes itself as a “global trade and logistics leader”.

When the Financial Times visited his Hong Kong sandwich shop unannounced on a weekday afternoon, Chaurasia was relaxing at a small table across the street.

He mocked the shop’s branding and lamented that some of its customers have moved to Singapore in recent years, part of a wider exodus from the city. But he would not immediately comment on the Trafigura case.

He later said by email, “We dispute the allegations made by Trafigura and will vigorously defend the claim”, but declined to address individual allegations in detail in light of the court proceedings.

According to a document seen by the FT, Chaurasia’s father Uday, who describes himself as a “hobby metals trader” on the website of a now bankrupt commodities company, was employed by Gupta at one of his Dubai-based trading companies. did.

In a text message to the FT, Uday Chaurasia denied he worked for Gupta, but did not answer a question about whether he had previously been employed by him.

plaintiff in person

MineCraft entered into a nickel buyback arrangement with Trafigura last year at an interest rate of 5.75 percent. According to corporate filings reviewed by the FT, it is owned by a company whose sole shareholder is Upadhyay Showakhar, a Nepali national in his mid-40s.

Upadhyay’s Facebook account identified him as the chef at Palm Jumeirah, the man-made island on which Gupta has a villa, which was included in the freezing order Trafigura received in May.

Gupta’s spokesman would not comment on whether Upadhyay was ever employed by him, his wife or their companies.

A photo posted on Facebook in 2018 shows Upadhyay at a function with Chaurasia’s relatives and another executive acting on behalf of Gupta’s companies in conversation with Trafigura.

The landlord and current tenant of the Dubai address that Minecraft’s company had filed for Upadhyay told the FT that he did not know there, and that neither Upadhyay nor Minecraft had ever rented a residential flat. Had taken.

MineCraft’s corporate secretary in Hong Kong resigned in mid-February, saying its fees had not been paid. Upadhyay did not respond to multiple requests for comment. Trafigura’s filings do not indicate that it ever dealt with Upadhyay himself.

The third respondent, not represented by Gupta’s lawyers, is Singapore-based New Alloys Trading. Its sole shareholder is Manoj Menon, whose name is listed on Internet domain records as the registrant of udtradinggroup.com, which shares its name with UD Trading Group, one of Prateek Gupta’s businesses.

Reached by email, Menon told the FT that he had not registered the domain name and underlined that the email address used on the registration record was not his, concluding that it “definitely has been done by someone else”. without their knowledge or approval.

Menon said the suggestion that Gupta controlled New Alloys was “baseless” and based on Trafigura’s “mere allegations”. “All I can say is that there is no fraud on Trafigura and we will bring the facts of the transaction to court,” he added.

According to Trafigura’s claim, New Alloys’ email communications with Trafigura were often handled by the teenage Sebastian. Sebastian introduces himself as the Singapore Country Head of New Alloys LinkedIn ProfileWhich also shows that he worked in Prateek Gupta’s UD Trading from 2016 to 2019. Sebastian did not respond to requests for comment.

He appears to have been a visitor to The Sandwich Hub. In 2018, a man posting under the name Kishore Sebastian posted a picture of the shop with its bizarre signage on a review website.

Additional reporting by Chan Ho-him and Simeon Kerr

Located in an alleyway near Hong Kong’s busy Tsim Sha Tsui shopping district, Sandwich Hub has a logo along the lines of adult entertainment site Pornhub, as well as the tagline: “Sandwiches that will make you want to come”.

The owner of the hole-in-the-wall Indian food joint, Aman Chaurasia, a jovial 30-year-old with a baby-faced smile, is upbeat about its offerings, which include low-priced entrees like paneer aloo toast and masala chai. Recipes included.

But he is also allegedly embroiled in an international fraud worth half a billion dollars. Last year, another business registered in his name sold cargoes of nickel to Trafigura, which upon examination turned out to contain the much cheaper metal.

Spring Metal is one of seven companies accused by a Singapore-based trading group in London’s High Court of fraudulently buying more than a thousand shipping containers of non-existent nickel. Trafigura paid companies $535mn for competing cargo, equivalent to more than 7 per cent of its record $7bn net profit in 2022.

The episode has raised questions about Trafigura’s due diligence, including how it may have ignored several red flags concerning its counterparts. Court filings indicate that it contained very few details about the owners of three of the seven companies, and that all three do not appear to have lawyers to defend them in the case. Yet he received more than half the disputed payments in total.

Public records reviewed by the FT and conversations with people familiar with the operations of the accused shed light on the collection of characters at the center of the scandal that rocked the global commodities industry.

the mastermind?

Trafigura says it uncovered the “systematic” fraud late last year when it inspected a set of containers at the port of Rotterdam, including some bought from Spring Metal.

The company claims that the person behind the seven companies was Prateek Gupta, a Dubai-based metals trader who was accused by New Delhi authorities in 2022 of defrauding the State Bank of India. Gupta has challenged the probe.

The four companies she is suing openly have links with Gupta, either through shareholding or directorship. Gupta, who denies wrongdoing, and the four companies have hired Mishcon de Reya, one of London’s most high-profile law firms, to act for them.

Trafigura alleges that Gupta has “de facto” control of others – Spring Metal, New Alloys Trading and Mine Craft Ltd. All three companies are listed individually as plaintiffs in court records, meaning they will represent themselves in court.

Trafigura appears to have had little knowledge of its current owners and claims to have relied heavily on Gupta and an operations executive he appointed to handle the business. Trafigura alleges in a court filing that Gupta also had access to Spring Metal’s email account.

Trafigura declined to comment, citing the ongoing litigation.

A spokeswoman for Gupta said she and the other defendants represented by Mishcon would file a “vigorous defense” this week, adding that it would be “inappropriate to share its contents” before it is filed with the court. It will “address all of the issues raised in Trafigura’s claim,” including “relationships” with Spring Metal, Mine Craft and New Alloys, “to the extent relevant,” he said.

In an affidavit filed in February by Sokratis Oikonomou, Trafigura’s former head of nickel trading, the company indicated it was “continuing to investigate” the ownership structure of Hong Kong-based Mine Craft Ltd.

Corporate filings reviewed by the FT show its ultimate owner is a man whose now-deleted Facebook page identified him as a chef at the Palm Jumeirah, a glistening palm-shaped man-made archipelago in Dubai.

repurchase

According to court filings, Trafigura’s relationship with Gupta dates back to 2014, after the company entered into business with seven defendant companies.

Initially, Trafigura only bought metals from them and sold them to its customers. But most of the business until 2022 involved “buyback” transactions in which it bought metal cargoes from companies and then sold them back to the same entities or others designated by it.

Trafigura said in court filings that the prices at which Trafigura bought and sold cargo were “calibrated so that it would earn a return equal to the interest on the value of that nickel during transit”.

For companies, it was actually the cost of the short-term borrowing arrangement that brought in the cash. Oikonomou said that sometimes the “travel period”, or the time frame before companies are repaid, was “deliberately maximized” so that the companies could keep the money paid by Trafigura for as long as possible.

Citibank financed the trade by providing a repurchase facility to Trafigura, which was valued at $850 million by 2020. Oikonomou said this set-up involved the US investment bank temporarily buying cargoes while they were in transit, before selling them to Trafigura.

Commodity traders typically did not physically inspect shipments until Citi began insisting on checks in October, according to Oikonomo. He added, Trafigura did not always insist on providing documents from the manufacturer of the metal, known as a “certificate of analysis”.

Citi stopped funding the trades in October. A spokeswoman for Citi said its only customer and counterparty was Trafigura.

know your Customer

According to Oikonomo’s affidavit, the seven companies were “inducted as trading counterparties in accordance with Trafigura’s internal KYC (Know Your Customer) procedures”.

When they first started doing business with Trafigura, Mine Craft and New Alloy were subsidiaries of an Emirati metal trading company. By the time of the disputed transaction with Trafigura they had split up and were operating under different ownership.

According to corporate records, Chaurasia incorporated Spring Metal in January 2015 in the low-tax, high-secrecy Malaysian offshore center of Labuan, three years before Sandwich Hub was founded, when he was in his twenties.

Their vision, as stated on Spring Metal’s website, was to be a “decisive influence in the metals industry both locally and internationally”. In 2022 he created another electronics and scrap metal trading company that describes itself as a “global trade and logistics leader”.

When the Financial Times visited his Hong Kong sandwich shop unannounced on a weekday afternoon, Chaurasia was relaxing at a small table across the street.

He mocked the shop’s branding and lamented that some of its customers have moved to Singapore in recent years, part of a wider exodus from the city. But he would not immediately comment on the Trafigura case.

He later said by email, “We dispute the allegations made by Trafigura and will vigorously defend the claim”, but declined to address individual allegations in detail in light of the court proceedings.

According to a document seen by the FT, Chaurasia’s father Uday, who describes himself as a “hobby metals trader” on the website of a now bankrupt commodities company, was employed by Gupta at one of his Dubai-based trading companies. did.

In a text message to the FT, Uday Chaurasia denied he worked for Gupta, but did not answer a question about whether he had previously been employed by him.

plaintiff in person

MineCraft entered into a nickel buyback arrangement with Trafigura last year at an interest rate of 5.75 percent. According to corporate filings reviewed by the FT, it is owned by a company whose sole shareholder is Upadhyay Showakhar, a Nepali national in his mid-40s.

Upadhyay’s Facebook account identified him as the chef at Palm Jumeirah, the man-made island on which Gupta has a villa, which was included in the freezing order Trafigura received in May.

Gupta’s spokesman would not comment on whether Upadhyay was ever employed by him, his wife or their companies.

A photo posted on Facebook in 2018 shows Upadhyay at a function with Chaurasia’s relatives and another executive acting on behalf of Gupta’s companies in conversation with Trafigura.

The landlord and current tenant of the Dubai address that Minecraft’s company had filed for Upadhyay told the FT that he did not know there, and that neither Upadhyay nor Minecraft had ever rented a residential flat. Had taken.

MineCraft’s corporate secretary in Hong Kong resigned in mid-February, saying its fees had not been paid. Upadhyay did not respond to multiple requests for comment. Trafigura’s filings do not indicate that it ever dealt with Upadhyay himself.

The third respondent, not represented by Gupta’s lawyers, is Singapore-based New Alloys Trading. Its sole shareholder is Manoj Menon, whose name is listed on Internet domain records as the registrant of udtradinggroup.com, which shares its name with UD Trading Group, one of Prateek Gupta’s businesses.

Reached by email, Menon told the FT that he had not registered the domain name and underlined that the email address used on the registration record was not his, concluding that it “definitely has been done by someone else”. without their knowledge or approval.

Menon said the suggestion that Gupta controlled New Alloys was “baseless” and based on Trafigura’s “mere allegations”. “All I can say is that there is no fraud on Trafigura and we will bring the facts of the transaction to court,” he added.

According to Trafigura’s claim, New Alloys’ email communications with Trafigura were often handled by the teenage Sebastian. Sebastian introduces himself as the Singapore Country Head of New Alloys LinkedIn ProfileWhich also shows that he worked in Prateek Gupta’s UD Trading from 2016 to 2019. Sebastian did not respond to requests for comment.

He appears to have been a visitor to The Sandwich Hub. In 2018, a man posting under the name Kishore Sebastian posted a picture of the shop with its bizarre signage on a review website.

Additional reporting by Chan Ho-him and Simeon Kerr