The bizarre case highlights commodity traders’ vulnerability to fraud,even when security and inspection controls are in place. In 2014 and 2015,Mercuria took provisions to cover potential losses after metal contained in a warehouse in the Chinese port of Qingdao was seized by authorities as part of fraud investigation.
Turkish police took 13 people into custody in relation to the faux copper scheme. Mercuria,one of the five-biggest independent oil traders in the world,is seeking redress in both Turkish courts and a UK arbitration case against the copper supplier,Bietsan. It’s also filed a formal criminal complaint with Turkish police and prosecutors alleging cargo substitution and insurance fraud,leaving the authorities to determine who’s responsible.
Several calls to Bietsan’s offices in Tekirdag went unanswered.
“Suspects have been taken under custody who are thought to be involved in the various parts of this organised crime against Mercuria,” the Geneva-based Mercuria said in a written statement in which it thanked the Istanbul Financial Crimes Department.
The story was pieced together from legal documents,interviews and local media reports.
Last June,Mercuria agreed to buy copper from Bietsan,a Turkish supplier it had done business with before,according to Sinan Borovali,the trading house’s lawyer in Turkey. It appears that copper was initially loaded into the first shipment of containers,before being surveyed by an inspection company. Seals used to prevent fraud were then affixed to the containers.