Iron ore trader Radiant demands $800 million from Glencore
Trader Radiant World, which is itself suspected of fraud, is holding Glencore responsible for losses of $1.4 billion. Glencore has firmly rejected the allegations.
Lawsuit against Glencore: Radiant World holds Zug commodities giant responsible for billion-dollar losses
Singapore-based iron ore trader Radiant World, which is itself suspected of fraud, has targeted commodities group Glencore. According to the NZZ, the company, led by 45-year-old Indian businessman Pinkesh Nahar, is demanding more than $800 million from the Zug-based group. Radiant is holding Glencore responsible for total losses of $1.4 billion.
In a letter to Glencore, Radiant accuses the Zug-based trader of entering into substantial financial and non-financial commitments and subsequently distancing itself from them. Radiant claims that this very distancing has resulted in massive losses for the iron ore trader. The London Financial Times was the first to report on the letter.
Allegations against Radiant: forged documents and figures
The case began a few weeks ago with serious allegations against Radiant World itself. The trading house, which maintains offices in Singapore, Dubai and on Rue du Rhône in Geneva, is alleged to have presented forged documents and figures to business partners worldwide in order to secure additional financing. More than a dozen banks, including several Swiss institutions, worked with the controversial company, according to the NZZ.
Radiant describes the allegations that it forged collateral as unfounded. The company complies with the highest legal requirements and has sufficient capital and liquidity, it said in a press release at the end of July. Radiant left an email inquiry from the NZZ unanswered on Saturday.
Glencore halts business and makes a provision
After doubts arose about the statements of the iron ore trader, several financial institutions and trading partners ended their business relationships with Radiant — including Glencore. The letter from Radiant, which holds Glencore responsible for its problems, describes in detail according to the Financial Times the alleged business practices of both companies. Among other things, Glencore is said to have advised Radiant on staff matters and capital raising.
Glencore has firmly rejected the allegations. "The claims are baseless, and Glencore will vigorously defend itself against them," the group said. It is Glencore itself that has suffered losses through Radiant. Appropriate measures are being taken, the Zug-based group stated.
According to reports, Glencore's raw material business with Radiant consistently accounted for less than one tenth of Glencore's business volume in the iron ore sector. The Swiss company's net exposure is said never to have exceeded one billion dollars. Nevertheless, Glencore made a provision in recent weeks. The exposure fell below the $500 million threshold, above which a publicly listed company would be required to disclose it.
Authorities in the USA and Singapore intervene
Iron ore, alongside crude oil, is one of the most traded commodities worldwide. Radiant World rose within two decades to become one of the world's largest traders in this segment. Glencore is also active in iron ore trading and is said to have conducted extensive business with Radiant.
According to media reports, criminal and investigative authorities in both the USA and Singapore have since become involved in the case. Regarding whether the US Department of Justice has already made contact with Glencore, the Swiss commodities trader declined to comment to the NZZ.
Source: NZZ