Vitol Group told Deutsche Bank AG in early August that contracts with Radiant World purportedly signed by Vitol’s chief financial officer were not real, according to a court ruling in Singapore.
The confirmation from Vitol was one of the key factors that led Deutsche Bank to conclude that it had likely been defrauded by Radiant World, according to an order by the judge who on Sept 24 placed Radiant under interim judicial management.
The ruling sheds further light on lenders’ efforts to assess and contain their exposure to Radiant World after Bloomberg reported in July that top traders including Vitol had halted business with it amid concerns that it had supplied banks with fake documents to obtain loans.
Details in the ruling show how Deutsche Bank had got in touch with Vitol and Glencore following the story to check the veracity of documents underpinning loans it had extended to Radiant World earlier in the year. The German bank had purchased seven receivables from Radiant that were backed by invoices showing purported sales of iron ore to the two trading houses.
But in exchanges in early August, Vitol told the bank that it did not have any records of six of those invoices in its system. Moreover, contracts Radiant World had provided showing the name and signature of Vitol’s CFO, Jay Ng, had not been executed or authorised by him, according to the judge’s ruling, which was made following a petition by Mizuho Bank, another lender to Radiant.
Vitol also told Deutsche Bank on Aug 4 that documents provided by Radiant World to the bank as evidence of Vitol’s assent to the transactions “were all false,” the judge said.
A day later, Deutsche Bank notified Radiant World that it had reasonable grounds to believe that three of the Vitol transactions were false or fraudulent, and demanded that Radiant repurchase the relevant receivables for about US$48.6 million. It also transferred about US$11.25 million of funds held in Radiant World accounts to Deutsche Bank’s Singapore subsidiary.
On the same day, Deutsche Bank was also notified by Glencore that paperwork submitted by Radiant World referenced a transaction that had happened, but with different dates and under contractual terms that did not allow for Radiant to use the deal to raise finance elsewhere.
On Aug 7, Deutsche Bank demanded repayment of the remaining four receivables from Radiant World, saying it believed the Vitol receivables were false or fraudulent, and the Glencore receivable didn’t exist.
Radiant World via its lawyers denied Deutsche Bank’s allegations that the documents it had sent were false. It has repeatedly denied wrongdoing. A spokesperson did not respond to a request for comment.
A spokesperson for Deutsche Bank declined to comment on the order, but referred to an earlier statement noting that it has a maximum exposure to Radiant World of US$102.59 million, and is pursuing all available recovery options.
Spokespeople for Vitol and Glencore declined to comment. BLOOMBERG
