Trafigura Group is carrying out a “major internal audit” after being hit by an alleged nickel fraud, Chief Executive Officer Jeremy Weir said in his first public comments on the subject.
(Bloomberg) — Trafigura Group is carrying out a “major internal audit” after being hit by an alleged nickel fraud, Chief Executive Officer Jeremy Weir said in his first public comments on the subject.
“You’ve got to learn from experiences like this,” he said in an interview with Bloomberg TV. He emphasized that the alleged fraud was limited to a particular line of Trafigura’s business, and that the company had found no internal involvement from its own employees.
Still, Weir acknowledged that he could not say for sure that there would be no other similar issues in other parts of Trafigura’s business.
“You put in all the checks and balances and controls that you can possibly do,” he said. “You can never say there’s not going to be problems in our business.”
Trafigura, one of the largest traders of energy and metals, shocked the commodities world last month when it announced it was facing losses of nearly $600 million after finding that cargoes of nickel it had bought didn’t contain any nickel. It is taking legal action against Prateek Gupta, the Indian businessman it accuses of perpetrating a “systematic fraud.”
A spokesman for Gupta has said that he is planning a “robust response” to Trafigura’s allegations.
Legal filings have revealed shortcomings in Trafigura’s controls. For example, the trading house paid for cargoes of nickel from companies connected to Gupta based on shipping documents that contained discrepancies, such as not showing the “HS” code that is used to identify the goods being shipped. Trafigura did not always insist on getting a “certificate of analysis,” verifying the contents of the cargoes, before paying for them.
“We’re not perfect, but we’re doing a very significant audit around where we’ve come up short,” Weir said on Tuesday in the interview at CERAWeek in Houston. “This was a very isolated part of the business. You can imagine we’re reviewing this really, really closely.”
Trafigura’s rival Glencore Plc has said that it was confident it would not be hit by a similar fraud. “We have very strong controls and systems in the company, and we are very confident that an incident like that would not be able to happen at Glencore,” CEO Gary Nagle said last month.
–With assistance from Archie Hunter.
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