Geneva, Switzerland-based Commodities trader Mercuria Energy Group Ltd. struck a deal last summer to buy $36 million (Rs 262 crore) of copper from a Turkish supplier. But when the cargo started arriving in China, the company found that the containers were full of painted rocks instead of copper.
It is being said that before its journey from a port near Istanbul to China even began, about 6,000 tons of blister copper in more than 300 containers were switched with jagged paving stones, spray-painted to resemble the semi-refined metal as per Bloomberg Quint.
Last year, Geneva-based Mercuria agreed to buy about 10,000 tonnes of the copper blister, an impure form of the metal, for delivery to China. About 6,700 tonnes of the total was loaded for shipment in containers on eight vessels.
When the first shipment was opened in China with other cargoes still on the way, Chinese inspectors found paving stones not copper, Mercuria’s lawyer Sinan Borovali from KYB Law said to Reuters.
Mercuria had already paid for 90% of the cargoes loaded for shipment, the lawyer said.
Mercuria filed a civil suit for a debt claim in Turkey and filed a report for theft and fraud with the Turkish prosecutor’s office. The lawyer said 14 people had been taken into custody after a police investigation.
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 a fraud investigation.
“Suspects have been taken under custody who are thought to be involved in the various parts of this organized crime against Mercuria,” the Geneva-based Mercuria said in a written statement in which it thanked the Istanbul Financial Crimes Department.
