ANZ commodities unit hit in alleged nickel receipts scam

SYDNEY • Australia and New Zealand Banking Group told a US court that its commodities trading arm suffered "substantial losses" after it discovered that receipts for metal held in Glencore's Access World warehouses are probably fake.

When ANZ looked into selling the nickel, it discovered 83 out of 84 receipts it held were likely forgeries, the Australian lender said in a June 6 petition filed in a US court in San Francisco. It was part of a request for information the bank could use in lawsuits in other jurisdictions. ANZ has hired lawyers in the United States, Hong Kong and Singapore to try to recover its losses and pursue the alleged fraudsters, ANZ said.

The case follows Access World's January warning to customers that it found forged warehouse receipts circulating in the market. The announcement sent shock waves through the commodities trading industry by reawakening concerns about the risk of fraud. A metal financing scam had been uncovered in Qingdao port in China in 2014.

The fallout from Access World's discovery has spawned lawsuits around the world. Earlier this month, Natixis sued broker Marex Financial in London after losing about US$32 million (S$44 million) on a sale-and-repurchase deal that the French bank said involved forged receipts for the storage of nickel used as collateral, according to papers on the case. Marex brokered the deal on behalf of its client, Come Harvest Holdings.

ANZ said in its filing that in December 2015, it entered into an agreement to purchase a substantial quantity of nickel from London-based brokerage ED&F Man Capital Markets. ED&F had, in turn, bought nickel from two Hong Kong companies: Come Harvest Holdings and Mega Wealth International Trading. Those transactions had repurchase agreements attached.

An ANZ spokesman declined to comment, while a spokesman for Glencore was not immediately available for comment. A spokesman for ED&F Man Capital Markets said by e-mail: "ED&F is not involved in this legal action and has no further comment to make." 

At all times, the metal remained in warehouses in Singapore, Malaysia and South Korea, and possession was transferred by the physical delivery of receipts. Between April and September last year, Singapore-based Access World issued 84 receipts, 83 of which were to Straits (Singapore), a Singapore brokerage facilitation company that is a unit of Straits Financial Group, wholly owned by CWT.

The receipts were then delivered to Come Harvest and Mega Wealth and subsequently to ED&F, and then to ANZ. A spokesman for CWT and Straits was not immediately available for comment.

In January, when ANZ began preparing to sell the nickel after ED&F decided not to repurchase any, it was told by the warehouse operator that it had already received authenticated receipts from other parties.

"The unmistakable inference, therefore, was that the receipts which ANZCT possessed were not genuine,'' ANZ said in the filing, referring to its commodities trading arm. The bank has "no reason to suspect" that ED&F was involved in any fraudulent activity, believing instead that "those forgeries were probably introduced earlier in the chain".

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A version of this article appeared in the print edition of The Straits Times on June 28, 2017, with the headline 'ANZ commodities unit hit in alleged nickel receipts scam'. Print Edition | Subscribe