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hello and welcome, you are 
listening to Patrick boil on 

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finance a podcast, exploring 
ideas, from quantitative Finance

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examining events occurring in 
markets right now and financial 

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history to see what lessons can 
be taken away including 

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interviews with some of the most
interesting people in the world 

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of Finance to learn more about 
the podcast visit on finance 

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dot-org when German miners first
Covered Nickel in the 15th 

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century. 
They named it cooked for a 

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nickel or Devils copper. 
Because while they taught it 

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contained copper, they couldn't 
recover any from it. 

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They blame their troubles on the
devil. 

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And since they're nickel has had
the nickname, The Devil's metal 

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amongst commodity Traders. 
It's had a history of devilish 

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Behavior to last week. 
Traffic Yura. 

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One of the world's largest 
commodity trading firms, 

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announced a five hundred and 
seventy seven million dollar, 

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right? 
Town claiming that they had 

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fallen victim to a systematic 
fraud in the devil's metal more.

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Surprisingly, though, to 
Industry, insiders was who they 

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were dealing with pratik Gupta 
of 43 year old Indian 

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businessman with a checkered 
reputation who had been trading 

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with traffic. 
You're a since 2016 traffic, 

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you're a discovered that 
shipments of nickel that they 

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purchased from Gupta. 
Linked companies, contained no 

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Trace. 
S of the valuable metal leading 

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them to launch legal action 
against Gupta and secure 625 

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million dollar freezing order 
against his business Empire 

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court documents. 
Show that the alleged fraud Drew

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in Citigroup, who financed the 
trades? 

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Barclays were gupta's companies 
held accounts that receive 

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traffic Yura funds and that the 
Scandal could reach even deeper 

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into the world of Commodities as
traffic. 

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You're a say that they sold. 
On potentially faked nickel. 

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Car goes in 11 trades worth 
almost 100 million dollars. 

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The 25,000 tons of missing 
nickel is not a small amount. 

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It comes to more than 10% of the
annual Imports of China. 

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The dominant Global nickel 
consumer, the alleged fraud 

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involves trades in nickel, which
was in transit during 2022 and 

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allegedly involved, all sorts of
scheming misrepresentation. 

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And Counterfeit documents. 
Now, the scam of delivering 

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metal that isn't what it's 
supposed to be is no new idea. 

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The British museum has an almost
4,000 year-old clay tablet on 

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display in which a Babylonian 
Merchant calls out a supplier 

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for trying to cheat him on a 
shipment of copper clay. 

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Tablets were the Twitter of that
time clay, tablet. 

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Beefs, were quite a thing in 
ancient Babylonia. 

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The Babylonians didn't have 
formal Metrics for Metals. 

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But the merchant in question, 
knew he had been scammed and 

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warned his supplier via clay 
tablet that from now on, I will 

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not accept any Copper from you. 
That's not fine quality. 

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It's amusing that he knew he had
been ripped off, but was still 

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planning on doing further 
business. 

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With the supplier. 
In more recent times, Metals 

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trading has continued to be a 
venue for fraud last year in 

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China alone, 500 million dollars
worth of copper, went missing. 

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Ting and traffic. 
Your is nickel, Scandal follows 

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hot on the heels of the lme 
nickel trading scandal. 

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From March of last year, when 
the London Metal Exchange, had 

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to suspend nickel trading for 
fear of a total Market collapse.

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This situation is quite a large 
fraud and it could work out to 

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be quite far, reaching the news 
calls, the price of nickel to 

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rise by around six percent on 
the day of its announcement as 

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it meant that there was Complete
less copper available to 

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Industry than was previously. 
Estimated at 25 thousand ton 

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black hole has just opened in 
the nickel supply chain. 

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So, who are the two parties to 
this dispute? 

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Well, traffic, your is a 
multinational commodity trading 

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company based in Geneva, 
Switzerland, it was founded in 

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1993 and operates in more than 
50 countries. 

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Around the world, they 
specialize in trading a wide. 

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Age of Commodities, including 
crude oil, refined petroleum 

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products Metals minerals and 
agricultural products. 

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They've become known for some 
controversial activities 

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themselves to including their 
involvement in a pollution 

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scandal in 2006 and their 
attempted use of a super 

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injunction in the UK to prevent 
the Press from reporting on it. 

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In addition, to its commodity 
trading activities traffic, your

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is also involved in other 
business. 

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Areas like Logistics 
infrastructure and finance. 

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The company is one of the 
largest independent oil and 

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metal trading companies in the 
world, and there's annual 

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revenues in excess of 147 
billion dollars. 

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Just, two months ago, traffic, 
yours top Traders. 

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And shareholders were 
celebrating having been awarded 

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a wooden point. 
Seven billion dollar payout as 

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profits boomed during the energy
crisis. 

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The Firm made a record seven 
billion dollars. 

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Net profit last year. 
Trafficker is not a publicly 

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listed company. 
It's owned by 1100 shareholders.

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Many made up of Executives and 
Traders at the privately held 

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firm the company still 
publishes, its annual accounts. 

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And you might wonder why they 
would do this as a private firm.

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Well, every commodity trading 
house has a different Edge and 

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traffickers Edge is in 
financing. 

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Both in the Wade finances 
itself. 

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And the financing deals. 
It can offer its counterparties.

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They publish their accounts so 
that they can show their 

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strength and because of that 
strength access huge amounts of 

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financing from Big Global. 
Landers. 

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The firm is reported to have 
seventy three billion dollars of

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credit lines from 140 different 
lenders. 

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Okay? 
So, what about pratik Gupta and 

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TMT? 
Well, pratik began his career. 

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As a trainee at his father's 
medal, Trading Company urged of 

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international where he became a 
managing director in 2008. 

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Now it's easier to get promotion
when it's your father's company.

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But nonetheless, welt on the 
company became insolvent in 

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2018. 
After defaulting, on loans. 

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From several Indian Banks. 
The Wall Street Journal reports 

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that many people in the 
Commodities industry. 

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Steer. 
Clear of pratik Gupta and his 

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businesses due to his reputation
in the industry. 

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Pratik Gupta has ties to Sanjeev
Gupta, who's gfg Alliance Group 

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of companies is implicated in 
the green fill Scandal that I 

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covered a while ago, on this 
channel gfg, Alliance is under 

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investigation by the UK serious,
Fraud Office for its involvement

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in that Scandal. 
While Sanjeev Gupta, is not a 

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relative of prateek Singh, 
despite sharing the same 

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surname, Sanjeev is a former 
shareholder in ocean. 

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Dev as would pratik gupta's 
alleged fraud on traffic Yura. 

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Many of the suspect gfg invoices
involved in the green cells 

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gamble involved, shipments of 
nickel to I should point out 

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that gfg has announced that it 
has for years had no business or

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relationship with pratik Gupta 
and is in no way connected to 

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any of the activities traffic, 
yours announcement referenced. 

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So bankers at Credit Suisse Who 
were, of course, helping manage 

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mr. 
Gupta's welt introduced him to 

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TMT a small trading firm based 
in Switzerland less than 10 

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years ago. 
He went on to buy the firm in 

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early 2016. 
TMT had a good reputation in 

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Swiss Financial circles before 
being purchased and crucially 

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had existing credit lines in 
place. 

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They also had a trading 
relationship with traffic Yura, 

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those credit. 
Lines. 

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Soon, shrunk under the new 
ownership as certain 

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counterparties backed away and 
TMT allegedly began asking 

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counterparties for longer 
payment terms saying they were 

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willing to pay high interest 
rates. 

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Some counterparties told the 
Wall Street Journal that they 

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viewed this as a red flag and 
declined to deal with TMT in an 

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unrelated case, the State Bank 
of India accused pratik Gupta 

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and other business associates of
Is of being party to a criminal 

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conspiracy, the bank claims that
the fraud cost it and other 

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lenders to ish, Dev The Firm, 
founded by his father, nearly a 

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hundred, and seventy five 
million dollars at today's 

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exchange rates investigators in 
India, say that they recovered 

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incriminating documents. 
And articles after opening a 

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fraud investigation based on a 
complaint from the State Bank of

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India. 
Unfortunately, by the time, the 

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Central Bureau of Investigation,
Vestigation opened its probe 

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trafficker was already heavily 
exposed to mr. 

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Gupta and his related companies.
Okay, so traffic Europe began 

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trading with TMT Metals more 
than a decade ago. 

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They provided Transit Finance to
TNT and two other Gupta. 

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Companies, essentially buying 
Nickel in containers that were 

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already on board ships and then 
selling it when the ship's reach

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their destination, charging 
interest for the duration of The

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transportation in 2021 transit 
times for containers at Sea 

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expanded and this was partially 
just due to the supply chain 

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disruptions that were occurring 
at the time, but some TMT 

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shipments took more than 300 
days to be delivered. 

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This was significantly longer 
than made sense for any global 

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Shipping route and was difficult
to explain traffic Europe, began

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reviewing, its relationships 
with various trading partners 

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last year and the risk 
management team started to pay 

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more attention to TMT Metals, 
especially when authorities in 

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India accused Gupta of 
defrauding. 

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The State Bank of India, in 
October of last year, Citigroup 

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declined to finance. 
The trades between traffic your 

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and grouped as companies 
anymore. 

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Meaning the traffic you are was 
now financing the traits itself 

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which led to traffic, you're 
investigating their counterparty

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more thoroughly in. 
Know, Remember according to 

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court documents, an informant 
told traffic Yura that one or 

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two of the purchased containers 
contained, something other than 

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nickel, the fraud was exposed 
when the company's investigators

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arrived at a port in Rotterdam, 
just before Christmas. 

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And check the contents of a 
container and found other less 

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valuable Metals. 
But no nickel inside, when the 

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trading house confronted Gupta, 
he told the head of nickel and 

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Cobalt All trading that the 
containers contained, mostly a 

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cheaper nickel alloy and the 
small amount of other materials,

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rather than the high-grade 
nickel metal that had been paid 

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for Gupta. 
Initially, blamed his business 

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partner in India for the mix-up.
And claimed that the contents 

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were different to avoid 
sanctions on shipping Russian 

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nickel, despite no such 
sanctions ever having been in 

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place at a meeting in early 
January, Gupta proposed. 

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The some it owed traffic Europe 
but the firm instead decided to 

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pursue a fraud claim and to 
request that the courts freeze 

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gupta's acids, it probably made 
more sense to have assets Frozen

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than to give Gupta time to pay 
or find a way of not paying in 

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many ways. 
This story is pulling together, 

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a number of pieces that I've 
covered in the past, on this 

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channel, like the trading issues
on the lme less than a year ago,

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the green cell scandal Which is 
still ongoing and the content on

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supply chain disruptions and 
economic effects of the war in 

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Ukraine. 
There's been quite a bit of 

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fraud in the nickel Market over 
the last few years for a few 

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reasons but mostly that it's a 
highly priced industrial metal 

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currently worth around 26,000 
dollars per ton and it has 

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become highly financialized. 
It surging value is a crucial 

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metal used in the production of 
electric car. 

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Batteries has made it an 
attractive Target for 

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questionable. 
Dealings some examples. 

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Well, a nickel repo deal between
the taxes and marik's fell apart

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in 2017, when it turned out, 
that it was based on false 

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receipts for metal, stored by 
access world. 

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Then a part of glencore, after a
two-year legal battle in 

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attacks, has worn a 32 million 
dollar claim against marik's in 

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2019, Edie and F mom. 
One, a 283 million dollar fraud 

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claim last year, against a 
Singapore, commodity Trader 

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straight for a fund. 
Also involving fake nickel 

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Warehouse receipt, Singaporean 
prosecutors have filed 105 

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charges against an alleged Ponzi
schemer. 

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Accused of cheating, investors 
out of over a billion dollars 

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for fictitious. 
Nickel traits to even in the 

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Greenfield case where Sanjeev 
Gupta is. 

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LG alliances being investigated 
by the UK serious, Fraud Office.

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Many of the suspicious invoices 
involved shipments of nickel so 

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far out of 1104 containers, 
traffic, your has checked 156 

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and despite what Gupta told 
traffic Yura. 

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No nickel of any grade at all 
has been found in them. 

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The containers were filled with 
carbon steel, a low value metal 

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worth less than a thousand 
dollars per ton. 

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Versus the roughly 26,000 
dollars per ton for nickel 

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industry. 
Insiders have expressed 

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considerable surprise. 
The traffic you are was dealing 

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with Gupta at all Jonas, Ray, 
the chief executive of Athena 

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intelligence told the Ft that he
had investigated TMT in the 

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past, over an alleged scheme, 
involving a network of 

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companies, trading between 
themselves, each with different 

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bills of lading and their own 
finances. 

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Their reputation was horrendous.
He told the Ft TMT Metals was 

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blacklisted from most credit and
insurance companies. 

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As they were such a high-risk 
entity traffic, your has said 

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that there's no evidence that 
any of its employees were 

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complicit in the fraud. 
An impairment charge of up to 

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five hundred and seventy seven 
million dollars. 

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Will be recorded by traffic. 
You're on the first half of 2023

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related to this alleged Good 
fraud, that's equivalent to more

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than 8% of the seven billion 
dollar. 

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Net profit, the company made in 
its 2022 Financial year, its 

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best year on record. 
While the alleged fraud has 

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drawn in firms, like Citigroup 
who financed some of the trades 

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and Barclays where gupta's 
companies held accounts, they 

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are unlikely to have been 
materially impacted the Scandal 

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00:15:54,200 --> 00:15:58,400
is likely to cause Banks to 
increase the scrutiny and risk 

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00:15:58,400 --> 00:16:01,800
management procedures. 
Around dealing with firms, like 

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00:16:01,800 --> 00:16:04,000
traffic Yura. 
This could impact their 

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financing Edge in the 
Commodities industry which would

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really matter to traffic Yura. 
It's not clear. 

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What will happen and who will 
take the head on the potentially

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faked nickel. 
Cargoes the traffic you are 

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00:16:17,600 --> 00:16:22,400
unwittingly sold on in 11 trades
worth ninety four million 

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00:16:22,400 --> 00:16:25,200
dollars. 
It's also not yet clear if 

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traffic, your is the only firm 
to have been tricked in this 

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manner by gupta's far? 
Firms will have to wait and see,

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00:16:31,500 --> 00:16:36,000
if more news comes out, it's 
somewhat amazing to me that 

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someone would run a fraud like 
this where they're guaranteed to

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be called once the containers 
are open. 

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But, who knows? 
Corporate filings show that an 

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00:16:46,900 --> 00:16:50,800
investment vehicle of artists 
Financial trade Finance, 

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00:16:50,800 --> 00:16:55,200
startup, backed by private 
Equity, Firm, TD, or capital is 

265
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a secured lender to TMT Metals 
for receivables financing. 

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00:17:00,200 --> 00:17:04,200
The company's website states 
that only the most meticulously 

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00:17:04,200 --> 00:17:07,500
risk assessed and commercially 
viable transactions. 

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00:17:07,800 --> 00:17:10,900
Make it through to the artist 
investment committee. 

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00:17:11,200 --> 00:17:14,200
This transaction seems to have 
made it through two though. 

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00:17:14,599 --> 00:17:18,099
Traffic, you're a says that they
have yet to decide whether to 

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00:17:18,099 --> 00:17:21,500
claim insurance or not. 
It's probably too early right 

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00:17:21,500 --> 00:17:24,300
now to do. 
So as they haven't examined, all

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of the metal inventories yet and
they have to still see how Gupta

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00:17:28,700 --> 00:17:32,400
response to their Claim experts 
are saying that it may be 

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00:17:32,400 --> 00:17:35,500
difficult for traffic your to 
recover their losses, through 

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00:17:35,500 --> 00:17:39,100
the court system, given the 
complexity and ownership 

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00:17:39,100 --> 00:17:41,000
structure of the web of 
companies. 

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00:17:41,200 --> 00:17:46,000
It claims are behind the alleged
fraud, Ian Milne, who was 

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00:17:46,000 --> 00:17:49,900
responsible for, trying to 
recover, debt from gupta's, UD 

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00:17:49,900 --> 00:17:55,600
trading for trade, Finance fund,
trans-asia private Capital told 

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00:17:55,600 --> 00:17:59,100
the press that traffic yura is 
likely to struggle to collect 

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00:17:59,100 --> 00:18:02,500
money from The as well. 
Gupta might have a lot of money 

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00:18:02,500 --> 00:18:05,500
out there. 
Most of it is not in its name. 

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After this flurry of fraud in 
the metals industry, over the 

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00:18:09,300 --> 00:18:13,100
last few years, things are 
likely to change somewhat as 

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00:18:13,100 --> 00:18:15,300
lenders. 
Increase their scrutiny of who 

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00:18:15,300 --> 00:18:19,100
they deal with and the risk 
management procedures in place 

288
00:18:19,400 --> 00:18:23,400
scandals like this are likely to
make Banks even more wary of 

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00:18:23,400 --> 00:18:27,200
lending against nickel trades 
and a time when commodity 

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00:18:27,200 --> 00:18:31,900
financing in general has been 
ranking outdated ways of doing 

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00:18:31,900 --> 00:18:35,800
business like paper documents, 
and email will need to be 

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00:18:35,800 --> 00:18:38,200
replaced with more robust 
approaches. 

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If fraud is to be reduced in the
industry, please don't suggest 

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00:18:42,300 --> 00:18:44,700
blockchain. 
And the comment section as the 

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00:18:44,700 --> 00:18:48,600
goal is to reduce the amount of 
fraud not to just draw in 

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00:18:48,600 --> 00:18:51,900
different types of fraudsters. 
Thanks for listening to this 

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00:18:51,900 --> 00:18:54,700
week's podcast. 
Do tell your friends about it as

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00:18:54,700 --> 00:18:59,000
that's really how podcasts grow 
have a great day and talk to you

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00:18:59,000 --> 00:19:00,000
again soon. 
Soon. 

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00:19:00,000 --> 00:19:03,000
Bye. 
If you enjoyed this episode, be 

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00:19:03,000 --> 00:19:05,900
sure to subscribe, so you're 
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303
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00:19:10,600 --> 00:19:14,100
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306
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00:19:20,200 --> 00:19:21,600
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