Businessman Gupta to challenge freezing order in Trafigura fraud case

By Eric Onstad and Sam Tobin

LONDON (Reuters) -Indian businessman Prateek Gupta plans to challenge a $625 million global freezing order on him and his firms imposed by a London court, his spokesperson said on Friday.

Commodity trader Trafigura, which sought the order, said on Feb. 9 that it had booked a $577 million charge relating to what it alleges is "systematic fraud" by Gupta's companies over nickel cargoes.

"A robust response to the allegations is being prepared," the spokesperson for Gupta said in an email.

"We intend to file an application to remove the freezing order on or before April 6."

A London court imposed the freezing order, dated Feb. 8, on bank accounts and other assets tied to Gupta and seven companies Trafigura said are controlled by Gupta, including those in Britain, Singapore, Malaysia and Switzerland.

That order was in force until today's hearing.

High Court judge Robert Bright on Friday said he agreed to make an amended order in a brief hearing on the case, without giving details.

A court document filed by Trafigura for Friday's hearing argued that the freezing order should be extended and said that the trader had agreed with Gupta's lawyers on an April 6 deadline for challenging the order.

A source with knowledge of the situation said the freezing order was extended on Friday, but did not say for how long.

In court papers submitted previously, the Geneva-based trader had said it began to suspect in October last year that around 25,000 tonnes of metal sold by Gupta's firms may not be high-grade nickel, and began inspecting more than 1,000 shipping containers.

Earlier in February, Trafigura told the judge in a closed-door hearing that some of the first containers inspected were found to contain carbon steel, which is worth a fraction of the price of nickel.

The court papers for Friday's hearing also said Trafigura had obtained freezing and disclosure orders against defendants in local courts in the Cayman Islands, Singapore and Malaysia.

The document criticised Gupta's companies as so far providing "very limited" and "wholly inadequate" disclosure regarding assets.

"Asset disclosure...leaves unanswered the central question of what has become of the very large sums of money which Trafigura has paid (defendants) in relation to the cargoes," the document said.

Gupta’s spokesperson said: “Our disclosure has not been inadequate. It wholly complies with the court order.”

Trafigura said it ended up inspecting 156 out of 1,104 containers by the time it filed court papers for the original freezing order, none of which contained nickel.

(Additional reporting by Pratima Desai and Polina Devitt; Editing by Alexander Smith, Kirsten Donovan)