By: Toh Han ShihSix Battery Road (brown building on left), hosts Radiant World headquarters in Singapore. Photo from Wikimedia CommonsSingaporean courts have become a battlefield where commodities trading companies are suing each other for billions of dollars. Multiple creditors have sued Radiant World Corporation, a Singaporean metal and mineral trader, with a US fund accusing Radiant of possibly committing the biggest commodities fraud since the Enron scandal in 2001, when US energy firm Enron suffered one of the biggest US bankruptcies with US$63.4 billion in assets. In turn, Radiant and its associate companies have sued Glencore, an Anglo-Swiss commodities trading and mining company.Radiant’s website states, “Radiant World and ten other companies have commenced proceedings in the Singapore courts against Glencore International AG and associated companies, arising out of a commercial relationship spanning more than a decade. The claims, which include claims for damages exceeding US$2 billion.”“Radiant World rejects, in the clearest terms, the allegations of wrongdoing that have been made against it and the companies associated with it,” its website added.Glencore retorted in a statement on September 15, “Radiant World and Sapphire Minmetals have alleged that they have claims against Glencore for substantial amounts. These claims are meritless and we will contest them vigorously. We have incurred losses and been exposed to risks by Radiant World companies and will take appropriate action.”“Glencore has confirmed evidence that these companies sent falsified invoices and contracts as well as fabricated emails, which they fraudulently claimed to have received from Glencore personnel, to a number of financial institutions,” the London-listed firm alleged.“We take these issues seriously and are conducting a review of our historic business activities with Radiant World, Sapphire Minmetals and associated companies. We have stopped doing business with these companies and have exited all obligations,” Glencore added.In a judgment of the Singapore High Court on September 25, Judge Kristy Tan said, “I do not accept (Radiant World’s) argument that its claim against Glencore for approximately US$2 billion…. should be regarded as a realisable asset. It is pure speculation as to how the claim will fare and that it will be “resolved within 12 months”.”Tan placed Radiant under the judicial management of several executives of KPMG, a Big Four accounting firm.“There is an urgent need for interim judicial managers to investigate the Company’s affairs in the light of the prima facie pattern of fraudulent conduct on the part of the Company’s management that has been seen,” Tan explained.The Singapore High Court judgment concerned a lawsuit by Mizuho Bank against Radiant.Three statutory demands have been made against Radiant, which it has not satisfied within three weeks thereafter, Tan noted.On August 17, Mizuho, a Japanese bank, served a statutory demand for US$97.3 million on the company.On August 21, Deutsche Bank, Singapore Branch (“DBSG”) served a statutory demand for US$102.6 million on the company.On August 14, Intesa Sanpaolo (“ISP”, an Italian bank) served a statutory demand for US$126.15 million plus interest on the company.“ISP’s experience prima facie comports with and contributes to the prima facie pattern of fraud seen in Mizuho and DBSG’s experiences with the Company,” Tan said.On July 30, two of the world’s largest commodities trading companies, Vitol and Cargill, announced they had halted all business with Radiant, said a report by Control Risks, a UK risk consultancy, on September 28. “This was based on concerns that the Singapore-based trading house had provided allegedly falsified trade documents and invoices to its creditor banks.”In the judgement, Tan noted, “It is again telling that the Company has avoided addressing the specific details of fraud provided by DBSG in respect of the Vitol Transactions and Glencore Transaction.”Singapore Police, the US Justice Department and the US Commodity Futures Trading Commission announced they were probing transactions related to Radiant, according to Control Risks’ report. Multiple banks froze accounts held by Radiant, while trading houses halted their transactions with the firm and civil lawsuits were filed against Radiant in Singapore by Mizuho and a Singapore trade finance platform, Incomlend, the report added.In late September, court filings revealed six creditors held a combined US$870 million exposure to Radiant, said Control Risks’ report.One of the largest frauds in commodities trading since Enron?On September 14, Mariner Atlantic Multi-Strategy, a New York fund, filed a criminal complaint with the Geneva Public Prosecutor’s Office in Switzerland for fraud and money laundering against Radiant World Corporation SA (Radiant’s Geneva-based subsidiary), Radiant’s founder Pinkesh Nahar and other parties.Mariner has requested a criminal investigation, searches of premises in Geneva, and the seizure of bank accounts and assets in Switzerland, said a US court document filed in the US District Court for the Southern District of New York on September 29.According to the US court document, Mariner has requested the New York court to permit Mariner to obtain documentary discovery from the Federal Reserve Bank of New York and the Clearing House Interbank Payments System for use in the legal proceedings in Switzerland.On June 26, Mariner entered into an agreement with Radiant World Corporation, the Singaporean company, and Radiant World Holding Limited, a related Hong Kong company, under which Mariner made available to these two firms two revolving credit facilities totaling US$50 million. On June 30, Radiant made four drawdown requests totaling US$48.6 million.“However, after the funds were released, Mariner learned that Radiant systematically had falsified commercial documents in order to simulate transactions and thereby obtain financing from international lenders, including Mariner, through fictitious trades,” Mariner alleged in the US court document.Several of Radiant’s purported counterparties were entities controlled by Nahar, Mariner alleged. “The scale of this blatant fraud is considerable: the value of the fraudulent invoices issued as collateral could reach US$1 billion, which would make it one of the largest frauds in the commodities trading sector since the Enron scandal.”“This is just the latest in a series of scandals centred around document fraud involving commodities traders in Singapore,” said Control Risks’ report.In 2020, a crash in global oil prices exposed two significant trade finance frauds, leading to the spectacular collapse of oil trading companies Hin Leong Trading and ZenRock Commodities, Control Risks’ report cited. Hin Leong’s founder, O.K. Lim, confessed to having concealed over US$800 million in futures losses and directing the forgery of trade documents to secure US$3.85 billion in credit from over 20 banks, while secretly selling off the oil pledged as collateral. Around the same time, ZenRock collapsed under more than US$600 million in debt, after lenders discovered the firm had used fabricated documents and round-tripping transactions to repeatedly pledge the same cargo to different banks.In 2023, Singapore-headquartered Trafigura uncovered a US$577 million deception, Control Risks’ report cited. The commodities giant discovered that thousands of shipping containers, which had been documented as holding high-grade nickel, were filled with low-value carbon steel, scrap metal and rubble.“These incidents showed that even the world’s most sophisticated trading desks remain vulnerable to physical substitution fraud when they rely on paper documentation for cargo that is non-existent, substituted or double-pledged,” Control Risks’ report said.Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel.