Jefferies fund alleges US$900m Radiant World receivables fraud

A trade-finance fund managed by Jefferies-linked Point Bonita Capital has alleged that documents supporting almost US$900m of iron ore receivables were falsified, substantially widening the scale of the dispute surrounding commodity traders Radiant World and Sapphire Minmetals.

The allegations concern at least 50 receivables transactions and were detailed in a September affidavit by Christopher Bushell, a lawyer representing LAM Trade Finance Group II, which became publicly available last week.

According to the affidavit, reported by Bloomberg, the fund has obtained evidence that Radiant World and Sapphire Minmetals systematically fabricated legal and financial documents used to support receivables-financing arrangements.

The fund claims it is owed more than US$610m under financing agreements with the two companies. More than US$550m relates to purported receivables from commodity sales to Glencore and Vitol.

Bushell alleged that both trading houses provided evidence indicating that relevant documents had been falsified and maintained that they owed no payments under the disputed transactions.

The latest allegations add to approximately US$500m of invoices separately challenged by creditors including Mizuho Financial Group, Deutsche Bank, Intesa Sanpaolo and Incomlend. The figures represent disputed receivables and creditor claims, rather than established losses, and should not be treated as a confirmed aggregate exposure.

It was previously reported that Mizuho had provided approximately US$100m against Radiant-linked invoices purportedly involving Glencore.

LAM Trade Finance Group II has already obtained a US$499m worldwide freezing order from London’s High Court against assets belonging to Radiant World, Sapphire Minmetals and their majority owners, Pinkesh Nahar and Rakesh Sethi.

The order is a precautionary measure rather than a judicial finding of fraud.

Jefferies’ latest quarterly filing separately acknowledges that Point Bonita obtained substantial preliminary evidence of systematic document falsification and has commenced proceedings involving allegations of deceit, conspiracy and breach of contract.

The fund also alleges that representatives of the trading companies attempted to prevent direct contact with purported customers during efforts to verify outstanding receivables.

Radiant World and Sapphire Minmetals have denied wrongdoing. Sethi has rejected the fraud allegations and maintained that the transactions followed instructions from Glencore.

The widening dispute exposes a fundamental vulnerability in commodity receivables finance: documentation and payment histories can appear credible for years while financiers remain dependent on reliable confirmation that the underlying buyer obligations actually exist.