London Metal Exchange discovers fraud at warehouse
The London Metal Exchange (LME) discovered “irregularities” with bagged nickel briquettes at one of its warehouses this week, which forced it to postpone a resumption of trading in the metal during Asian hours until March 27.
According to a statement from the LME, it had to cancel nine nickel warrants at one of its facilities after finding out that bagged nickel briquettes stored there were found to not have the weight specified in the contracts.
“The exchange has received information that a number of physical nickel shipments out of one specific facility of an LME-licensed warehouse operator have been subject to such irregularities,” the exchange said in the statement.
A warrant amounts to around six tons of the metal, meaning around 54 tons of the LME’s nickel was affected. The exchange said this represents 0.14% of its live nickel inventories. While the LME said it has no reason to believe that its other warehouses have been jeopardized, it has asked operators to recheck their stored warranted nickel. It added that metals which do not allow bagged delivery “are not susceptible to this type of irregularity.”
The exchange did not name the warehouse or its location, but several media outlets later reported, citing sources, that the supposed nickel bags were actually filled with stone. The fake nickel was reportedly stored at an LME warehouse in Rotterdam operated by Access World, which declined to comment on the news.
The announcement comes on the heels of another scandal involving nickel at trading giant Trafigura. Last month, the company said it found “systematic fraud” in shipments that did not contain the metal specified in the contracts, and is facing millions of dollars in losses. Trafigura has launched legal proceedings against Indian metals tycoon Prateek Gupta and his companies over the alleged fraud.
For more stories on economy & finance visit RT's business section