| BEIJING, Sept 20
BEIJING, Sept 20 The Chinese authorities have
frozen part of commodity trader Trafigura's investment in a
Chinese copper smelter as part of a years-long probe into the
Swiss firm's oil trading, according to documents from the police
and banks reviewed by Reuters.
In October last year, police in the northern Chinese city of
Cangzhou, froze $32.9 million Trafigura Pte Ltd had injected
into the metals project, a joint venture with Chinese metals
producer Jinchuan Group Co Ltd in the southwestern
city of Fangchenggang, documents dated Oct. 28, 2015 show.
The documents were from the Cangzhou Police Bureau and a
Bank of China branch in Fangchenggang, which authorized the
move. The frozen funds represented just over a third of the
$94.4 million investment Trafigura Pte Ltd had pledged.
Investigators arrested Tian Meng, Trafigura's Beijing-based
oil marketer in August 2014, following a complaint to police by
private Chinese trader Qingdao United Energy, alleging it had
lost $32 million from trade financing deals arranged by Tian
without its knowledge.
Tian was released on bail last month - without being charged
- after more than two years in detention. Reuters couldn't reach
Tian for comment.
Trafigura declined to comment on the fund freeze. The
Cangzhou Police Bureau and Cangzhou prosecutors' office declined
comment. Jinchuan did not respond to requests for comment. Li
Yixing, founder of Qingdao United Energy, said he was briefed by
the police of the fund freeze, but declined to comment further.
The events highlight the complexity of doing business in
China, a key market for the Swiss merchant which deals in
everything from oil to copper. Trafigura's investment in the
smelter was seen as an important step for Trafigura in expanding
its footprint in the copper concentrates and metal market in the
world's top commodities consumer.
Senior sources at Trafigura have repeatedly said the company
believes the dispute is a commercial one and is not a matter for
police or state prosecutors.
The Fangchenggang smelter, in Guangxi province, is not
connected to the trading being investigated.
Senior industry sources said the freezing of Trafigura's
investment should not have a material impact on the Swiss firm
given it reported $97.2 billion in revenue and $2.6 billion of
gross profit in 2015 as shown in Trafigura's annual report.
The one-year freeze expires next month, the documents
Authorities also detained Li Bo, head of Trafigura's
Beijing-based oil operation, in June 2015, as part of the
investigation into the same case. Li was released later on bail
last February and has not been charged.
Police targeted Trafigura Pte Ltd because it was the
counterparty of the Qingdao firm in the alleged trade financing
deals, according to Qingdao United Energy's Li and another
source with direct knowledge of the probe.
(Additional reporting by Dmitry Zhdannikov in London; Editing
by Josephine Mason and Martin Howell)