LONDON (Reuters) - French bank Natixis (CNAT.PA) has sued metals broker Marex Spectron for $32 million over alleged fraudulent receipts for nickel stored at warehouses in Asia run by a unit of commodities giant Glencore (GLEN.L), a court filing showed.
In the legal action, filed in London’s High Court, Natixis said it would seek damages from Marex because the bank provided finance based on fake receipts in a deal arranged by the broker.
Marex rejected the claim and said it had issued a counterclaim against Glencore unit Access World because the warehouse operator had verified the receipts as being authentic.
“We vigorously contest Natixis’ claim,” Marex said in a statement. “Access World needs to explain how receipts that it had authenticated were subsequently cancelled.”
Natixis acknowledged it had filed a lawsuit against Marex but declined to make any further comment. Access World’s owner Glencore declined to comment.
Access World said on Jan. 21 that it has become aware of fake warehouse receipts circulating in its name and urged holders to seek authentication.
The legal action revolves around three trades in nickel warehouse receipts in late 2016 and early 2017.
Marex said it had the receipts authenticated by Access World and also had the physical metal inspected by Alfred H. Knight, an specialist metals inspection firm.
Alfred H. Knight did not reply to requests for comment.
Marex said the fraud was uncovered when it sought to verify a fourth trade and Access World said those receipts were fraudulent. Later, Access World said receipts from the other three trades were also fake after Natixis checked with the warehouse operator, Marex added.
“The $30 million of receipts in Natixis’ claim represents the full extent of Marex’s involvement in the receipts business. If there is any larger fraud, it involves other market participants and not Marex Spectron,” Marex said.
Metals markets were rocked about three years ago by a $3 billion fraud at Qingdao port in China, when a firm allegedly duplicated warehouse certificates to pledge metal as collateral for multiple bank loans.
Following the more recent fraud, some global banks briefly froze credit lines for Singapore metal traders, people familiar with the matter said at the time.
Banks and trading houses have tightened procedures on collateral financing since Qingdao, particularly around limiting transfers of titles to metal.
The London Metal Exchange - the largest base metals exchange - set up a global inventory monitoring chain known as LMEShield for private stocks held outside its warehousing network, where rent is cheaper, but security is also lower.
Additional reporting by Pratima Desai in London and Melanie Burton in Melbourne, editing by Louise Heavens and David Evans