CHINA: Citigroup Inc. has been in state of panic due to recent scams at two Chinese ports. The fraud uncovered over disputed metal finance deals turned them in a state of panic as their metal was at risk, said Mercuria Energy Group Ltd’s lawyer Graham Dunning.
Adding, “The discovery of the fraud was a massive problem for Citi as it was their metal and it was at their risk,” Mercuria lawyer Graham Dunning told a London judge. “There was a state of panic.”
The disputed copper and aluminum is under lock-down in the ports of Qingdao and Penglai, where Chinese authorities are investigating an alleged fraud. Neither side can get access; they don’t know how much of the metal is there. Dunning said at a pre-trial hearing in August.
Citigroup argues that it effectively delivered the metal to Mercuria under the terms of a sale-and-repurchase agreement by handing over warehouse receipts. The bank says it is owed about $270 million. Mercuria, a Cyprus-based firm with major trading operations in Geneva, argues the products were never properly delivered.
“It appears that substantial quantities may be missing from the warehouses or may be the subject of multiple pledges,” Dunning said today.
Citigroup spokesman Simon Boughey didn’t immediately respond to an e-mail seeking comment.
