The Trafigura logo is pictured in the company’s offices in Geneva. The trading firm has been implicated in a major trading scandal costing tens of millions of dollars. (Photo : Reuters)
Chinese police have frozen bank accounts owned by Dutch commodities trading house Trifagura Beheer BV as part of an investigation into an alleged $32-million gasoline trade fraud, Reuters news agency reported Wednesday.
The investigation was launched after private Chinese trading firm Qingdao United Energy (QUE) told police it had lost $32 million when a trader, Zhang Wei, arranged illegal financial trading deals with Tian Meng, a Trafigura employee based in Beijing, Reuters reported quoting anonymous sources.
Police have detained Tian since August in the northern city of Cangzhou; the dealer is facing up to seven months in jail without charge.
According to Reuters, the police froze one account at Industrial and Commercial Bank of China and another at Bank of China, both held in Shanghai by Trafigura's Singapore unit.
Both banks did not respond to requests for comment.
The seizure is seen by analysts as a serious blow to Trafigura's operations in Shanghai, the hub of its metals activity in China.
"This will first hamper [Trafigura] obtaining financing in the relevant Chinese banks," a China-based trader with a western trading house said in an interview under the condition of anonymity. "If the news spreads, other Chinese banks will be scared off, too."
A senior Trafigura source told Reuters that the company believed Zhang was an authorized QUE agent and had represented other companies in previous transactions without problems.
"As far as we are concerned, there is no change in the substance of this matter, which is a commercial dispute and not a matter for police or state prosecutors," said the source.
"We believe the prosecutors will conclude there are no charges to answer, but if any are brought we will vigorously contest them."
Trafigura declined to make an official comment on the case.
The trading house, one of the world's top three privately owned metal and oil traders, was previously in the news for attempting to suppress a story in the U.K. regarding its illegal dumping in the Ivory Coast via a super-injunction.
Commodity financing deals have been under intense scrutiny in China in recent months following a billion-dollar scandal at the major port of Qingdao, where a private Chinese trading firm has been accused of forging warehouse certificates to secure bank loans.
