December 15, 2017 / 12:47 PM / 6 months ago

Natixis bank broadens metals fraud lawsuit, targets Glencore unit

* $32 mln lawsuit first filed against broker in May

* Case involves fake nickel warehouse receipts in Asia

By Eric Onstad

LONDON, Dec 15 (Reuters) - French bank Natixis has broadened its $32 million lawsuit over fraudulent receipts for nickel stored at warehouses in Asia by adding a unit of commodities giant Glencore as a defendant, a court filing showed.

Glencore's warehouse unit Access World rejected the accusations, according to the court papers.

The move increases the focus on Access World, which said in January it had become aware of fake warehouse receipts circulating in its name and urged holders to seek authentication.

In May, Natixis launched a lawsuit against metals broker Marex Spectron for $32 million after the bank said it paid the broker for metal but the ownership receipts provided by Marex for nickel stored in a warehouse turned out to be fakes.

Marex rejected the claim and issued a counterclaim against Glencore's unit Access World, which stored the metal. Marex said it had been diligent in verifying the warrants and that the warehouse firm had confirmed the receipts were authentic.

"Some further particulars having been provided by Marex, the bank has now brought the claims against Access World," Natixis said in a court document filed on Dec. 7.

Natixis had no immediate comment. Marex and Glencore declined to comment.

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.

DISPUTED DOCUMENTS

The Natixis legal action revolves around a series of complex trades in nickel warehouse receipts in late 2016 and early 2017 in which the bank granted what amounted to loans using nickel as collateral.

Warehouse receipts can be endorsed from one holder to another and in this case the documents were transferred between several parties before they were discovered to be fakes.

Marex said it verified some of the documents by sending them by courier to Access World's office in Singapore.

The warehouse company acknowledged in court papers that on Dec. 22, 2016 and on Jan. 9, 2017 it certified that the receipts were valid, but raised the possibility that they were not the same documents that were shown to be fakes in February.

"As soon as the warehouse receipt leaves Access World's possession, it will have to be re-authenticated by Access World on any subsequent presentation," it said in a court filing on Sept. 15.

Fake warehouse receipts for metal stored in Access World depots have also spurred legal action from Australia and New Zealand Banking Group, which was involved in a similar loan deal using nickel as collateral.

Unlike Natixis, ANZ has sued neither its broker, ED&F Man, nor Access World, but said in U.S. court papers it was targeting parties in Asia it suspected were behind the fraud.

ANZ was not immediately available for comment and ED&F Man declined to comment.

ANZ received permission from the U.S. District Court in San Francisco to interview U.S. witnesses linked to Asian firms involved in the nickel trades, a court filing in August showed.

ANZ, Australia's third-biggest lender, said in the court papers that it had already unearthed information in Hong Kong after it asked courts there for access to bank records.

Those bank documents, included in the U.S. court filing, showed transfers of $151 million from two Hong Kong firms involved in the nickel trades to people and entities in California.

The two Hong Kong firms - Come Harvest Holdings Ltd (CHH) and Mega Wealth International Trading Ltd - were clients of ED&F Man and handed over the warehouse receipts in exchange for loans.

One of them, CHH, was also a client of Marex and provided the warehouse receipts for the transactions with Natixis, the British court documents show.

CHH and Mega Wealth were not available for comment. (Reporting by Eric Onstad; Editing by Edmund Blair)

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