Qingdao Copper Fraud Fallout

Citigroup in a "state of panic."

Mercuria, Citi in court over China metals financing deals
As Citigroup demanded early repayment of $270 million for the repurchase deals, Mercuria Energy initiated legal proceedings in Jun 2014. The bank claims that it had right to demand early repayment following the closure of the ports. Also, the bank claims handing over the warehouse receipts to Mercuria Energy in late July, confirming delivery of metals held in the Qingdao and Penglai ports.

Contesting such claims, Mercuria Energy argues that handing over of the warehouse receipts does not amount to delivery of the metal, particularly given the fact that there is ambiguity over the existence of the concerned metals. The commodity trader also mentioned in court that Citigroup was in a "state of panic" following the unearthing of the alleged fraud at the two ports.

Mercuria Energy, in the court document claimed that Citigroup contemplated to forward a default notice in the event Mercuria Energy fails to repurchase the metals in the concerned ports. Per the court documents "Essentially it seems from the disclosed documents that Citi hoped that it could use its commercial muscle to bring things to a head at the very early stage and coerce Mercuria into absorbing the loss."

Citigroup denies such claims. In its court submission, the bank said "Mercuria's strategy is, put bluntly, to refuse to honor its contractual obligation to repay Citi."
Citigroup tries to handover pieces of paper after fraud is discovered at the Qingdao port, then went on to try blackmail:
Young suggested that Mercuria be reminded that it had extensive financial arrangements with Citi, including $4 billion in credit and borrowing facilities and over $14 billion of bilateral trade facilities, plus potential help in financing the purchase from JP Morgan.

ZeroHedge has more.

No comments:

Post a Comment