Commodities Trader Scammed
Commodities are economic goods that can be bought and sold. Some examples include copper, coffee, oil, and gold. As an investor, you have a few options when investing in commodities. You can invest in futures contracts based on the underlying physical asset’s price, invest in a mutual fund or ETF, or you can outright own the physical commodity.
Last summer, Switzerland based commodities trader Mercuria Energy Group made a deal with a Turkish firm to buy $36 million worth of copper. Mercuria had done business with the Turkish supplier before, but this time, the deal went south.
Allegedly, in the dark of night, over 300 cargo containers containing roughly 600 tons of copper were opened and replaced with stones spray painted to look like copper — someone had scammed Mercuria out of $36 million.
But how were fraudsters able to dupe Mercuria under the strict security and inspection measures at shipping docks? Special seals were placed on the containers to prevent fraud, but the fraudsters found a workaround — they replaced the real seals with fake ones.
Usually, trading houses like Mercuria can make claims against a cargo insurer’s policy in cases of non-delivery. However, to add insult to injury, Mercuria discovered all but one of the seven contracts used by the Turkish supplier to ensure the cargo were forged.
Mercuria is now seeking compensation in Turkish and U.K. courts against the Turkish supplier, and they have filed a criminal complaint alleging cargo substitution and insurance fraud. So far, 13 suspects have been taken into custody as officials investigate the situation.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.