Radiant World, an iron ore trader, is threatening a $1.4 billion lawsuit against Glencore, alleging that Glencore operated as a "senior partner" to Radiant and its related companies but sought to obscure this relationship from its audited financial records. According to Radiant World's lawyers, Glencore approved new hires, directed payments, and advised on fundraising and pricing for Radiant's physical trades, indicating a deep operational involvement.
This legal threat follows Glencore taking a $480 million provision related to its dealings with Radiant World and associated companies, marking one of its largest trading losses. Glencore has accused Radiant World of sending falsified invoices and contracts, as well as fabricated emails, to financial institutions. These accusations are part of ongoing investigations by the US Department of Justice, Commodity Futures Trading Commission, and Singapore police into Radiant World's activities.
Rakesh Sethi, chairman of Sapphire Minmetals Corporation (a company formerly part of Radiant World), stated that Glencore desired increased iron ore trading volumes and used the network of legally separate companies to bypass internal exposure limits, which were reportedly capped at $500 million for a single company. Sethi claims Glencore unilaterally closed out derivatives positions in July 2021, leading to a $1.16 billion loss for Radiant World and its affiliates, with Sapphire's share being $300 million to $350 million. Radiant World claims its total losses exceed $1.4 billion due to Glencore's actions.
Glencore has vehemently denied these claims, stating they are "meritless" and that Glencore will "vigorously contest them." The company has also stopped doing business with Radiant World and Sapphire Minmetals and is conducting its own review of past activities. Glencore maintains that its financial exposure to Radiant World is not material to its financial position, remaining below its $500 million threshold after accounting for provisions already booked.
Despite the asset freeze imposed by the British High Court on Radiant World and Sapphire Minmetals at the request of Jefferies Financial Group, Sapphire's chairman expressed confidence in the company's future, though it may shift focus to base metals from iron ore. This ongoing dispute highlights significant tensions and financial implications between the two trading entities.
