Geneva-based commodity company Mercuria Energy Trading has filed a civil suit against Turkish company Bietsan Bakir after a $36 million shipment of copper it had ordered turned out to be nothing more than painted rocks.
The Cypriot-domiciled company filed the civil suit in Turkey. The suit filed with the Turkish prosecutor's office accused Bietsan Bakir of both fraud and theft.
Mercuria Energy agreed to buy 10,000 tons of copper blisters, a form of impure copper ore, from the Turkish supplier last year. The company requested that the order be shipped to its facility in China.
While on its way, the cargo was opened by Chinese inspectors, who found that it was filled with painted paving stones and not copper as indicated in the shipping documents. Authorities said that the seals affixed to the containers, which are used to prevent fraud, were not tampered with.
Mercuria's lawyer Sinan Borovali from KYB Law said that the company had already paid 90% of the cargo that was loaded for shipment. While the shipment was in transit, Mercuria paid a total of $36 million in five installments to Bietsan Bakir.
Turkish authorities have reportedly already arrested 14 people involved in the transaction. The people in custody are currently being questioned as part of a police investigation into the matter. Turkish authorities are reportedly still trying to determine who is responsible for the switching of the cargo.
"Suspects have been taken under custody who are thought to be involved in the various parts of this organized crime against Mercuria," Mercuria Energy said in a statement.
Lawyers said that Mercuria Energy is the victim of cargo fraud. They said that the cargo may have been switched while it was being transported from a port near Istanbul to China.
nvestigators said that 6,000 tons of blister copper placed in more than 300 containers was switched to stones painted to look like semi-refined ore. The containers reportedly were affixed with seals that were made to look like the ones used by customs officials.
Apart from filing a civil suit in Turkey, Mercuria Energy, one of the world's largest independent oil traders, is also seeking redress through a UK arbitration case against Beitsan Bakir. The incident has highlighted the continued vulnerability of commodity traders to fraud and the underlying issues of customs security and inspection controls.
