Suspects remanded in Turkish case over alleged copper heist

A dozen suspects in a cargo fraud case involving copper replaced with painted rocks have been remanded in custody by a Turkish court.

Last year, Geneva-based Mercuria agreed to buy copper worth $36m from a Turkish supplier. But when the first of eight cargoes arrived at a Chinese port, inspectors found the metal had been substituted with worthless copper-coloured stone and concrete, Mercuria said.

After the commodity trader filed a report for theft and fraud, Turkish prosecutors opened an investigation and last week a court placed 11 suspects under house arrest.

Prosecutors appealed against that decision and a different court ordered the men be remanded to custody on Friday, according to Burcu Acarturk Yildiz of KYB, the Istanbul law firm representing Mercuria. Another suspect who was at large was also arrested.

“This is the biggest fraud committed against a single entity in the history of the Turkish republic,” said Yigit Akali, another lawyer representing Mercuria in Turkey.

Turkish newspaper Hurriyet reported last week that the defendants had denied wrongdoing in court. One suspect said he “lacked the financial power or intelligence” to carry out a scam of this scope.

The case in Turkey highlights how commodity trades can be subject to fraud even when measures are taken to secure and inspect cargoes. In 2014, Mercuria was caught up in the fallout from a metals financing scandal at warehouses in China that involved forged warehouse receipts.

The bizarre episode started in June when Mercuria, one of the world’s biggest commodity traders, agreed to buy about 10,000 tonnes of copper blister, an impure form of the metal, from a supplier in Turkey for delivery to China. Eight ships were loaded with 6,700 tonnes of the metal, which were placed in large containers.

In order to pass an inspection test, it appears a container was first loaded with the metal but then later switched to copper-coloured stones and concrete, according to Mercuria’s lawyers and its complaint to the Turkish Prosecutors.

However, this was discovered only when the first of the ships carrying the load reached the Chinese port of Lianyungang in August.

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“As soon as we were made aware by the authorities in the discharge port [in] China that the copper blisters were substituted with various stone and concrete worthless material, we immediately made all necessary notifications and applications before the respective parties and authorities, in China and before the Turkish authorities as well,” Mercuria said in a statement. “We are since following up with the proceedings closely.”

In addition to the formal complaint it made to Turkish police and prosecutors, Mercuria has also launched civil legal proceedings against the supplier in Turkey and arbitration in England.

In its complaint to the Turkish prosecutors Mercuria claimed it had discovered that just one of the eight contracts used to insure its cargoes was real. The rest, it alleged, had been forged.

The defendants face up to 24 years in prison on a variety of charges including aggravated fraud, organised crime and falsifying documents and the customs seals, according to Mercuria’s lawyers.