Hong Kong court finds major bank ANZ was scammed millions in six-year long nickel fraud

A Hong Kong court has found ANZ was defrauded of hundreds of millions of dollars by a trader and his affiliates, and was able to fraudulently obtain financing from the major Australian bank. Hong Kong High Court judge Mimmie Chan determined Wai Kwok Wong, who controls Come Harvest and Mega Wealth International Trading (CM/MW), used fake invoices for nickel in Asian warehouses to obtain financing from the big four bank. The matter was initially brought to the court six years ago with the court now ruling that $US293 million ($412.5m) was defrauded from ANZ, with the bank relying on the defence of “deceit and conspiracy” by the defendants. Around 83 invoices were faked by the consortium, with Justice Chan finding employees at a Singaporean brokerage, Straits Financial, had assisted in the fraudulent financing. The nickel was housed in London Metal Exchange warehouses which are over Malaysia, South Korea and Singapore. Justice Chan found Wong and his affiliates knew they were defrauding ANZ and would rely on the fake invoices to make a financing decision. It was also found that Wong’s affiliates Ko Siu Mei Hamay and Siu Chang Hang knew of the fraudulent activity. “On the totality of the evidence concerning the dealings in the warehouse receipts relating to the nickel, I am satisfied that the warehouse receipts which were delivered to EDF Man Capital Markets Limited (MCM) and the Plaintiff were forgeries,” Justice Chan said. “I have found that Wong, Ko and Siu all knew of the Plaintiff’s role as the ultimate financier or purchaser of the nickel purportedly represented by the warehouse receipts. I also find that Wong, Ko and Siu knew or ought to have known that the Plaintiff, as ultimate financier, would rely on the genuineness of the warehouse receipts presented to it.” The court did find ANZ incurred a financial loss given there was no underlying asset, being the nickel attached to the financing. Straits in its defence said providing soft copies of invoices was standard practice, but the court found this was invalid and untrue. ANZ in its own investigations found that each forged warehouse receipt was endorsed by Straits. The case has also embroiled Glencore due to the warehouses where the nickel was is owned buy its subsidiaries. Court documents showed: “Even to the untrained eye, there are differences, in some cases obvious ones between the PDF copies of the original warehouse receipts sent by Straits and those hard copies sent by CM/MW to MCM and the Plaintiff”. It showed examples of word changes where one receipt from Straits referring to “Sherritt nickel briquette” while the hard copy said “Sherritt nickel briquettes”. The case made by ANZ coincides with rival Westpac alleging it and two other banks were defrauded of close to $400m from Forum Finance chief executive Bill Papas, who has since moved from Australia to Greece. ANZ is yet to make comment on the matter given the judgement can still be appealed by the defendants. In 2017 ANZ said: “The (nickel receipt) exposure was fully accounted at our recent half-year result and was significantly less than the total value of the payments due. Given the exposure was not material to the group, it did not require a specific disclosure and was included in our general provisioning line”. Two defendants that were employees of CM/MW were dismissed by the judge.