BEIJING (Reuters) - Chinese prosecutors have charged Trafigura’s Singapore division and a Beijing-based staff member for allegedly fabricating gasoline deals with a Chinese oil trading company following a three-year probe, according to a letter of indictment reviewed by Reuters.
Prosecutors in Langfang, in northern China’s Hebei province, filed the charges on Aug. 4 against Trafigura (Singapore) Pte Ltd and Tian Meng, its Beijing-based oil marketer, the official document issued by prosecutors shows.
The document charges the Swiss firm and Tian with fraudulently obtaining bank credit through fabricated oil deals.
Prosecutors also charged a second individual, Zhang Wei, a Chinese fuel trader, for “conspiring with” Tian in the alleged fraud. He is a shareholder in private Chinese trader Qingdao United Energy.
The charges are the first since police arrested Tian in August 2014 following a complaint to police by Qingdao United Energy, alleging it had lost $32 million from trade financing deals arranged between Tian and Zhang without its knowledge.
Tian was released on bail last August after two years in a detention center in the northern Chinese city of Cangzhou.
The prosecutor charged Trafigura’s Singapore entity because it was the counterparty of the Qingdao firm in the alleged trade financing deals, according to the document.
Trafigura declined to comment. Senior sources at Trafigura have repeatedly said the company believes the dispute is a commercial one and is not a matter for police or state prosecutors.
Tian declined to comment when reached by phone on Wednesday. Zhang remains in detention and Reuters was not able to contact him or his lawyer for comment.
An official with Langfang Prosecutor’s Office’s public prosecution division confirmed that Trafigura’s Singapore unit, Tian Meng and Zhang Wei had all been charged, without giving further details.
In a message via WeChat, the founder of Qingdao United Energy, Li Yixin, said: “No matter how powerful a company is, or how eloquently it defends itself, facts are hard to remove.”
Tian and Zhang convinced Qingdao to make two gasoline purchases, but investigators found that they were fake deals and were arranged just to have the Qingdao firm issue bank lines to Trafigura, the prosecutors said.
“After Tian got approval for the deal from Trafigura, Zhang Wei signed a contract with Trafigura in the name of Qingdao United Energy and fabricated the fact that it was purchasing gasoline from Trafigura,” according to the document.
Chinese courts typically conduct trials three months after prosecutors file charges, but a trial can be postponed by up to six months.
It is not unusual for the Chinese authorities to detain a criminal suspect for two years or longer without charge if a case is deemed sensitive and complicated.
As part of the probe, Chinese authorities have also frozen $32.9 million that Trafigura Pte Ltd had injected into a metals project jointly owned with Chinese metals producer Jinchuan Group Co Ltd [JCGRP.UL] in southwestern China.
Additional reporting by Beijing newsroom and Dmitry Zhdannikov in London; editing by Josephine Mason and Martin Howell