Radiant World, Sapphire Minmetals Cut Staff Amid $499 Million Fraud Allegations

Iron ore traders Radiant World and Sapphire Minmetals are significantly reducing their workforce across Asia and Europe as they contend with mounting allegations of fraud and a court-ordered asset freeze, according to a Bloomberg report. The operational cutbacks signal deepening turmoil for the trading group amid multiple legal battles.

Operational Downsizing

The staff reductions have been substantial across the companies' key trading hubs. According to Bloomberg, which cited people familiar with the matter, the changes include:

• Radiant World: Has lost almost half of its iron ore traders in China and Singapore, with further departures from its offices in London and Geneva.
• Sapphire Minmetals: Has also cut its operations in China and Singapore.

The sources noted that the workforce changes consist of both layoffs and resignations. Underscoring the severity of the situation, Sapphire's chairman, Rakesh Sethi, told Bloomberg that he was putting new trading business on hold. "I don’t intend to do further business until I sort out these things," Sethi stated, referencing the firm's legal disputes.

Legal and Financial Pressures

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The downsizing follows a $499 million worldwide freezing order imposed on both companies by a London court. The legal action was initiated by a fund managed by Jefferies Financial Group Inc., which alleged the traders used falsified iron ore invoices in a "fraudulent scheme" against it.

Beyond the asset freeze, Radiant World is facing separate lawsuits in Singapore. The creditors suing the firm include Incomlend Pte and a unit of Japanese banking giant Mizuho Financial Group Inc.

Context and Counterclaims

In their defense, Radiant World and Sapphire Minmetals have collectively claimed they suffered losses exceeding $2 billion due to the actions of Glencore Plc, the commodities giant that was previously a major financial backer of the group.

This dispute follows an earlier Bloomberg report in July that major commodity traders, including Glencore, had moved to cut ties with Radiant World. The decision was reportedly driven by concerns that the trading firm had provided falsified documents to its lenders.