Vitol, Cargill Halt Trading with Radiant World Over Document Concerns, Bloomberg Reports

Commodity trading giants Vitol Group and Cargill Inc. have ceased all business with Radiant World, a rapidly growing iron ore trader, amid concerns over the validity of its trade documents, according to a Bloomberg report citing people familiar with the matter. Fellow commodities major Glencore Plc is also reportedly not pursuing any new business with the firm.

Allegations of Invalid Documents

The decision by the trading houses follows the discovery of potential irregularities in paperwork used for financing. According to several of the sources cited by Bloomberg, two of the firms identified invoices or other documents provided by Radiant World to its banks that were not valid.

The third company, Glencore, reportedly pulled back after its traders received what they considered credible warnings from industry colleagues about falsified documents. Sources indicated that Vitol and Cargill have not conducted business with Radiant World for several months, while Glencore is said to be monitoring the situation closely.

Lenders Reviewing Exposure

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The allegations have prompted financial backers to reassess their involvement. Radiant World's swift ascent in the iron ore market was fueled by hundreds of millions of dollars in credit lines from banks and credit funds, often secured against trade documents like invoices and shipping receipts.

At least two creditors are now reviewing their exposure to the company:

• Intesa Sanpaolo SpA: The Italian bank has already taken a provision on its exposure to Radiant World, it said in a statement to Bloomberg.
• Jefferies Financial Group Inc.'s Point Bonita fund: The fund is also reportedly reviewing its position.

In a statement responding to the allegations, Radiant World said: "These accusations are categorically untrue. Radiant World’s trading relationships are healthy and uninterrupted."