Commodities trader pays £26m for shipment of painted stones thinking it is copper

Company only discovered the fraud when the cargo shipments started to arrive in China

Mercuria Energy has filed a civil suit against a Turkish company after the £26m fraud (REUTERS)

A commodities trader got duped while buying copper worth £26m when the shipments started arriving in China and they found out it just consisted of spray-painted stone.

Mercuria Energy Group, a Geneva-based multi-national trading company, bought 10,000 tons of copper blisters (an impure form of the metal) last summer from Turkish supplier Bietsan Bakir.  

The cargo went through a strict security and inspection controls process, yet it was only at its destination in China that officials discovered there was no real copper to be found.

The Swiss trader is now seeking redress in Turkish and the UK courts and has launched a civil suit, while Turkish police have arrested 14 people in connection to the case.

“Suspects have been taken under custody who are thought to be involved in the various parts of this organised crime against Mercuria,” the company said in a statement thanking the Istanbul financial crime department. 

However, the incident also reveals the vulnerability of security checks in international trade.

After Mercuria Energy’s order last year, about 6,700 tonnes of the total 10,000 were loaded for shipment in containers on eight vessels. The blisters were original when they were loaded and went through a security check, before being sealed. 

At some point before it began its journey from the Istanbul port, the blisters in the shipment were changed with stones and the cargo was sealed again, BBC News reported quoting a statement from the law firm KYB.

The company found out only when the first shipment arrived and it had already paid 90 per cent of the price.

"There has been a criminal investigation petition by the buyer against the seller and two intermediaries," Turkish police said in a statement. "It’s been determined that the incident is the outcome of fraud perpetrated in an organised manner."

The horror for one of the five biggest oil traders in the world didn’t end there, however. The company found out they also can’t make a non-delivery claim with the seller’s insurance company – which is the norm in such cases – as six of the seven insurance contracts used by the Turkish company to insure the cargo were fake.