Vitol, Cargill cut ties with iron ore trader over fake invoices

Three of the world's largest commodity trading houses have severed or frozen business ties with Radiant World, a fast-growing iron ore trader, after encountering documents the company provided to its banks that were deemed invalid, Bloomberg reported on Thursday.bloomberg

Vitol Group and Cargill have stopped trading with Radiant World entirely, while Glencore is no longer entering into new business with the company, according to people familiar with the matter. The moves mark a sharp reversal for a firm that had rapidly ascended to become one of the largest players in global iron ore trading.bloomberg

Concerns Over Falsified Documents

Two of the trading houses encountered invoices or other documents that Radiant World had provided to its banks that were not valid, according to Bloomberg's reporting. A third pulled back after its traders were informed by industry colleagues about concerns regarding falsified documents that the company considered credible.investing+1

Radiant World's expansion has been underpinned by hundreds of millions of dollars in credit lines from banks and credit funds, often secured by trade documents such as invoices and shipping receipts. Vitol and Cargill have done no business with Radiant World for several months, while Glencore is said to be monitoring the situation closely.businessupturn+1

Lenders Review Exposure

The concerns have spread to Radiant World's creditors. Intesa Sanpaolo and Jefferies Financial Group's ↘ 0.02% Point Bonita fund are reviewing their exposure to the company. Intesa has already taken a provision on its exposure to Radiant World, according to a statement it provided to Bloomberg.investing+1

Radiant World Denies Allegations

Radiant World has firmly rejected the claims. "These accusations are categorically untrue," the company said in response to questions. "Radiant World's trading relationships are healthy and uninterrupted".investing

The case echoes past commodity trading scandals in which falsified documentation was used to secure financing. Much now depends on what lenders and trading partners uncover during their reviews, with Radiant World's access to the credit lines that fueled its rise potentially at stake.businessupturn