* Glencore warehouse unit mostly to blame for losses, judgesays * Marex can only claim back fraction of $32 mln judgment * Case related to fake receipts for nickel stored in Asia (Adds comment from Access World in paragraphs 13-14) By Eric Onstad LONDON, Oct 2 (Reuters) - Glencore warehouse unitAccess World was mostly to blame for $32 million of losses froma complex metals fraud, but broker Marex Spectron will have paymost of the bill to French bank Natixis , a UK judgeruled on Wednesday. Access World failed to quickly identify fake receipts fornickel stored at Asian warehouses, but its terms and conditionscapped liability, London High Court Judge Simon Bryan said. "Access World's breaches were of very high relative causalpotency," Bryan said in his judgment. "They also bear the lion's share of relative blameworthinesswhen compared to Marex's contributory negligence."
However, the judge said Marex would have to pay $32 millionto Natixis after the bank sued Marex in 2017 over the fraudulentreceipts, which were part of a repurchase agreement. A trial washeld in January. The deal between Natixis and a Hong Kong firm was arrangedby Marex. None of the parties in the case have disputed that thereceipts were fraudulent but it is unclear who faked them.
Since Bryan said Access World was largely to blame forallowing the fraud to go undetected, he allowed Marex topartially recover its losses from the warehouse company. Access World's terms and conditions limit liability to100,000 euros per warehouse receipt and Bryan cut Marex'srecovery by 25% due to its own negligence. The judgment did not specify the total amount Marex couldrecover from Access World, but since the case involved 16warehouse receipts, Reuters calculates a total of 1.2 millioneuros, a fraction of the $32 million Marex owes Natixis. Marex, which took a provision of $31.9 million linked to thecourt action in its April results, welcomed theruling. "We are a victim of this industry-wide fraud and we are nowlooking at other options available to us, including appealingthis judgment and seeking recourse from the relevant client inthe Hong Kong courts," it said in a statement. Natixis declined to comment. "Whilst the Court did find that certain aspects of AccessWorld's authentication of some warehouse receipts could havebeen more meticulous, the court did comment upon the level ofsophistication of the fraud," Access World said in a statement. The warehouse firm also said that since the fraud wasuncovered, it had implemented additional features andprocedures, including new technology.
COMMERCIAL MOTIVATION The practice of using metal as collateral in warehouse repodeals has come under increasing scrutiny since a $3 billionfraud four years ago at Qingdao port in China, which led to a$440 million fine for the firm involved, Dezheng Resources, anda 23-year jail sentence for its chairman. In January 2017, Access World said it had become aware offake warehouse receipts circulating in its name and urgedholders to seek authentication. The judge faulted both Marex and Access World for notuncovering the fraud earlier. London-based Marex failed in November 2016 to send originalsof the first several warehouse receipts to Access World to beauthenticated. "I consider that it allowed its commercial motivation toprevail over what would have been the appropriate... course ofconduct," Bryan said. But Access World gave the green light to several warehousereceipts before uncovering the fraud. "Access World was negligent in a number of respects...it wasAccess World that had special knowledge of the security featuresof its own warehouse receipts," the judgment said. In a related case, broker ED&F Man last year filed a $284million lawsuit against two Hong Kong companies, alleging thatthey knowingly provided fraudulent warehouse receipts for nickelstored in Asia. (Reporting by Eric Onstad; editing by Kirsten Donovan)
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