SFO secures trio of convictions in $500 million trade finance fraud

Balli Steel plc bought and sold steel around the world using short-term loans from trade finance banks to fund its deals. The company collapsed back in 2013 having amassed debts of around $500 million to over 20 creditor banks, in turn triggering an investigation by the SFO.

SFO investigators exposed how two of the defendants, namely executives Melis Erda and Louise Worsell, conspired to deceive trade finance banks by providing misleading information, false shipping documents and forged signatures on fake sales contracts. This allowed Balli Steel plc to obtain a string of loans to bolster the company’s finances and continue trading, while at the same time avoiding the repayment of many of these loans.

By February 2013, this had led to a cumulative loss of approximately $150 million for five banks, including a debt of over $100 million owed to the Development Bank of Singapore.

In-house company

The SFO also uncovered that many of the falsified documents were produced under the name of an in-house shipping company called Trans Ocean Navigation. It was concealed from Balli Steel plc’s creditors that Trans Ocean Navigation was not an independent shipper, but rather controlled by Balli Steel plc. Trans Ocean Navigation was registered at an accommodation address in the Cayman Islands and operated from Balli Steel plc’s own London offices located in Marylebone.

The SFO’s investigation involved a record-breaking degree of international co-operation. No fewer than 30 requests for evidence – more than for any previous SFO investigation, in fact – were sent to law enforcement partners in 25 different countries, among them Belgium and the Netherlands.

Commenting on this case, Lisa Osofsky (director of the SFO) stated: “This result demonstrates our commitment to battling serious economic crime. I’m extremely proud of the whole SFO team for successfully exposing such a complex case of international fraud, and also for bringing Balli Steel plc’s top executives to justice.”

Osofsky added: “This group of individuals intentionally defrauded multiple international finance houses as they attempted to keep their fraudulent business afloat, using increasingly audacious methods in order to do so as the scale of their debt spiralled.”

Sentencing in this case will take place on 3 and 4 April 2023.

Detail on the case

As part of the UK investigation, the SFO collaborated with the US Federal Bureau of Investigation and the Department of Homeland Security to gather evidence of the suspected offences, and also worked with the Belgian Federal Judicial Police and the Fiscal Information and Investigation Service in the Netherlands to secure key witness statements.

Evidence relating to Balli Steel plc trades was also received from 24 other countries around the globe.

Balli Steel plc was the main trading entity within Balli Group plc, of which it was a subsidiary. Both companies were ultimately controlled by the Alaghband family.

The charges in relation to each individual in this case are as follows:

*Nasser Alaghband (former director of Balli Group and the CEO of Balli Steel plc) pleaded guilty to fraudulent trading prior to the trial

*Louise Worsell (managing director of Balli Steel Middle East FZE) was convicted on multiple counts of conspiracy to defraud

*Melis Erda (Balli Group treasurer and a member of Balli Steel plc’s Executive Committee) was convicted on multiple counts of conspiracy to defraud

*David Spriddell (former finance director of Balli Steel plc) was found not guilty of fraudulent trading in carrying on the business of Balli Group and Balli Steel plc with the intent to defraud creditors)

*Vahid Alaghband (former director of Balli Group) faced charges of two counts of fraudulent trading and one count of conspiracy to defraud, but was severed from this trial in November 2022