Jefferies Financial Group has discovered that some invoices supporting its financing to iron ore trader Sapphire Minmetals Corp. are not genuine, according to people familiar with the matter. The discovery came after Jefferies checked the veracity of the invoices with trading house Vitol Group, which confirmed that some of the invoices were not genuine. This revelation represents a significant blow to the US bank and its Point Bonita fund, which is already in the process of discontinuation. The case has now expanded beyond Jefferies, with Vitol and Cargill halting all trading with Singapore-based Radiant World following the discovery that invoices used to secure financing from Italy's Intesa Sanpaolo did not represent real trades.
The Point Bonita fund, which Jefferies manages and holds a 5.9% stake in according to its most recent quarterly report, has an exposure to Radiant World of less than $300 million. Jefferies is currently winding down the Point Bonita fund and faces investor lawsuits following the fund's exposure to the collapse of auto supplier First Brands Group. Intesa Sanpaolo has disclosed a provision of approximately €200 million (approximately $230 million) against its exposure to Radiant World, stating that the position was "prudentially and largely covered" with no expected impact on the bank's 2026 net profit. Radiant World has denied all wrongdoing, stating the accusations are "categorically untrue" and that it conducts business to the highest standards.
The developments highlight a fundamental vulnerability in commodity trade finance, where each lender operates in isolation when evaluating borrower document history. Unlike exchange-traded derivatives that settle through a central counterparty, seaborne commodity trade finance relies entirely on bilateral document checks between lenders and named counterparties. As per Bloomberg reports, there is no central registry of commodity invoices, so a trader can submit the same false invoice to multiple banks or invoices for trades that never occurred, with each bank's verification process operating independently. The Radiant World case illustrates this gap, as the company was able to expand its banking relationships to a network of lenders providing several hundred million dollars in credit lines without access to previous investigations. The company was reportedly on track for 65 to 70 million tons of iron ore annually by late 2025, approaching Glencore's 75 million tons the previous year.
Iron ore prices dropped to a 13-month low of $93.65 per ton on the Singapore Exchange, driven by a record-weak Chinese construction reading and the disclosure of potential invoice fraud at Radiant World. China's construction PMI fell to 47.0 in July — a record low and the steepest contraction in building activity since the start of the COVID-19 pandemic. The two forces are compounding each other, with China's construction sector contracting to its worst reading since the pandemic and the disclosure of potential invoice fraud at one of the world's largest iron ore traders raising concerns about trade-finance liquidity across the sector. Iron ore futures have already declined roughly 6% this year, with the most-traded contract on Dalian's commodity exchange declining nearly 3% alongside the Singapore drop.
Sapphire Minmetals was majority owned by Radiant World and its founder Pinkesh Nahar until 2015, according to corporate filings in Hong Kong. The most recent filings show the parent company of Sapphire Minmetals as being a Singapore company called Sino Global Holdings Pte, which is in turn majority owned by Rakesh Sethi. Sapphire Minmetals Chairman Sethi has categorically denied the allegations, stating in an email that the rumors are untrue and unsubstantiated. Representatives for Jefferies and Vitol declined to comment on the matter. The breakdown began when Vitol and Cargill reviewed paperwork that Radiant World had submitted to its banking lenders and found the documents to be invalid. In at least one confirmed case, Radiant World used Vitol invoices as collateral to obtain financing from Intesa Sanpaolo, with Vitol confirming that the underlying trades had never taken place.
