Stephen Tricks and Philip Prowse outline the issues raised by the Qingdao phantom metals scandal and identify potential solutions.

It has been around 12 months since the name Qingdao entered trade finance terminology worldwide, not as the home of a fine beer to accompany a bowl of noodles, but as the location for a warehousing scandal that has rocked the commodity finance community.

Much has been written in the meantime on the problems at Qingdao; several banks and trading companies have had to instruct their lawyers, but getting to the bottom of events in Qingdao is by no means easy. The Chinese authorities have been reluctant to release much information, saying that the investigations continue. It may fall to the courts outside China to try to work out the details of what went wrong - indeed, at the time of writing, the High Court in London is due to deliver judgment on the dispute between Citi and Mercuria over the early repayment of repos following the discovery of the Qingdao fraud.

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Original article featured in April 2015 issue of the Trade & Forfaiting Review.

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