Glencore (GLEN.L) has accused Winston Soosaipillai, the former owner of collapsed Lincolnshire oil refinery Prax, of orchestrating a $236m (£177m) fraud against the FTSE 100 commodity giant.
The Anglo-Swiss company claims Soosaipillai was “centrally involved in the fraudulent conduct” that resulted in Glencore losing millions of pounds worth of oil delivered to Prax’s Lindsey refinery near Grimsby.
Glencore told the High Court it was “induced by fraudulent misrepresentations” into delivering more than $236m worth of crude oil to the Lincolnshire refinery before it collapsed in June last year.
The company says it was deliberately misled about Prax’s financial position, including false assurances that the refinery was solvent and capable of paying its debts.
High Court submissions stated: “Prior to the liquidation, Mr Soosaipillai was, in fact, conducting the business of the Prax Group… fraudulently.”
Lawyers acting for Glencore argued that “representations” made to the company “were untrue and misleading” and claimed that Soosaipillai “knew this” at the time they were made.
Glencore is now seeking to recover crude oil still held by Prax and seize any refined products processed from the crude it originally delivered to the refinery before the collapse.
The company argues it continued to own the crude oil while it was being processed, and that Soosaipillai’s misrepresentations effectively voided Prax’s contracts with Glencore entirely.
Prax collapsed suddenly last year carrying more than £1.5bn in debts, after “material irregularities” were discovered in a loan facility the company held with HSBC, prompting a severe cash crisis.
Lawyers defending Prax argued Glencore should be treated identically to all other creditors, warning that granting its request “would be a recipe for chaos and undermine the logic and policy of the collective insolvency process.”
Prax’s legal representatives further argued: “Any fraud that may have taken place would, if demonstrated, be a misfortune that befell all the creditors of the company in common.”
They added that “Glencore has suffered no special hardship that was not suffered by the creditors as a whole,” strengthening their case for equal treatment during insolvency proceedings.
Prax was founded by Soosaipillai and his wife Arani in 1999, after the couple met while studying accounting and finance at the University of Kent together.
The business initially operated petrol stations before expanding aggressively, acquiring the Lindsey oil refinery from French oil giant Total in 2021 as part of a series of debt-fuelled deals.
Those acquisitions transformed Prax into a sprawling £10bn conglomerate with worldwide operations, before the discovery of financial irregularities brought the entire enterprise to an abrupt halt.
Soosaipillai and his wife each own 40 per cent stakes in Prax directly, with the remaining 20 per cent held through trusts in which both serve as trustees.