Commercial Court dismisses US$500 million West African oil trading fraud claim after 10-year battle

28/01/25

On 22 January 2025, Mr Justice Henshaw sitting in the Commercial Court dismissed a claim alleging a massive fraud involving West African crude oil trading: Alta Trading UK (formerly known as Arcadia Petroleum Limited) v. Bosworth [2025] EWHC 91 (Comm). The parties have fought the litigation for ten years, involving courts at the highest levels in England and abroad on issues of jurisdiction.

The Arcadia Group was one of the world’s largest oil traders. It traded crude oil, oil products, commodities, and derivatives across the globe, with traders in London, Geneva, Singapore, and the United States. The Arcadia Group was owned and controlled by Farahead, a company connected with the Norwegian/Cypriot shipping billionaire John Fredriksen.

Peter Bosworth was CEO, and Colin Hurley was CFO, of the Arcadia Group. 

In February 2015, the Claimants obtained a worldwide freezing order and brought claims against Mr Bosworth, Mr Hurley and other defendants under English and Swiss law, including claims for unlawful means conspiracy, breach of fiduciary duty, dishonest assistance and knowing receipt, in respect of 144 transactions involving West African crude oil between 2007 and 2013. The Claimants alleged that Mr Bosworth and Mr Hurley were the principal architects of and beneficiaries from the fraud. The Claimants said that Mr Bosworth and Mr Hurley “inserted” fraudulent entities into the transaction chains between West African national oil companies selling the crude and the legitimate Arcadia Group buyer, such that the ‘inserted’ entities extracted profits that otherwise would have accrued to Arcadia. The principal ‘inserted’ entity was a company referred to as ‘Arcadia Lebanon’. The Claimants contended that Arcadia Lebanon belonged beneficially to Mr Bosworth and Mr Hurley, and that Mr Bosworth and Mr Hurley used it for their own benefit, dishonestly diverting from the Claimants profits and opportunities that were rightfully theirs. The interest on the allegedly diverted profits of US$325 million amounted to a further US$177 million, giving a total of US$502 million.

From the outset of the litigation in 2015, Mr Bosworth and Mr Hurley had denied all the claims against them. They said that the inserted entities made payments to third party service providers, which were necessary to conduct West African oil trading, and that they had structured the transaction chains to protect the Claimants from the inherent risks of West African crude oil trading, in particular the risks of corruption and the compliance and reputational risks of making payments to service providers. The sums alleged to be diverted profits were in fact properly characterised as costs of the oil transactions. Mr Bosworth and Mr Hurley said that they held the shares in Arcadia Lebanon on behalf of Farahead, and that Farahead agreed to, knew about, and benefited from Arcadia Lebanon’s activities.

A 3-month trial took place before Mr Justice Henshaw in summer 2024.

In a 429-page judgment, the Judge dismissed the Claimants’ claims. The Judge held that there had never been any fraud. He found that Mr Bosworth and Mr Hurley acted honestly throughout the 144 transactions and he rejected all the Claimants’ allegations of dishonesty against them. The Judge found that Mr Bosworth and Mr Hurley did not divert any profit or opportunity from the Claimants, that they acted in what they genuinely and reasonably believed to be in the Arcadia Group’s best interests and did not conceal from Farahead and Mr Fredriksen the payments to service providers or the reasons for making such payments.

The judgment considers the risks in obtaining crude oil term contracts, and the structures of oil trading transactions, including the use of sleeving arrangements and service providers. It contains a substantial discussion of the duties of directors, and the scope and application of the ‘no profit’ and ‘no conflict’ rules that prevent fiduciaries from diverting a company’s business and opportunities. Read the judgement here.

Mr Bosworth and Mr Hurley counterclaimed against the Claimants for bonuses and unpaid sums owed to them when they left the Arcadia Group in 2013. Mr Hurley’s counterclaim of US$3 million plus interest succeeded. Mr Bosworth’s counterclaim to a retention bonus of US$ 20 million was dismissed but his other claims succeeded in part in the total sum of US$9.26 million plus interest.