Trafigura Insider Gagged From Discussing Accounting by Court

(Bloomberg) -- A unit of commodities-trading giant Trafigura Group Ltd. got a Swiss court to stop a whistleblower from discussing alleged accounting fraud with Belgian and Swiss authorities, potentially undermining their investigations into the accusations.

The would-be informant, who asked not to be named to avoid recriminations, was ordered by a Zurich court in September not to speak to any third parties about Trafigura’s zinc-refining unit Nyrstar, according to a copy of the injunction seen by Bloomberg. The court said the man had violated his obligations to corporate confidentiality and risked causing damage to the company that would be difficult to undo, should he do it again, the document shows.

The gag order demonstrates both how little protection whistleblowers can expect in Switzerland, where corporate secrecy is often invoked to block leaks, and also how injunctions can be used to stymie regulators’ investigations both there and in other countries. Under Swiss law, informants must first go to their employers with suspicions of wrongdoing and can only approach a third party if it’s proven that the employer isn’t acting on the information in a timely manner.

The whistleblower risks a 10,000 Swiss franc ($10,100) fine and has already been ordered to pay 10,000 francs in advance to cover the costs of court proceedings, according to the injunction. Nyrstar Sales & Marketing AG, a Swiss entity, filed the injunction application. Nyrstar is the world’s second-largest zinc refiner and was acquired by Trafigura in July.

Belgium’s Financial Services and Markets Authority in August said it was investigating allegations made by a whistleblower about financial irregularities at Nyrstar. An FSMA spokesman declined to comment when asked this week for an update on the probe.

Swiss federal prosecutors say they received a criminal complaint regarding Nyrstar that they examined before dropping the case in September. A spokesman declined to say why. A separate arm of the Swiss attorney-general’s office declined to provide a copy of the so-called no-proceedings order.

A spokeswoman for Trafigura and Nyrstar declined to comment on the injunction as did a spokeswoman for the Zurich court.

Nyrstar has previously said it “strongly refutes any allegation that any of its published accounts have been falsely or incorrectly stated.”

Restructuring Deal

Trafigura Group took control of Balen, Belgium-based Nyrstar’s operational assets in July as part of a deal to restructure its debt and stave off bankruptcy. Angry Nyrstar shareholders allege in an ongoing legal fight that Trafigura was able to negotiate lopsided contracts from Nyrstar that effectively drained it of cash since 2016, contributing to the company’s collapse.

A September report from Nyrstar’s auditor Deloitte warned that incomplete disclosures relating to supply deals with Trafigura could affect the accuracy of the zinc producer’s financial reports.

Aline Wey Speirs, the whistleblower’s lawyer, said it’s unfair that an injunction in one European country should hobble an investigation of a listed company by regulators in another. At a hearing in early November, she asked for the September injunction to be lifted and a judge has yet to rule on that.

“The lack of whistleblower protection in Switzerland means that our client faces legal repercussions from his former employer that would not be permissible under other legal regimes,” Speirs said in a statement. “Our client was awarded whistleblower status in Belgium, but through its Swiss entity Nyrstar is suing our client before Swiss Courts.”

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net;Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Lynn Thomasson

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