Alta Trading UK Limited & Ors v Peter Miles Bosworth & Ors

The High Court holds that use of intermediary "sleeve" companies and payments to service providers in West African oil term-contract trading are commercially legitimate risk-management measures when adopted openly and with shareholder knowledge; by contrast, a pleaded large-scale scheme of diversion of profits via Arcadia Lebanon/Arcadia Mauritius/Attock entities was not established and claims based on that alleged conspiracy fail.

This ten‑week trial concerned allegations that certain senior Arcadia executives and third‑party traders diverted profit from the Arcadia group by inserting third‑party or nominee entities into chains of West African oil term‑contract transactions and by routing payment to service providers and other intermediaries. The claim focused on 144 transactions from 2007–2013 (the "144 Transactions"), including Zafiro, Sao Tome and Senegal term contracts. The claimants said the intermediaries (notably Arcadia Lebanon, Arcadia Mauritius and Attock Mauritius) were used to siphon profits away from Arcadia London/Arcadia Switzerland to benefit certain defendants. The court examined underlying trading practice in West Africa, the role of sponsors and service providers, the use of sleeving structures, documentary and accounting evidence, and disputed witness accounts. The principal issues were whether (a) the alleged diversion/conspiracy occurred and (b) the defendants (including senior executives) acted dishonestly or breached fiduciary duties. The judge concluded that the claimants had not proved a fraudulent scheme or deliberate concealment, and that the questioned structures were legitimate commercial responses to endemic regional risk, adopted with shareholder knowledge and, at times, with Farahead's acquiescence. Several counterclaims by defendants for unpaid bonuses were partly upheld.

Overall disposition

1. The claim based on an alleged sustained and substantial fraud by insertion of third‑party/sleeve entities into West African term‑contract chains and diversion of profits is dismissed. The claimants have not proved dishonest conduct, a conspiracy using unlawful means, or breaches of fiduciary duty by the defendants sufficient to establish the pleaded proprietary remedies ([2025] EWHC 91 (Comm) paras 1–6, 410–415, 1016–1020).
2. Arcadia Lebanon and similar intermediary arrangements were used as a risk‑mitigation and sleeving response to well‑known compliance and operational risks of West African NOC term contracts; those arrangements were openly discussed with, and in practice known to, the group shareholders and relevant officers (paras 66–76, 120–126, 163–172, 255–267, 309–312).
3. Service providers and sponsors (e.g. Pang Ling, Sonergy, Proview, Bergamot, Azenith) performed substantive operational, sponsor and facilitation roles that are customary in West African trading; substantial profit‑shares are not inherently illegitimate and were, in context, commercially explicable (paras 66–96, 122–136, 229–241, 266–276).
4. Where documents and cashflows were hard to reconcile, the available contemporaneous records (audited accounts, Trade Capture, bank statements) do not support the claimants’ characterisation that the bulk of the 144 Transactions’ "gross profits" were fraudulently diverted; forensic accounting produced competing but reconcilable analyses and did not show unaccounted enrichment of the defendants which established a fraud (paras 241–246, 961–964).
5. On Swiss law issues pleaded, the court finds no proper basis to treat alleged breaches as criminal mismanagement or to hold third parties as knowing accomplices for the reasons above (paras 1016–1024, 877–906).
6. Counterclaims: the court allows part of Mr Bosworth’s claim in relation to the Cushing (storage) investment on the facts pleaded and proved but reduces the quantum after assessing documentary variants; the court allows Mr Hurley’s counterclaim for the agreed retention payment (USD 3m) (paras 322–339, 1072–1084). Other counterclaim elements fail or require adjustment (paras 1047–1069).

Principal factual and legal findings

• Use of sleeving / contract‑holding entities in West African term contracts was and is widespread, often necessary to obtain and operate term contracts and to insulate parent companies subject to stricter compliance regimes (paras 66–75, 170–176, 309–313).
• Zafiro, Sao Tome and Senegal contracts required complex operational and pricing work; sponsors/service providers played ongoing roles in optimisation of grade, laycan and documentation (paras 229–236, 346–356).
• Arcadia Lebanon was incorporated in 2006 to address compliance/operational considerations, became operational from 2007, and was used with the knowledge (and at times the instructions) of Farahead representatives; it was not a secret personal vehicle of the executive defendants (paras 266–276, 309–316, 446–459).
• The claimed scheme to "insert" Arcadia Lebanon/Arcadia Mauritius/Attock Mauritius to divert the Arcadia Group’s profits is not borne out by the bulk of the contemporary documentary, accounting and oral evidence (paras 143–151, 197–206, 726–731, 1016–1024).
• Where payments were large (e.g. to Sonergy, Proview) the court accepts expert and factual evidence that profit‑shares of significant size were in the market and could be commercially justified by the services and risk‑sharing involved (paras 86–96, 122–136, 241–246, 947–956).

Relief and orders

• The claim is dismissed.
• Counterclaims succeed in part: judgment for Mr Bosworth in the reduced sum identified in the judgment (see paras 1045–1069) and for Mr Hurley in the sum identified for the retention bonus (para 1084). Interest and consequential accounting issues reserved to be calculated and determined on written submissions.