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

The court held that the Claimants had not established the pleaded course of fraudulent diversion involving the insertion of off‑book "sleeve" entities into West African crude supply chains so as to divert profits from the Arcadia Group. The judge concluded that (i) the use of Arcadia Petroleum SAL ("Arcadia Lebanon") and similar intermediaries was explained and authorised in context as a compliance and risk‑mitigation measure agreed with the group’s owners, (ii) payments to sponsors and service providers (profit shares and per‑barrel commissions) were commonplace in West African term trading and were not shown to be sham or bribes, and (iii) the Defendants (including Bosworth, Hurley and Kelbrick) had acted honestly and within the commercial discretion appropriate to their roles. Key legal issues decided included the law on fiduciary duties (Companies Act 2006 ss.170–177), dishonest assistance and knowing receipt under English law, unlawful‑means conspiracy, and parallel analyses under Swiss law (in particular Article 717 SCO and related provisions). The Claimants’ principal cause of action is dismissed; the First Defendant (Bosworth) and Second Defendant (Hurley) succeed on parts of their counterclaims for unpaid remuneration/entitlements.

This was a long, document‑heavy commercial trial following accusations by members of the Arcadia Group (claimants) that a sustained fraud had been perpetrated by senior trading executives and associated third parties in relation to 144 crude transactions (April 2007–May 2013) tied to West African national oil companies. The claim alleged that contract‑holders and intermediaries outside the Arcadia Group (notably Arcadia Lebanon, Arcadia Mauritius and Attock Mauritius) were inserted into chains of trade to divert profit away from the Arcadia Group into entities controlled or beneficially owned by some of the individual defendants.

Relief sought: declaratory relief, an account and disgorgement, damages and equitable remedies for conspiracy, knowing/unconscionable receipt, dishonest assistance and breaches of fiduciary duty (and related Swiss law causes of action in respect of Arcadia Switzerland).

Procedure and evidence: ten weeks of trial evidence including fact witnesses (Farahead principals, the individual defendants, trading and operations witnesses), three expert fields (oil trading practice; Swiss law; forensic accounting) and extensive disclosure. The court also considered interlocutory litigation including an application to amend pleadings late in the timetable.

Issues framed by the court:

• whether the pleaded "insertion" and diversion scheme was established;
• whether Arcadia Lebanon and the other intermediaries were operated to divert Arcadia Group profits;
• whether payments to service providers and sponsors were legitimate commercial payments or corrupt/sham payments;
• whether the senior defendants breached fiduciary duties, dishonestly assisted breaches or received misapplied funds; and
• ancillary Swiss law and criminal‑management issues as pleaded for Arcadia Switzerland.

Court’s reasoning (concise): the judge found that the documentary and witness evidence did not support the narrative of a secret fraudulent scheme. Instead, the court accepted experts’ and fact witnesses’ evidence that sleeving, sponsors and service‑provider profit shares (sometimes substantial) were commonplace in West African term trading and were deployed here as a compliance/risk mitigation measure that had been discussed with, and understood by, the group owners. The auditors and corporate advisers had questioned service‑provider arrangements and the buyer/owner (Farahead) understood the compliance and tax issues; Arcadia Lebanon’s receipts and payments were not shown to be sham or diverted for the personal enrichment of the company’s directors. The court declined to infer dishonesty where alternate, plausible commercial explanations (including the importance of physical trading to support paper trading and trading limits) existed and where the Claimants had not pleaded a positive alternative on industry practice. A late proposed amendment (an "alternative claim") was refused as not arguable and, in any event, time‑barred; many late Reply amendments were disallowed as non‑consequential and unpleaded.

Result: claim dismissed in full (no primary or accessory liability established). Counterclaims succeeded in part: Bosworth established a Cushing investment entitlement and unpaid annual bonuses in part; Hurley established an unpaid retention bonus.

The claim is dismissed. The court found that the Claimants failed to prove the pleaded scheme of fraudulent diversion. The use of Arcadia Lebanon and similar intermediary entities was held to have been a commercially explicable risk‑mitigation measure in West African term trading, not a device for a large‑scale fraudulent diversion. Payments to sponsors and service providers were not shown to be sham or corrupt and the Defendants were found to have acted honestly and within their commercial discretion. Consequently, the causes of action for unlawful means conspiracy, dishonest assistance, breach of fiduciary duty and knowing receipt were not made out. The First Defendant’s counterclaim succeeds in part, and the Second Defendant’s counterclaim succeeds; further particulars and interest to be determined as necessary.