Mitsubishi loses US$90 million in China in suspected fraud by copper trader, sources say
Mitsubishi dismissed Gong Huayong, a Shanghai-based copper trader at one of its China units, after finding that he had made unauthorised trades with local companies.
Mitsubishi Corp. has suffered a loss of more than US$90 million in China after uncovering suspected fraud by one of its copper traders, according to people familiar with the matter.
The loss is the latest in a string of recent cases of alleged wrongdoing to hit a major commodity trading house, highlighting the risk that individual traders who handle billions of dollars in commodities may seek to enrich themselves at the expense of their own companies.
In October, Trafigura Group said it was facing a US$1.1 billion hit in Mongolia involving suspected wrongdoing by its own employees. While the scale of Mitsubishi’s loss is considerably smaller, it has nonetheless sent a chill through the huge but conservative Japanese trading house.
Mitsubishi dismissed Gong Huayong, a Shanghai-based copper trader at one of its China units, after finding that he had made unauthorised trades with local companies, including some that were related to him, the people said. The losses amounted to well over 600 million yuan (US$82.8 million), they said, declining to be identified as they aren’t authorised to speak publicly.
That matches a loss of 13.8 billion yen (US$92.2 million) that Mitsubishi disclosed in its most recent quarterly results, citing a “loss in Chinese trading business,” without further explanation. The hit was primarily the result of Gong’s actions, the people said. Mitsubishi Corp. shares slid as much as 2.1 per cent on the news, though they later recovered ground to trade down 1.2 per cent at around 10:15am. Singapore time.
A spokesperson for Mitsubishi confirmed that Gong had been dismissed by the Chinese unit and added a criminal complaint had been filed. The company will cooperate fully with authorities, the spokesperson said, declining to comment further on what it said was now a criminal matter.
Calls and messages to Gong’s mobile phone did not go through, and an email inquiry to his company address was rejected. Several traders in China, who used to have business connections with Gong, said they also could not reach him. These traders asked to be not named due to the sensitivity of the case.
