Sumitomo to Face Shareholders for 1st Time Since Scandal
Sumitomo Corp. executives are about to face shareholders, as well as U.S. and British investigators, for the first time since disclosing its $1.8 billion in copper trading losses.
Shareholders will gather today for their annual meeting at the trading company’s headquarters here. Copper prices rose Wednesday amid expectations that Sumitomo executives may provide an indication of the company’s current holdings of the metal.
“What the market needs is a fresh update on the Sumitomo situation,” said William Adams, a senior analyst with Rudolf Wolff & Co. in London.
Sumitomo hasn’t said how much copper it owns. Yasuo Hamanaka, its former chief copper trader, bought and sold as much as 500,000 metric tons a year. Analysts who attended the American Copper Council’s biannual meeting in Montreal last week estimated that the company owns 800,000 to 1 million tons.
Meanwhile, two officials of the U.S. Commodity Futures Trading Commission and three investigators from Britain’s Securities & Investment Board arrived in Tokyo for their own meetings with Japanese government officials and executives at Sumitomo.
The CFTC officials have said they want to know whether the trading illegally influenced copper prices on U.S. markets, including the Comex division of the New York Mercantile Exchange.
Three investigators from Britain’s Serious Fraud Office, which has criminal prosecutorial powers, were expected to arrive in Tokyo today to participate in the meetings.
Spokespersons for the investigative teams declined to comment on whether they would meet Hamanaka, who was fired earlier this month after the company disclosed the unprecedented loss.
Sumitomo, Japan’s third-largest trading company, has yet to say how it will deal with the losses, and what effect they will have on earnings. On June 19, Sumitomo said it would increase its reserve against losses to $1.3 billion, cancel a stock repurchase program and forgo executive bonuses.
It has decided to allow reporters to watch the meeting on closed-circuit television, marking the first time that the media have ever been allowed to observe the proceedings.
On the London Metal Exchange on Thursday, copper for delivery in three months closed $55 a ton higher at $1,800. The contract has fallen 16.5% since the company revealed the losses.
Hamanaka’s whereabouts since he was fired June 5 are unknown. Tokyo police and a Sumitomo spokesman denied reports that he was in a Japanese safe house being held for questioning.
