Sumitomo Execs OKd Trades, Broker Says
Executives at Sumitomo Corp. apparently authorized accounts handled by the firm’s former chief copper trader, Yasuo Hamanaka, said Credit Lyonnais Rouse, a broker for the Japanese trading company.
The commodity trading unit of France’s state-owned Credit Lyonnais bank made the statement after the owners of Winchester Commodities Group Ltd., a British firm that traded on Hamanaka’s behalf through Rouse, said in newspaper interviews that several Sumitomo directors approved his biggest trades.
Sumitomo contends that Hamanaka, who lost $1.8 billion trading copper, was a “rogue trader” who acted without the knowledge of his superiors. In disclosing the losses last month, the company said they resulted from unauthorized copper trading by Hamanaka during the past decade.
The company said it would not comment further until it completes its “intense investigation” of the losses, said Walter Montgomery, a U.S.-based spokesman.
Rouse, which U.S. and British regulators are examining in connection with Sumitomo’s losses, is one of 17 firms that has a seat on the London Metal Exchange, where Hamanaka did much of his trading. Along with handling trades for Winchester, which doesn’t have an LME seat, it provided credit to Sumitomo.
In the statement, Rouse said it was “satisfied that all credit lines and contractual documentation were properly processed and authorized by officials designated by Sumitomo to have such powers, and such authorities were not exclusively in the hands of Mr. Hamanaka.”
Winchester’s owners, Ashley Levett and Charles Vincent, told both the Financial Times of London and the Wall Street Journal that several Sumitomo directors approved Hamanaka’s biggest trades.
Those directors include Hamanaka’s boss, Akio Imamura, they said. Sumitomo rescinded Imamura’s promotion to managing director last week after shareholders approved it at the company’s annual meeting. Vincent and Levett met Imamura and Hamanaka at the headquarters of Credit Lyonnais Rouse in 1993 to discuss the transaction code-named “Radr,” in which Hamanaka agreed to buy 1 million metric tons of copper over two years, the Journal reported.
