business

Mitsubishi to shut Singapore oil-trading unit after losses by trader

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By Yuka Obayashi and Shu Zhang

Mitsubishi Corp, Japan's biggest trading group, said on Wednesday it would shut its Singapore-based crude oil and fuel trading unit after revelations in September that a trader there racked up enormous unauthorized trading losses.

The unit, Petro-Diamond Singapore, will lose about 34.2 billion yen ($314 million) before taxes after closing the unofficial trading positions. That means the final debt for the unit could be as high as 30.8 billion yen, the company said in a statement.

Mitsubishi, Japan's biggest trading house by sales, said in September that a trader lost $320 million in unauthorized transactions in crude oil derivatives and that the matter had been reported to the police.

The trader, Wang Xingchen, also known as Jack Wang, denied any wrongdoing in a statement issued through a lawyer.

These were the first such losses at Mitsubishi, which invests in everything from salmon to natural gas and trades many commodities globally.

Mitsubishi will bring some oil and fuel trading back to Tokyo, Chief Financial Officer Kazuyuki Masu said during the company's first-half results briefing on Wednesday.

"Since it booked such a big loss, we could not reinvest in the same company and it's better to reinforce our management system," Masu said.

He added that the company's oil trading in the United States and Europe was unaffected. In recent years, Mitsubishi had shifted its oil trading headquarters to Singapore.

Some settlements would be done in Hong Kong, he said. Masu did not say how many staff would be cut or affected by the shutdown. Petro-Diamond has about 50 employees in Singapore.

Mitsubishi also said it would cut its full-year earnings forecast because of the Petro-Diamond losses and lower coal prices.

The company expects profit to be 520 billion yen for the year through March, down from a forecast of 600 billion yen.

First fiscal-half profit fell 22% to 242.4 billion yen, the company said.

Petro-Diamond staff weren't told of the decision until Wednesday and are "shocked," a person with direct knowledge of Petro-Diamond's operations told Reuters. The person was not authorized to speak to the media and spoke on condition of anonymity.

Since the losses came to light, Mitsubishi has required all of its transactions to be reviewed by Mitsubishi headquarters in Tokyo.

Mitsubishi has had no contact with Wang and does not know where he is, other than that he is outside Singapore, Masu said.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

2 Comments
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The name Wang Xingchen sounds like he is PRC Chinese. On further checking, he is indeed Chinese, not Singaporean. It is such a shame that up to 50 employees of the company might lose their jobs because of him. Singapore is a very safe place for foreign companies to do business here and I hope Japanese companies will not be 'turned off' to operate from Singapore due to this incident.

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First things first, nationalities does not matter, it is the matter of how, mitsubishi runs their business in Singapore. How can this much money goes missing ???. Something is very wrong. This company have 50 employees, why then ,can such a big case not discovered until now ???. Are U sure that it is not the head office in Japan that is having a problem with their control system and some Japanese is making this person as the scape-goat ???. In japan worst cases have happened with the Japanese operations, who is the Japanese head of operations in Singapore for this operations. This Japanese case is very deep. Pls look at the real under currents. No fear, Sinagapore is one country that takes corruption very seriously.

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