Mitsubishi to shut Singapore oil unit where rogue trader lost US$314 million
- The parent company will liquidate Petro-Diamond Singapore after it closes out oil and fuel contracts and settles debts, it said
- Mitsubishi Corp had only recently began combining its Japan trade operation with that in its Singapore office
Some three years ago, Japanese oil trading firm Petro-Diamond Singapore relocated to a bigger office in swanky Marina Bay, as parent Mitsubishi Corp started combining its Tokyo trade operation with that in the Southeast Asian city state.
The once-conservative Petro-Diamond last year became the global book leader for Mitsubishi’s crude oil and fuel trading businesses, tripling its profits and assets from two years ago, according to interviews with company officials, trade sources and reviews of its financial records.
Like other trading companies, Petro-Diamond had eyed a slice of the fast-growing Chinese crude import market, hiring for the first time a Chinese trader in November 2018 to handle oil business with China, the sources said.
But in September, Mitsubishi said a Petro-Diamond trader had lost about 34.2 billion yen (US$314 million) after he “repeatedly” engaged in the unauthorised deals since January, disguising them to “look like hedge transactions”. They reported the matter to police.
Since it booked such a big loss, we could not reinvest in the same company and it’s better to reinforce our management system
The trader, identified as Wang Xingchen, also known as Jack Wang, denied any wrongdoing in a statement issued through a lawyer, saying he was acting on his managers’ orders and that the losses resulted from “premature” settlement of the derivatives positions.