Copper fraudster gets eight years

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The Independent Online
THE FORMER chief copper trader at Sumitomo has been sentenced to eight years in prison after pleading guilty to hiding $2.6bn (pounds 1.6bn) in trading losses, the largest financial disaster ever blamed on a single trader.

Yasuo Hamanaka, 50, lied and forged documents as his losses snowballed while he bought 1 million tons of copper over a decade in a desperate attempt to keep prices up. Hamanaka bought so much copper - as much as 5 per cent of all that metal traded in the world each year - that traders dubbed him Mr Copper.

His lawyers said he would appeal, and he remains out on bail. Prosecutors had asked for a 10-year sentence. The judge cut that by two years since it was Hamanaka's first offence. "Hamanaka's actions greatly shook Sumitomo's corporate foundation," said Judge Yoshifumi Asayama. "He caused turmoil in the international copper market. There's no room for more leniency."

Sumitomo said it had tightened supervision of its traders since the fraud was discovered in June, 1996, as US and British authorities investigated manipulation of the copper market.

Kenji Miyahara, Sumitomo president, said: "The company's internal controls have always been consistent with industry standards. Nevertheless, after discovering Mr Hamanaka's unauthorised activities, we evaluated our internal control system and employed new measures."

From 1985 until his exposure in 1996, Hamanaka bought copper in such copious quantities that he single-handedly kept prices rising in order to forestall losses on all the copper he had already amassed.

That infuriated traders who had bet the other way and generated rumours for years that he and Sumitomo were manipulating the market.

In a hearing last year, Hamanaka pleaded guilty to fraud and forgery, admitting he forged documents and stole 75.6 billion yen (pounds 355m) from one of the company's Hong Kong units to cover up the decade of unauthorised trades.