Lyonnais accuses Sumitomo chiefs in copper scandal

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The Independent Online
Credit Lyonnais Rouse, the broking arm of the French state-owned bank, yesterday said that copper deals it entered into with Sumitomo Corporation were always fully authorised by senior officials inside the Japanese company.

The French firm's statement yesterday made it the fourth company to turn the spotlight of the inquiry for the pounds 1.2bn losses incurred by Sumitomo firmly on the Japanese firm itself.

Merrill Lynch, the giant US securities firm, Winchester Commodities of the UK and Global Minerals and Metals of New York have all said Mr Hamanaka was not acting alone but had the backing of his company.

Roy Leighton, chairman of Credit Lyonnais Rouse, said: "[We] are satisfied that all credit lines and contractual documentation were properly processed and authorised by officials designated by Sumitomo to have such powers.

"Such authorities were were not exclusively in the hands of Mr Hamanaka. Credit Lyonnais Rouse has consistently provided the London Metal Exchange and regulators with timely reports on client positions and other matters in accordnace with their requests."

Mr Leighton indicated yesterday that Sumitomo had provided his firm with additional proof that those signing relevant documents on its behalf were properly authorised to do so.

It is understood that the names of those who approved Mr Hamanaka's trades, or who may have acted independently of him, have already been passed on to UK regulators, including the Securities and Futures Authority and the Securities and Investments Board.

All credit lines extended to Sumitomo were approved by Credit Lyonnais credit committees in London and Paris and followed internal procedures based on SFA requirements.

Mr Leighton's comments renewed speculation, which initially surfaced soon after the extent of Sumitomo's losses were revealed, of the extent to which executives within the firm knew and approved of the rogue trader Yasuo Hamanaka's activities.

Sumitomo has repeatedly claimed that while some of his book was known, Mr Hamanaka lost the bulk its money on separate unauthorised activity, which he kept track of in a secret under-the-counter book.

However, Sumitomo's position was also rebutted yesterday by Ashley Levett and Charles Vincent, two Winchester Commodities traders, who dealt with the Japanese firm.

The two dealers, who retired from the businesses in the past few months and now live in Monaco, claimed in separate interviews yesterday that key trades they carried out were approved at Sumitomo board level. This included one of the biggest deals entered into by Sumitomo in 1993, codenamed Radr, involving the purchase of a million tonnes of copper over two years, worth up to pounds 1.9bm.

Meanwhile, one influential copper trader yesterday claimed that Sumitomo still has a long position in copper totalling 1.5m tonnes and disposing of it could depress prices down to $1,500 a tonne over the next 18 months.

Herbert Black, a Canadian dealer who co-owns American Iron & Metal, said the rate at which it was being disposed of should be speeded up. "I think they are holding at least a million and a half tonnes, and I think the Chinese are long an additional quarter of a million tonnes."

Mr Black said: "There should not be a backwardation at this time. I think the LME is opening the door to future lawsuits because Sumitomo has already acknowledged that they had fraudulent positions."

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