Maverick trader's secret book details pounds 13bn copper fraud

The rogue copper trader who cost Japan's Sumitomo Corporation pounds 1.2bn may have carried out unauthorised trades in the metal of up to a staggering two trillion yen (pounds 13bn) a year.

Sumitomo's president, Tomiichi Akiyama, told the Japanese newspaper Asahi Shimbun that the trader Yasuo Hamanaka kept track of his unauthorised deals over 10 years in a secret under-the-counter book that only he knew about.

Authorities in Japan, Britain and the United States are set to widen their investigations this week into how the scandal went unnoticed for 10 years, while world copper traders are braced for a hectic ride as markets reopen today.

The market's main uncertainty is how Sumitomo, the world's biggest copper trader, plans to extricate itself from the long positions Mr Hamanaka has locked the company into.

In the UK the Serious Fraud Office (SFO) has said it is widening its investiagion to cover anyone connected with the fraud.

Earlier this year the Securities and Futures Authority (SFA), the City regulator, conducted an investigation into Winchester Commodities, a UK copper broking firm which has made huge returns from the business. Winchester's two largest shareholders, Ashley Levitt and Charlie Vincent, are now based in Monaco.

Pressure on the London Metal Exchange is expected to increase this week as it emerged that it was alerted as early as 1991 to irregularities in copper trading by Hamanaka. The rogue trader asked a metals broker in October 1991 to confirm details of his trades, some of which were fictitious. The broker, David Threlkeld, declined and brought the request to the attention of the LME. "The LME was aware of this in 1991,'' Mr Threlkeld told journalists on Saturday.

Agencies in the United States, Britain and Japan are urgently trying to discover whether Tokyo's "Mister Five Per Cent" was a one-off maverick, or whether they have stumbled on a plot to rig the price of the world's flagship industrial metal.

If accomplices in any unlawful activity are found, vowed David King, chief executive of the London Metal Exchange (LME), "we will hang them high and publicly''.

The main traders in the copper market expect further wild fluctuations in the metal's price as Sumitomo sorts out its positions. Mr King commented yesterday: ``I am confident that the situation can be resolved in a satisfactory manner without causing disruption in the marketplace."

The Securities and Investments Board (SIB), London's senior market regulator, has been supervising the SFA's investigations into the cooper market. The SIB has also been investigating the trade in copper in liaison with the US Commodities Futures Trading Commission (CFTC).

Enquiries may be redoubled into the scandal that hit Chile's state copper giant Codelco in 1995 when it lost $170m on unauthorised LME trading. Its top dealer has denied fraud charges.

Mr Akiyama, referring to Hamanaka's secret book, said it recorded trades which were about twice the amount a year shown in official paperwork Mr Hamanaka processed for the company.

Sumitomo's annual copper trading volume in 1995 was $9.4 bn, the Asahi Shimbun said.

Mr Akiyama said Sumitomo only learned of what was going on when Hamanaka confessed on 5 June to his rogue trading and showed company officials the secret book. Mr Akiyama said the trader was able to get away with his unauthorised dealings for so long because papers from banks he used in his trading transactions, which should have been sent to the company's financial department, were instead sent directly to Mr Hamanaka.

The company was only fully alerted to Mr Hamanaka's activities when bank documents meant for the trader were mistakenly sent to the company's financial department, the Asahi said.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project