Sumitomo starts $1bn copper scandal claim

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The Independent Online

The normally hidden world of the City's metal traders is due to open up today when the Japanese industrial conglomerate Sumitomo begins a $1.1bn (£610m) damages claim against a member firm of the London Metal Exchange (LME).

The normally hidden world of the City's metal traders is due to open up today when the Japanese industrial conglomerate Sumitomo begins a $1.1bn (£610m) damages claim against a member firm of the London Metal Exchange (LME).

Sumitomo wants $695m plus interest from Carylon, known at the time as Credit Lyonnais Rouse (CLR), the futures arm of the French bank Credit Lyonnais. CLR was the clearing broker for the copper trading of Yasuo Hamanaka, then known as "Mr 5 per cent" because at one time he controlled 5 per cent of the world's copper market. He was head of Sumitomo's non-ferrous metals division, but is serving eight years' jail in Japan for forgery and fraud over unauthorised copper dealings.

Sumitomo alleges that CLR dishonestly helped Mr Hamanaka to transact his unauthorised trades and knew - or turned a blind eye to the fact - that he was acting in breach of his employment with Sumitomo. The Japanese company also claims that CLR dishonestly assisted Mr Hamanaka by receiving on behalf of Sumitomo the $289m proceeds of another transaction in November 1993 and paying those sums to a different subsidiary of the group. Over 10 years Mr Hamanaka, 56, made losses which Sumitomo says totalled £2.6bn.

CLR, run by the current head of the Futures and Options Association, Roy Leighton, denies any wrongdoing and will strongly contest the claim, which it says is without foundation.

The case is expected to bring into the witness box several leading figures in metals trading, including Charles "Copperfingers" Vincent, who in the 1990s owned the broker Winchester, which has since gone out of business. Sumitomo claims that Winchester abetted CLR over the Hamanaka trades, something which Mr Vincent also denies.

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