Sumitomo faces fresh claims it knew of losses

Evidence mounted yesterday that a number of senior officials at Sumitomo Corporation may have known for some time of loss-making trading accounts operated by the disgraced trader Yasuo Hamanaka, as US law officials began a criminal investigation into the $1.8bn case.

The US Attorney's office in New York opened a formal grand jury investigation to search for links between Mr Hamanaka and copper trading firms in the US.

This means criminal investigations are under way on both sides of the Atlantic, following an announcement last Friday that Britain's Serious Fraud Office is looking into the affair.

The US Attorney's investigation became known after Global Minerals & Metals Corporation in New York said it had been served with a subpoena on Monday requesting the production of documents.

Its founder, David Campbell, was also subpoenaed to testify before the grand jury, said Elliot Sloane, a spokesman for the firm.

"We're not the target here, at all. It's Hamanaka," added Mr Sloane. The company's lawyer, Peter Haveles, said: "The company is confident that at the end of the inquiry, it will be shown that there is nothing wrong".

Mr Sloan confirmed that Global was a large buyer and seller of copper on behalf of Sumitomo and it also acted as a broker, using accounts at Merrill Lynch and Rudolf Wolff in London, maintained in Sumitomo's name for hedging the Japanese giant's copper exposure.

Sumitomo has declared that Mr Hamanaka authorised these accounts by himself, against company rules, and there have been reports that they were secret devices operated as part of Mr Hamanaka's fraudulent schemes.

Sumitomo said specifically on Monday that the Global accounts operated in its name were not authorised.

But both Global and Merrill said the brokerage accounts were properly authorised by Sumitomo at a level senior to Mr Hamanaka.

Mr Sloane said Global expected to be able shortly to publish documentary evidence of this claim. Rudolf Wolff refused to comment.

Simultaneously, details also surfaced of a parallel civil inquiry by the Commodities Futures Trading Commission, (CFTC), which is the main federal body that oversees commodities trading in the US. Among firms it is believed to be reviewing is Winchester Commodities of the UK.

In a statement confirming his probe, John Tull, acting chairman of the CFTC said: "In order to restore the confidence necessary for this market ... I have directed the commission staff to examine any and all relationships, financial or otherwise, between Sumitomo and any of the business concerns whose identies have surfaced or will surface in the course of the commision's surveillance of the copper market."

In Japan, Sumitomo's vice-president, Mutsumi Hashimoto, gave an evasive performance, refusing to comment on reports linking Mr Hamanaka's copper trades with Global Minerals and Metals. Global, founded in 1993, is reported have had close ties with with Sumitomo to the extent that the securities house even offered to invest as much as $3m to fund its creation.

Mr Hashimoto also left open the possibility that Sumitomo may sue Mr Hamanaka and that senior management, including the Sumitomo president, Tomiichi Akiyama, might resign, and hinted that a proposed buy-up of the corporation's own shares, scheduled for a general shareholders' meeting on 27 June, was now in jeopardy.

He added that the corporation would "thoroughly reinforce our internal control system," although he failed to explain how this might be achieved.

In a further unsuccessful attempt at damage limitation, Sumitomo gave a private briefing to securities analysts from major brokerages to answer questions about Mr Hamanaka's losses. "They were trying to reassure us, but in my case it had the opposite effect since they were able to answer so few of our questions," said Paula Sugawara of Lehman Bros. "I still think there's a lot of bad news yet to come out. To be running up those kinds of losses and the company not to know seems incredible."

"We had expected the company to give us more details about the loss but they didn't, so it was very disappointing," said Kota Nakako, an analyst at SBC Warburg who has reversed his recommendation on Sumitomo from buy to sell. Sumitomo shares closed 20 yen higher at 1,030 yen, after a 200 yen fall on Monday.

Journalists have been unable to track down Mr Hamanaka, who is said by his daughter to have left the family home in Kawasaki, near Tokyo, late last week for an unknown destination. Sumitomo claims to have no knowledge of his whereabouts.

In London, Winchester Commodities Group said it "vehemently denies" responsibility for any Sumitomo losses. It said it had had minimal involvement with Sumitomo in the last 12 months during which many brokers were heavily engaged representing the Japanese firm. Winchester said it would be happy to help any inquiry and "has nothing to fear".

The London Metal Exchange, which has stayed silent on the scandal since the weekend, promised a statement today after a meeting of its copper specialists yesterday. The price of copper remained stable in London, $10 higher at $1,990 a tonne, but trade slowed to a trickle.

Nymex, the New York energy and metals market, has been campaigning for tighter regulation of the London Metal Exchange since well before the Sumitomo crisis emerged, because of concerns that problems could spill over into the US.

PROMOTED VIDEO
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
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

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape