Here's how a China-based copper trader led to losses worth $92 mn for Mitsubishi Motors

Mitsubishi Corporation has reported a loss of 13.8 billion yen ($92.2 million). The reason for this massive loss is a Shanghai-based copper trader, Gong Huayong.

According to Bloomberg, Mitsubishi has revealed that Gong engaged in unauthorised transactions with local firms, some of which had personal connections to him, leading to substantial financial setbacks.

Gong, serving as a trading manager at Mitsubishi Corporation RtM China Ltd., facilitated deferred payments for copper concentrate and refined copper to certain local companies without proper authorisations.

In several instances, these companies were not approved counterparties, and some had direct personal ties to Gong. This breach of protocol resulted in significant financial exposure for Mitsubishi.

More from World

Nepal's new PM pays homage to people died during the Gen Z protest in her first national address This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

The irregularities came to light earlier this year when customers in the copper business failed to settle trades or defaulted on payments. Subsequent internal investigations revealed Gong’s unauthorised activities, leading to his dismissal. Mitsubishi has filed a criminal complaint and is cooperating fully with authorities, Bloomberg reported.

A series of trading scandals

This incident adds to a series of trading scandals affecting major commodity firms. In October, Trafigura Group faced a $1.1 billion loss in Mongolia due to suspected employee misconduct. Mitsubishi itself experienced a similar event in 2019 when unauthorised oil trades by a rogue trader resulted in losses exceeding $300 million.

Mitsubishi has assured stakeholders that no further losses are anticipated from this incident and has maintained its full-year profit guidance of 950 billion yen. The company emphasises its commitment to stringent internal controls to prevent future occurrences.

Shares of Mitsubishi Corp. experienced a brief decline of up to 2.1 per cent following the news but later stabilised, trading down 0.7 per cent by early afternoon in Singapore.

Impact Shorts

More Shorts

‘The cries of this widow will echo’: In first public remarks, Erika Kirk warns Charlie’s killers they’ve ‘unleashed a fire’

Trump urges Nato to back sanctions on Russia, calls for 50–100% tariffs on China

The company declined to provide further details, citing the ongoing criminal investigation. Attempts to contact Gong for comment were unsuccessful.

This case underscores the vulnerabilities in commodity trading operations and highlights the necessity for robust oversight mechanisms to safeguard against internal malfeasance.