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Mitsubishi takes $320m hit from rogue oil trader

Full fallout from illicit derivatives trading at Singapore unit still unclear

The swing in crude oil prices this summer led to the large losses from the unauthorized derivatives trading.   © Reuters

TOKYO -- Japanese trading house Mitsubishi Corp. announced Friday that a Singapore subsidiary expects to book $320 million in losses due to unauthorized derivatives trading by a former employee.

A Chinese national at Petro-Diamond Singapore, which trades crude oil and petroleum products, had engaged in derivatives trading unrelated to client transactions since January, according to a release. The swing in crude prices this summer led to large losses from these positions.

PDS began investigating the employee's transactions during his absence from work in mid-August, leading to the discovery. The individual was terminated on Wednesday, with the company lodging a police complaint on Thursday.

The trader had joined the company in November 2018 and was largely in charge of crude transactions with Chinese clients.

PDS has closed the derivatives positions and determined the losses. It is still investigating the total impact, including transaction fees and other factors.

The final figure will count toward derivatives-related losses in Mitsubishi Corp.'s July-September results.

The trading house projects a 2% increase in group net profit to 600 billion yen ($5.56 billion) for the fiscal year ending March 2020. How the losses impact the forecast "shall be announced if and when a performance review is necessary," Friday's release said.

The parent company and other group members also engage in derivatives trading. Mitsubishi Corp. said it had not identified similar improprieties at present.

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