TOKYO -- Japanese trading house Mitsubishi Corp. will liquidate as early as next year a Singapore-based oil-trading arm that lost 34.2 billion yen ($314 million) due to unauthorized derivatives transactions by an employee.
The subsidiary, Petro-Diamond Singapore, will be shut down once its contracted trades, credits and debts are settled, Mitsubishi said in a statement Wednesday. The unit's liabilities could exceed assets by up to roughly 30.8 billion yen. The incident was first disclosed in September.
The financial blow to Mitsubishi has been factored into its fiscal 2019 earnings forecast. It now projects a net profit of 520 billion yen, down from the original projection of 600 billion yen, due to this and other losses.
Mitsubishi said it will continue overseas trading of crude oil and petroleum products "once it has reconfirmed that its risk management systems are both sound and thoroughly enforced, taking all possible measures to prevent similar incidents from occurring in the future."
A portion of these functions will be transferred to Tokyo. Relocating local Petro-Diamond employees is under consideration.
Mitsubishi has filed a criminal complaint against the former Petro-Diamond trader responsible for the problematic transactions and says it is cooperating with authorities investigating the incident. The trader has left Singapore, and his whereabouts are currently unknown.