Japan’s Mitsubishi Corp. has reported a loss of over $90 million due to alleged fraud by a Chinese copper trader within the company. According to Bloomberg, a source familiar with the matter disclosed that Mitsubishi has fired Gong Huayong, a copper trader in Shanghai, who was found to have engaged in unauthorized trades with local companies, including those linked to himself.
This incident resulted in a loss of 13.8 billion yen (approximately $92.2 million) for Mitsubishi in the recent quarter, attributed to “losses in China trade operations,” as stated in their financial report. The company’s spokesperson confirmed on Wednesday that the loss was related to Gong but reassured that there would be no further losses stemming from this issue.
Following this news, Mitsubishi’s stock price initially dropped by 2.1%, but later recovered to a 1.1% decline by 11 a.m. on Wednesday. The spokesperson also confirmed Gong’s dismissal and stated that criminal charges have been filed against him. Mitsubishi expressed willingness to fully cooperate with authorities while refraining from further comments on the criminal case.
It has been reported that prior to Mitsubishi’s full disclosure of the incident, Gong may have left China under the guise of official duties and has not returned since. Insiders suggest that this scandal may prompt Mitsubishi Corp., already known for its cautious approach, to become even more vigilant. Concerns have been raised among the company’s Chinese employees regarding potential pressure or impact resulting from this event.
This is not the first time a foreign conglomerate has been entangled in fraudulent commodity trading. In 2019, Mitsubishi faced losses exceeding $300 million when a Chinese trader in its Singapore oil division conducted unauthorized trades, leading to the closure of that business unit. The trader claimed to have followed management instructions and attributed the losses to “premature” settlement of derivative positions, as stated by his lawyer.
Additionally, in October of this year, Swiss trading giant Trafigura Group confronted a $1.1 billion loss in Mongolia due to allegations of misconduct by internal employees.