KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
Mitsubishi Corp, one of Japan's leading trading houses, has reportedly suffered losses exceeding $90 million (RM402.10 million) due to suspected fraudulent activities by a Shanghai-based copper trader. This incident adds to the growing list of scandals within major commodity trading firms, raising concerns about internal controls in handling billions of dollars in commodities.
Details of the Fraud
The loss stems from unauthorized trades made by Gong Huayong, a trading manager at Mitsubishi Corporation RtM China Ltd. Investigations revealed that Gong made deals with local companies, some of which were personally linked to him, allowing deferred payments for copper concentrate and refined copper without the company's approval.
Mitsubishi dismissed Gong and has filed a criminal complaint against him. Efforts to contact Gong have been unsuccessful, and some reports suggest he left China on business before his actions were fully uncovered.
Financial Impact
The loss, valued at ¥13.8 billion (RM411.82 million), was reflected in Mitsubishi's second-quarter results under a “loss in Chinese trading business” but was not detailed at the time. Despite this setback, Mitsubishi maintained its full-year profit guidance of ¥950 billion, indicating that the loss, while significant, is manageable.
The company's shares fell as much as 2.1% on the news but later recovered slightly to trade down 1.2% by 10:15 AM Singapore time on Wednesday.
Wider Industry Implications
This incident follows other high-profile commodity trading scandals, including a $1.1 billion loss by Trafigura Group in Mongolia earlier this year and Mitsubishi's own $300 million loss in 2019 due to rogue oil trades in Singapore. These events underscore the risks associated with lax oversight in the trading sector.
The situation is reminiscent of Sumitomo Corp's $2 billion copper trading scandal in the 1990s, which involved unauthorized bets by Yasuo Hamanaka, later sentenced to eight years in prison.
Reactions and Fallout
Mitsubishi’s response highlights its intent to strengthen oversight and cooperate with Chinese authorities. However, the scandal may lead to heightened scrutiny and more conservative practices, particularly within its Chinese operations, where employees fear potential repercussions.
One of Mitsubishi's counterparties has already reported the incident to Shanghai police. However, local authorities have not yet responded to inquiries.
Looking Ahead
While Mitsubishi's losses from this incident are dwarfed by its broader profit outlook, the scandal poses reputational risks. It also reinforces the need for tighter controls in an industry increasingly vulnerable to individual misconduct. This latest fraud underscores the ongoing challenges trading houses face in balancing operational efficiency with robust oversight.
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