Sumitomo is suing Credit Lyonnais Rouse (CLR) for $1.1bn, claiming that the commodities broker facilitated unauthorized trading by Yasuo Hamanaka, a Sumitomo rogue former employee, who is currently serving 8 years in prison in Japan as a result of his fraudulent activities. Hamanaka and his rogue copper trading eventually cost Sumitomo $2.6bn.
The High Court in London heard last week that CLR regarded Sumitomo as a 'client from heaven'. Between May and June 1993, CLR is said to have increased Hamanaka's credit facilities six-fold, although CLR says that it had no reason to suspect that the former Sumitomo man was operating outside his internal trading limits.
One deal, said to have taken place in June 1993, was apparently the equivalent in size of 25% of the annual global copper consumption at that time. The transaction is said to have netted tens of millions to CLR and the brokers who executed the trade are believed to have received bonuses that year of over $6m between them. By the end of the very day of the trade, Sumitomo's loss as a result of the deal is said to have been $61m. It is believed to have eventually cost the Japanese firm $183m.
The case continues.
While on the subject of 'easy money', The Sunday Times reports that four former Goldman executives paid under $2 three years ago to acquire control of an insolvent mobile-handset business. Three years on and the turnaround is complete. The company, Sepura, is now said to be worth around $180m. One of the four is Jonathan Green. He may regard his share of any spoils as chicken feed. Green was also a founder member of hedge fund GLG, which Lehman is said to be interested in acquiring for around $1.8bn.