(Bloomberg) -- The Chinese oil trader fired by Mitsubishi Corp. for allegedly losing $320 million in unauthorized trading said company documents that detail how the transactions were authorized would show that he is innocent.
The documents would show that Wang Xingchen was not senior enough to be able to confirm the contracts or to make the changes to data that Mitsubishi says disguised the true nature of the trades, according to his lawyer Joseph Chen in Singapore. Wang has asked Mitsubishi, the biggest Japanese trading company, and its unit Petro-Diamond Singapore Pte. to disclose the papers by Oct. 17, Chen said in a statement.
The trader, also known as Jack Wang, last month denied allegations that he made hidden bets on oil prices. Mitsubishi had said an unidentified trader “repeatedly” engaged in unauthorized crude derivative deals since January, disguising them as hedging transactions for clients in China.
Oil traders often use derivatives as a hedging tool to reduce the risk of unpredictable swings in prices.
The $320 million loss is equivalent to about 6% of the Mitsubishi’s projected profit for the year and may require the company to lower its estimate for earnings. Still, the company said existing internal controls at its trading unit are sufficient.
Mitsubishi, which has not publicly disclosed the name of the fired trader, intends to fully cooperate with authorities, a spokesman said by phone, without commenting on whether the company received a request for documents. Mitsubishi said last month that the trader was fired on Sept. 18 and was reported to the police the following day.
In a telephone interview with Bloomberg News on Thursday, Wang said he wanted the case to be solved so that he and the companies involved “could move on from the unfortunate events.”
The Singapore Police Force confirmed it’s investigating the matter and declined to provide any other information as the investigation is ongoing.
Wang has asked his former employer to disclose “all the relevant documents” to both himself and the police, especially those that were submitted to Petro-Diamond’s Financial and Credit Team both before and after the trades were executed. The papers should show who reviewed and authorized the trades and who was responsible for granting permission to increase trading limits and conduct reviews of credit risks and exposures, Chen said.
The documents will show “our client did not have the requisite level of seniority, authorization and access of higher echelons of Petro-Diamond’s Finance and Credit System where changes in data could be made,” Chen said in the statement.
Mitsubishi said the unauthorized transactions were discovered in mid-August after a slump in oil prices triggered large derivatives losses at the company, during a time when the trader was absent from work.
The company said the employee manipulated data in Petro-Diamond’s risk management system so that the transactions looked like they were related to real deals with customers, Mitsubishi said. After recognizing that they could result in a loss for the company, it closed the derivatives positions.
--With assistance from Stephen Stapczynski and Serene Cheong.
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