Mitsubishi Group Loses Ground in Singapore: Forced to Shut a Store
Facing issues due to unauthorised derivatives by an employee, Mitsubishi Group announced on November 6 its plans to liquidate a Singapore-based oil trading arm.
Having witnessed losses worth 34.2 billion yen ($314 million), the Singapore unit, Petro-diamond, will be shut after its credits, debts and contracted trades are settled.
The possibility of a shutdown could be clearly seen after the incident was disclosed in September. As per sources, the liabilities of the unit could exceed by nearly 30.8 billion yen. This economic breakdown of the firm is clearly reflected in the fiscal 2019 earnings forecast. The firm’s net profit has dropped from original projection of 600 billion yen to 520 billion yen currently.
Reports in September claimed that a trader, Wang Xingchen, also known as Jack Wang, had lost nearly $320 million in some unauthorised dealings in crude oil derivatives.
On being interrogated by the police, he refused to admit to any wrongdoing, in a statement issued by a lawyer.
The Chief Financial Officer of Mitsubishi Group said in the first-half results briefing that they will bring some oil and trading back to Tokyo. Justifying the move, Masu said, “Since it booked such a big loss, we could not reinvest in the same company and it’s better to reinforce our management system.”
The expected shut down will affect lives of many existing staff members leaving them in midriff. Currently, Petro-Diamond has nearly 50 employees in Singapore. The firm must have proposed transfer opportunities to its employees. What is surprising is the fact that Mitsubishi did not even inform its employees about the decision prior to making final announcement on Wednesday and hence the Petro-Diamond staff is extremely “shocked”, said a person with direct knowledge of the matter on conditions of anonymity.
The firm has planned a cut in its full-year earnings forecast due to the Petro-Diamond losses and reduced coal prices. The reports of fiscal year 2019 reveal that profits fell by 22 percent to 242.4 billion yen in the first half of the year.
Meanwhile, the whereabouts of Wang Xingchen are currently unknown to the Singapore police.
Even though Mitsubishi Group is facing challenges in Singapore, the firm is going strong in United States and Europe. Following the tradition, Mitsubishi will be visiting the Dubai International Motor Show this year as well.
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