ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, February 18, 1997 TAG: 9702180079
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: TOKYO
SOURCE: Associated Press
Yasuo Hamanaka, once the star copper trader at Sumitomo Corp., pleaded guilty Monday to fraud and forgery in the cover-up of $2.6 billion in losses.
The trader who once controlled 5 percent of the world's copper market acted with increasing desperation to hide 10 years of losses, prosecutors said.
The disclosure of Hamanaka's losses last year roiled world copper markets, rocked the 300-year-old trading company, and raised fresh questions about supervision at Japanese corporations.
As the trial opened Monday in Tokyo District Court, prosecutors read the two charges: that Hamanaka forged the signatures of his bosses four times to keep his off-the-books trading secret, and that he swindled a Sumitomo subsidiary in Hong Kong out of $770 million to cover his losses.
Asked if the charges were accurate, Hamanaka calmly responded, ``That is correct.'' He said nothing further at the session.
The guilty plea means future trial sessions will focus on the sentence, which could total up to 15 years.
In a 44-page statement, prosecutors described how a whirlwind of false signatures, faked reports and fudged numbers began in the summer of 1985, when Hamanaka's department at Sumitomo was in the red.
Hoping to improve the department's results, Hamanaka and his then-supervisor, Saburo Shimizu, made unauthorized risky bets on copper futures in the London market and lost millions of dollars, the prosecution said.
After that, Hamanaka speculated in ever-larger amounts, hoping to make back what he had lost through what prosecutors called ``high-risk, extremely dangerous trading.'' Shimizu left Sumitomo in 1987.
``Through various deceptions, he pretended that Sumitomo's copper trading team always turned a profit and that he was a talented dealer,'' the prosecution statement said. ``Therefore, he had the full confidence of his superiors.''
When the losses were disclosed in June 1996, world copper prices tumbled amid uncertainty over how much of the metal Sumitomo would have to sell to unwind the risky deals.
Hamanaka, 48, is the only person charged in the Sumitomo scandal, and the prosecution statement shed little light on the question of whether higher-ranking Sumitomo executives knew of his dealings. The company has denied that higher-ups were involved.
The next session is set for March 10, when jockeying between the prosecution and the defense will begin over Hamanaka's sentence.
LENGTH: Medium: 53 linesby CNB