LONDON – Trafigura Group is preparing to take a US$1.1 billion (S$1.5 billion) hit after discovering what it suspects was fraud involving employees in its Mongolian oil business.
The loss, which could also force the commodity trading giant to restate prior earnings, comes less than two years since Trafigura rocked the industry with the revelation it lost more than US$500 million in an alleged nickel fraud.
The company found that some of its employees in Mongolia had manipulated data and documents to inflate the amount of money it paid out, as well as deliberately concealing overdue debts over a period of about five years, Trafigura said in a statement on Oct 29.
Trafigura discovered the issue in its Mongolian business in late 2023, according to people familiar with the matter, who asked not to be identified discussing private information.
The loss comes at a sensitive time for the company, as chief executive officer Jeremy Weir prepares to hand over to gas boss Richard Holtum after a period of breakneck growth that has made Trafigura one of the world’s largest commodity traders, handling enough oil every day to meet the combined demand of Germany, France and Spain.
Owned entirely by about 1,400 of its employees, Trafigura is relying on continued bumper profits to pay out a wave of retiring top executives, and the Mongolia loss will add more pressure to earnings that were already in retreat due to lower market volatility.
Trafigura is preparing to record the US$1.1 billion provision when it reports annual results for the financial year ended in September. The company, which previously announced first-half earnings of US$1.47 billion, is still likely to report full-year profit of around US$2 billion or higher when it discloses the results in December, some of the people said.
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