Crunch day for Sumitomo

ONE of the largest cases ever seen in the Commercial Court begins on Monday when Sumitomo opens a $1.1bn (£610m) claim against Credit Lyonnais Rouse over the 1990s copper scandal that rocked the London Metal Exchange.

Sumitomo alleges that CLR, now known as Carylon, dishonestly assisted its trader Yasuo Hamanaka in fraudulent futures and options deals estimated to have cost the Japanese industrial giant $2.6bn - more than double Nick Leeson's rogue trading at Barings.

It wants $693m compensation plus interest. CLR vehemently denies the charges.

Hamanaka, dubbed 'Mr 5%' in honour of the amount of the world copper market he is supposed to have at one time controlled, is now languishing in jail after being sentenced to eight years for forgery and fraud in Tokyo in 1998.

The case has taken four years to put together and is likely to see a dozen of the most colourful and best-known characters from the LME in the 1990s called to the witness-stand, including CLR chairman-Roy Leighton and Charlie 'Copperfingers' Vincent, then owner of broker Winchester. Sumitomo claims that as clearing broker, CLR knew Hamanaka was acting in breach of his duties at the firm when he embarked on a series of gigantic trades in the early 1990s. Its traders were only ever meant to go into the futures market to hedge price fluctations from physical copperdeals.

It adds that CLR 'dishonestly assisted' Hamanaka by receiving on behalf of Sumitomo the proceeds of another transaction and paying them out to a different Sumitomo subsidiary 'similarly knowing or turning a blind eye to the fact that Hamanaka was acting in breach of his duties'.

The case will also call into question the links between CLR and Winchester, a metals firm that has since gone out of business. The Japanese giant alleges that Winchester took on 'wash trades' to generate commission for CLR and allow Hamanaka to book a profit.

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DUBBED the biggest white-collar criminal of all time, Yasuo Hamanaka was a star copper trader before he pleaded guilty to an elaborate web of deceit seven years ago.

His downfall began after he tried to cover up losses incurred from copper trading in the Philippines. He bought up vast amounts of metal to try to manipulate demand and the market eventually collapsed.

On taking the stand in a Tokyo court seven years ago and being asked whether he admitted fraud and forging signatures, he simply said: 'Yes, that's true.'