Trafigura warns that misconduct in Mongolia could cost $1.1 billion

After an internal review, global commodity trader Trafigura said it expects to set aside $1.1 billion as a provision for misconduct by individuals within its Mongolian petroleum product supply business.

The statement stated that "the misconduct included data manipulation and document manipulation, which resulted in Trafigura paying inflated amounts and deliberately concealing overdue receivables."

Trafigura stated that an external investigation, which was conducted after the internal review, is still in progress but confirmed the significant exposure accumulated by the group over the past five years.

Trafigura CEO and Executive Chair Jeremy Weir stated: "We are deeply disappointed by the misconduct that has occurred in our Mongolian Oil Business."

He added that "there is no place for wrongdoing in Trafigura and we are taking the appropriate disciplinary actions against the few individuals involved."

In a statement, Trafigura said that its principal counterparty is responsible for a substantial portion of the total exposure.

The statement added, "We intend to hold counterparties to their obligations of repayment."

Trafigura warned that it may be required to restate comparative figures from prior years in its financial statements for 2024. Trafigura will report its full year results in December.

(source: Reuters)