Sumitomo Sues UBS, Chase Manhattan
TOKYO (AP) _ Sumitomo Corp. has sued the banking companies UBS AG of Switzerland and Chase Manhattan Corp. of the United States, demanding compensation for loans provided a former employee who caused huge losses from illegal copper trading.
The huge trading company said it filed a lawsuit today against UBS and employees at the Tokyo District Court seeking $230 million in damages.
Sumitomo said it also filed a lawsuit yesterday against Chase Manhattan in U.S. District Court in New York seeking $532 million.
``Chase views these claims by Sumitomo as entirely unwarranted and Chase intends to defend the case vigorously,″ said Ken Herz, a spokesman for the New York-based bank.
UBS spokeswoman Monika Dunant in Basel said the Swiss bank contests any compensation claim by Sumitomo in relation to past business.
UBS and Chase Manhattan lent Yasuo Hamanaka, the former Sumitomo trader, funds for his illegal copper dealings without a funding contract, although both knew Hamanaka did not have the authority to receive such credit, the lawsuits say.
Sumitomo earlier paid $532 million to Chase Manhattan and $257.4 million to UBS to cover credit extended to Hamanaka.
But Sumitomo accused the banks of ``illegal behavior″ and is now seeking to recover the money.
``We will continue to take appropriate action, including legal action, to recover damages suffered by our company,″ Sumitomo said in a statement.
In September 1996, Sumitomo said it lost $2.6 billion from Hamanaka’s unauthorized copper trading. It has since paid millions of dollars in class action lawsuits filed by copper traders and others over trading in Japan and abroad.
Hamanaka was sentenced to eight years in prison in March 1998 by the Tokyo District Court on forgery and fraud convictions. Sumitomo has filed a separate civil lawsuit against Hamanaka.