Sumitomo Corp. said Thursday it will pay an out-of-court settlement of $87.5 million to 51 companies that sued the firm in the United States in October 1999 over unauthorized copper trading by a former employee who is now in prison.
The trading house said in Tokyo that the civil damages case that was pending in state court in San Diego has been settled with the mostly U.S. claimants that purchased copper and copper products between 1986 and 1997.
The company agreed to pay the money without any admission of wrongdoing, while the plaintiffs agreed to drop all claims in the case, including an antitrust action.
It said the plaintiff corporations include utilities, telecom firms and manufacturers, but declined to disclose their names.
Sumitomo said it plans to write off the payment as an extraordinary loss in its financial statements for fiscal 2000. The write-off will not affect its earnings forecast announced April 4, it added.
For a period of more than 10 years that began in 1985, Yasuo Hamanaka, then head of Sumitomo's nonferrous metals department, made what the company said were unauthorized copper transactions and hid his losses until they had swollen to some $2.6 billion. In November 1996, prosecutors in Japan charged Hamanaka with forging documents relating to copper deals between September 1993 and September 1994 to conceal the losses. Hamanaka pleaded guilty and was sentenced in 1998 to eight years in prison.
Sumitomo previously settled two lawsuits, one filed in New York and the other in California, over the copper deals by Hamanaka. But there were six lawsuits still pending.
In March, five former Sumitomo executives reached a court-brokered compromise with a corporate shareholder to pay 430 million yen in damages to the company for the losses caused by Hamanaka's activities.