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Profits at Commodity Trader Trafigura Tumble Amid Mongolia Fraud
Trafigura saw its net profit for the financial year 2023/2024 ended on September 30 plunge by 62% as the commodity trading giant recorded a loss of $1.1 billion related to serious misconduct by individuals in its Mongolian oil business.
Trafigura booked a net profit of $2.8 billion for FY2024, down from a $7.3 billion profit in FY2023 and $6.8 billion for FY 2022, the oil and metals trading house said on Friday.
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The underlying performance was strong, with strong contributions from all three core businesses – Oil and Petroleum Products; Metals, Minerals, and Bulk Commodities; and Gas, Power, and Renewables, said outgoing chief executive Jeremy Weir.
He is stepping down from the CEO role in January 2025 after ten years. Weir will be chairman of Trafigura’s board as of next year and will be succeeded by Richard Holtum as CEO, effective 1 January 2025.
Commenting on the FY2024 performance, Weir said that the strong business performance was “marred by the extremely disappointing discovery of serious misconduct by individuals in our Mongolian oil business, involving deliberate manipulation of data and documents and concealment of overdue receivables.”
Trafigura publicly disclosed in October 2024 that it had recorded a total loss of $1.1 billion on the discovered fraud in the Mongolian business. Of this loss, $358 million is reflected in the FY2024 results.
“An external investigation remains ongoing. We have reviewed other higher-risk offices and lines of business, and we are confident that these issues are isolated to a self-contained operation in Mongolia,” Weir said.
In accordance with International Accounting Standards (IAS 8), Trafigura has also restated prior year comparative figures to account for the exposure provisions for the Mongolian business.
In oil and petroleum products, “prices periodically disconnected from physical market fundamentals because of factors including the conflict in the Middle East, disruptions to shipping in the Red Sea and the ongoing war in Ukraine,” Trafigura said.
Separately, Trafigura and three other defendants earlier this month went on trial in Switzerland’s top criminal court over allegations of bribery. Trafigura has been charged for failing to take all reasonable measures to prevent payment of more than $5 million in bribes to an Angolan oil official in exchange for oil and shipping contracts more than a decade ago.
By Charles Kennedy for Oilprice.com
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Charles Kennedy
Charles is a writer for Oilprice.com
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