Trafigura uncovers significant misconduct in Mongolian operations

Trafigura, one of the world's leading commodity suppliers, has recently reported that an internal review and external forensic investigation into its Mongolian petroleum products supply operations have uncovered serious misconduct. This includes data manipulation and the concealment of overdue receivables, leading to inflated payments. The issues involve a small number of local counterparties and have resulted in significant exposure for the company over the past five years, according to a statement of the company.

The ongoing external investigation has confirmed a substantial debt owed to Trafigura by its main counterparty in Mongolia, and the company plans to enforce repayment. Conservatively, Trafigura expects to record a provision of US$1.1 billion, which may require restating prior year figures in the 2024 financial statements under IAS 8, pending final audit.

Jeremy Weir, Executive Chairman and CEO of the Singapore-based company, said: “We are bitterly disappointed by the misconduct in our Mongolian oil business. There is no place in Trafigura for wrongdoing and we are taking appropriate disciplinary action against the small number of individuals involved. Following in-depth reviews, we are confident that this issue is isolated to a self-contained operation in Mongolia. Nonetheless, we are taking further actions to improve oversight and controls across the Group."

He also commended the internal scrutiny introduced in 2023, acknowledging the diligence of Trafigura employees in uncovering these issues: "Their diligence reflects the culture of responsibility and ownership we aim to instill throughout our global business."

Following a comprehensive risk assessment, reviews in higher-risk locations have shown no significant findings. Trafigura will continue implementing measures to strengthen credit control and risk management, with these actions subject to external assurance for the Audit Committee.

The Group will report full-year results in December 2024 for the financial year ending 30 September 2024. As of the balance sheet date, Trafigura maintained a strong liquidity position of US$14.15 billion and anticipates shareholders’ equity exceeding US$16 billion, subject to final audit.