Grain Trader Nidera Reveals $200 Million ‘Rogue Trader’ Loss

Updated on
  • Dutch grain trader posted its first annual loss in five years
  • China’s Cofco set to increase its 51 percent stake after loss

Nidera BV, a division of China’s largest food company, lost nearly $200 million over three years due to what it called “severe” irregularities by a single trader in biofuels.

The Dutch grain-trading firm reported for 2015 its first annual loss in five years because of the biofuels business, according to filings in the Netherlands. Ton van der Laan, who until this month was chief executive officer, said last year that Nidera had suffered from the actions of a "rogue trader."

The losses are a setback for China’s Cofco Corp., which took control of Nidera two years ago to create a global agricultural commodities trading house.

In the three years to the end of 2015, the company accumulated a net loss of $188 million in biofuel trading. Before taxes, the losses totaled $238 million.

The main reason for the loss were "irregularities discovered in our biofuel trade business in Rotterdam, which led to a considerable overstatement of our stocks and forward book and to a substantial bad debt position," the company said in its annual filing to the Dutch Chamber of Commerce.

Biofuels Loss

"The responsible trader was dismissed, and we stopped trading in the biofuels business," Nidera said. "The matter was an isolated event in a non-core part of the business."

The trading house restated accounts for 2014 and 2015 and changed its financial year. In the 15 months to the end of December, Nidera lost $135 million. That compares with profit of $42.9 million in the 12 months ending Sept. 30, 2014.

“We are expecting to be able to achieve growth in the coming years,” said Bert Ooms, a spokesman for Nidera.

Dutch anti-fraud police last week seized more than 1 million euros ($1.1 million) in real estate, cash in bank accounts, an equity portfolio and a car from a former trader who worked for a firm dealing in agricultural products and biofuels, the country’s prosecutor office said in a statement. Nidera said the case was related to its biofuel losses. 

Forgery, Corruption

The Dutch prosecutor said the man is suspected of "non-official corruption and forgery," adding he earned approximately 1.2 million euros between 2013 and May 2015 through gifts concealed to his employer. The prosecutor didn’t disclose the identity of the trader. The case is ongoing.

Cofco bought 51 percent of Nidera in 2014 in a deal that valued the Dutch grain trader at $4 billion, including debt, a person with knowledge of the matter said at the time. The rest of the Rotterdam-based company, established in 1920, is controlled by the founding families.

Cofco will increase holdings in Nidera by the end of the year because the contract governing the 51 percent acquisition includes a clause that ties the stake to the Dutch trader’s performance, Matt Jansen, CEO of Cofco Agri, said earlier this year. Nidera said in its annual filing that Cofco and the founding families were in ongoing negotiations that could lead to a further increase in Chinese company’s stake.

Nidera in April named Dierk Overheu as its new chief executive officer amid a management overhaul that followed losses caused by the biofuels trader.

Commodity trading houses have been hit by rogue traders in the past. In one of the most notorious cases, Yasuo Hamanaka, a top copper trader for Sumitomo Corp., hid $2.6 billion in losses trading the metal from his Japanese employer in 1996. In another case, a trader in the soybean market caused losses in 1999 for Andre & Cie SA that ultimately prompted the company, at the time one of the largest grain traders, to collapse in 2001.