The Marketplace Report: China Broker Disappears

Alex Chadwick speaks with Marketplace London bureau chief Stephen Beard about the disappearance of a trader who lost hundreds of millions of dollars in a copper deal he brokered for China.

Copyright © 2005 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ALEX CHADWICK, host:

I'm Alex Chadwick. Back now with DAY TO DAY and a "Marketplace" mystery.

This is the curious tale that's been unfolding in London's financial district, where a Chinese metal trader is reported to have run up losses worth hundreds of millions of dollars. The trader, who is working in London for a Chinese government agency, has gone missing. There are rumors; boy, are there rumors. Some of colleagues say he may have been murdered. Joining us from the "Marketplace" London bureau is Stephen Beard.

Stephen, how about this mystery? What's going on?

STEPHEN BEARD reporting:

Well, we don't know a great deal, Alex. We know the name of the trader, Liu Qibing. We know that he was working for a secretive Chinese government agency, the State Reserve Bureau, which handles the Beijing government's commodities stocks, and we know that Mr. Liu took a massive gamble on copper prices in the London market and lost.

CHADWICK: Well, how much did he lose and how did he lose it?

BEARD: Well, we don't know exactly how much, but one analyst told me that he thinks it could be as much as $1.2 billion. What Mr. Liu did was to sell copper short, that is sell copper he doesn't own expecting the price to fall by the time to deliver the metal so he can buy it in at a lower price for delivery and then pocket the difference. The problem was that after he sold the copper that he didn't own, the price didn't fall, it soared. So the Chinese government now has to buy in the copper at a very much higher price, thus incurring huge losses.

CHADWICK: He lost $1.2 billion for the Chinese government?

BEARD: Yes, it looks like it. Yeah.

CHADWICK: Well, where is he?

BEARD: Well, he's gone missing. We don't know. Analyst Robin Barr of UBS says the rumor mill at the Exchange has been working overtime.

Mr. ROBIN BARR (UBS): Some of the rumors unfortunately suggest that he may well have been killed or he may be on an enforced leave, he may be in jail. I'd like to think that he's on holiday enjoying himself somewhere.

BEARD: I think he's unlikely to be enjoying himself. But his disappearance does remind one of Nick Leeson's flight from Singapore after he ran up trading losses of more than a billion dollars and brought down Barings Bank.

CHADWICK: So maybe this is China's Nick Leeson, Mr. Liu. What do you think?

BEARD: Well, some analysts think not. They think that he wasn't a rogue trader, that unlike Leeson, he wasn't sort of wildly gambling and then covering up his losses. They think he may well have been acting on the instructions of his bosses back home. If so, the so-called Communist authorities in Beijing have just learned a very painful lesson in the vagaries of capitalism and the dangers of speculation.

Anyway, later today on "Marketplace," more alleged shenanigans--and I stress `alleged.' We'll be reporting on the trial of the curator of the Getty Museum, who's accused of illegally purchasing artifacts in Italy.

BEARD: Thank you, Stephen.

Stephen Beard of public radio's daily business show, "Marketplace," produced by American Public Media.

Copyright © 2005 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: