Trafigura’s chief executive Richard Holtum has described the commodity trading giant’s US$1 billion loss in a major fraud case within its Mongolian oil operations as a “humbling experience,” pledging sweeping internal reforms to prevent future misconduct.
Speaking at the Financial Times Global Commodities Summit in Lausanne this week, Holtum said the company has undertaken a “significant governance and controls project” following revelations of “serious misconduct” at its Mongolia-based petroleum products unit. The fraud, discovered last year, stemmed from a web of falsified documents and data manipulation that led to inflated payments and hidden receivables.
“We have learned a huge amount from it, and we’re in a much better place for it,” Holtum said, adding that the internal review has been led by the company’s chief risk officer and chief operating officer.
Trafigura first disclosed the scandal in October 2023, noting that individuals within its Mongolian office were involved in a complex scheme involving local counterparties. Former CEO Jeremy Weir reported in the company’s 2024 annual report that the fraud caused a total loss of US$1.1 billion, with US$358 million of that recognized in the prior fiscal year.
According to Holtum, the Mongolian office operated in relative isolation, with traders and operators co-located and lacking external managerial oversight. He noted that language barriers and Covid-era travel restrictions hampered the company’s ability to monitor activities in real time.
“In no way is this an excuse,” Holtum said. “But that is essentially how it happened.”
He emphasized that the financial blow was absorbed entirely by Trafigura’s shareholders, without exposing banks to the loss. “People felt the pain in their pockets,” he said, calling the incident a catalyst for major internal change.
The company is now focused on modernizing its internal infrastructure and scaling its back office and compliance teams to match its rapid growth over the last decade. Holtum said the reforms include encouraging employees to speak up about questionable activities and fostering a more transparent company culture.
Reflecting on the Mongolia fraud and the separate 2023 nickel trading scandal that caused losses of up to US$577 million, Holtum admitted that both issues “would have perhaps [been] caught much earlier” with a stronger internal dialogue and oversight culture.
Adding to the controversy, recent reports have revealed that the suspended head of Trafigura’s Mongolian petroleum operations allegedly loaned over US$500 million to an oil company owned by his aunt—raising further questions about internal checks and balances.
An external investigation into the Mongolian fraud remains ongoing.
