After effectively performing hara-kiri on the global copper market the
corporation deepened the wound by its lack of explanation, says Jonathan
Clare of Citigate
The Sumitomo Corporation has not covered itself in glory recently. But
then nor has anyone else connected with the latest threat to the global
Just how badly Sumitomo has fared is a matter of opinion. If the
corporation is a victim of circumstance because the regulators’ rules
were too weak to cope and the system broke down the ere is some excuse.
If Sumitomo’s management failed to understand its own business, crossed
its fingers and hoped for the best there is none at all.
The difficulty is that no one yet really knows what happened, why it
happened and how much it will cost. The Bank of England, the Bank of
Japan, the London Metal Exchange and Sumitomo have all conspicuously
failed to come up with an adequate explanation. We’ve all been left
fumbling in the dark.
But despite the big unknowns couldn’t Sumitomo have handled its
corporate public relations better?
The answer has to be yes. We’ve been here before: any financial markets,
whether banking, insurance, commodities, equities or any other are
Look at the collapse of Barings, the disaster area that calls itself
Lloyd’s, and Bunker Hunter who tried, and nearly succeeded, in cornering
the silver market for himself. Sometime, something will go wrong.
But it seems that Sumitomo was quite unprepared to deal with a crisis.
This is, no doubt, partly cultural. It reflects the consensual
relationship between Government, commerce and a docile press in Japan:
Government backs business; business feeds soft information to the press;
the press reports, rather than questions. But Sumitomo is a
multinational mega corporation and operates in a wider context where the
rules are different.
Every international oil company and every international airline has a
crisis management plan to cope with the big oil spill or the fatal
crash. A financial crisis is no different. A good plan will manage the
news, keep people informed, establish and maintain the house line and
ensure corporate spokesmen are properly briefed and rehearsed so they
can speak with authority. Above all, it ensures you stay in control.
What, one wonders, did the Sumitomo plan say about all that?