First there was the London Whale, and now there is the Greenpeace Whale, as the charity blows over US$ 5 million
Last year a rogue trader known as the London Whale at JPMorgan Chase cost the company $6.2 billion dollars in trading losses and another billion in fines. According to Bloomberg, the company took a bigger hit in its reputation.
Meanwhile at Greenpeace International, which operates in over forty countries, a rogue trader who was trying to help the charity by scoring in the currency markets, bet the wrong way on the euro (he thought it would go down in value) and lost 3.8 million of them. Greenpeace explains in a press release:
The losses are a result of a serious error of judgment by an employee in our International Finance Unit acting beyond the limits of their authority and without following proper procedures. Greenpeace International entered into contracts to buy foreign currency at a fixed exchange rate while the euro was gaining in strength. This resulted in a loss of €3.8-million against a range of other currencies.
Greenpeace spokesperson Mike Townsley tells the Vancouver Sun (Greenpeace started there in 1971) that this was "done with the best of intentions but not the best of judgment." Indeed.
The employee was a financial expert whose job included currency trades to protect the organization from fluctuations in the market. He was not qualified, however, to undertake trades on the scale he did, Townsley said. In addition, he ignored company rules, under which he should have checked with supervisors and probably hired an external expert for advice on how to manage risks, Townsley added.
Like JP Morgan Chase, Greenpeace is big enough to eat this mistake; it takes in 300 million euros a year in donations and other income. But Townsley noted that the organization was worried and concerned that it would offend its supporters and apologized. Since they do not accept donations from companies or governments, this is going to hurt a lot more than just the US$ 5 million.