Easy come, easy go

If there's one area where you probably have to have currency hedging facilities in place, it's that of ship construction -- a long-term business frequently involving a range of currencies. However, it's also best to ensure that you have good compliance and auditing in place as well.

Step forward SembMarine of Singapore, which got the first bit right, but not the second. About US$248m seems to have been lost by the company's finance director. This is not proprietary trading gone wrong. Sembmarine doesn't allow for any speculative trading. All deals are meant to be hedges against 'real life' agreements. In other words, the only logical explanation for the loss is that the finance director discovered that he liked a punt, and currency trading can be the crack cocaine of punting fun. The markets hardly ever close. BTW, Sembmarine made a profit of $238m last year, so it looks like this gambling foray will wipe out a year's profits. Quality.

I hesitate to imply that it's in the Asian nature to like a gamble, despite the perpetually full betting shops in London's Chinatown. But one might recall that China Aviation Oil also had a senior executive (the CEO) who traded way beyond the company's means, and then he made the mistake of hiding it from investors. That was $500m or so down the pan. All this money presumably ends up somewhere -- although unfortunately not in my pocket. These guys must be the equivalent of the occasional big fish who turns up at a live or online poker game. The trading desks all go into a frenzy trying to get the money first. I look forward to Citigroup (or whichever counterparty it was) boasting in its quartlery results "yeah, we skinned that sucker alive". Unfortunately, I doubt that such a statement would see the light of day:

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( A Lucky Hand )

Diane

I've tried telephoning a few of you but, as is the way of you social high-lifers, most of you were out. Sorry if you have to learn of it this way, but I guess that you would like to know sooner rather than later.

Diane Hammon died this morning, aged 52. She was taken into hospital last Monday after another attack of DKA and slipped into a coma late last week after an infection — possibly bacterial, possibly viral — set in and spread to her brain. Kate telephoned me on Sunday to say that things did not look good and I went up to Worcester yesterday to visit Diane, and to meet with her (adult) son and daughter, Stuart and Kate. Di's breathing was still strong (she was perhaps the strongest person I knew) but the morphine was being stepped up and it was really a matter of making her comfortable for her last days. She'd had so many stays in that ward, I think she had been in every bed. And even some of the nurses were finding it hard to keep their emotions in check — Di had always been a gregarious soul, even when in intensive care. The nurses loved her. In fact, most everyone did, including me.

The funeral will be sometime next week. I will obviously be going up there and I should have further details by the weekend.

No eulogies or stuff like that here. Di would not have wanted sentimental gush. Those of you who knew her know what a sweet and wonderful person she was. She bore her long illness with stoicism. "I wish it hadn't happened, but you play this life with the cards you are dealt" she said to me in one of our many long phone conversations.

QFT.

PJ