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Greenpeace Loses $5.1 Million On A Bad Currency Trade
June 16, 2014
by Julia Roche
The non-governmental environmental organization said the losses were “a result of a serious error of judgment” by one of its employees in the International Finance Unit in Amsterdam.
“Greenpeace International entered into contracts to buy foreign currency at a fixed exchange rate while the euro was gaining in strength,” the press release said. “This resulted in a loss of 3.8 million euros against a range of other currencies.”
The employee, who has not been identified, has been fired. He wasn’t a trader, though.
“This is not a ‘Wolf of Wall Street’ scenario with young guns with ten computer screens,” Mike Townsley, the international director of communication for Greenpeace, told Business Insider in a telephone interview. “This is a mature, sober finance professional who unfortunately…whose judgment ended up being faulty and bypassed our control systems.”
He said it was a third-party contract that turned out unfavorably. The responsibility lay with the individual, who was terminated in March of this year.
One of the responsibilities of Greenpeace International’s finance unit is to manage funds, Townsley explained. Greenpeace is a global organization in 40 countries, so money comes into the international unit and money goes out in the form of various currencies to support Greenpeace operations around the world.
The individual entered into euro futures contracts for a basket of currencies sometime last year with a third party. The third party matches with someone who wants to buy and sell, Townsley explained.
“We transfer the currency. So again, it’s not like we are trading on the stock market.”
This particular individual didn’t have permission or authorization to enter this contract.
“Given the scale of some of these transfers, he would under our rules need to get approval—that didn’t happen. It should have, but it didn’t. The consequence— We terminated his employment. We’ve strengthened our internal controls.”