LONG BEACH WAREHOUSE CENTER STAGE IN SCANDAL.

Byline: E. Scott Reckard Associated Press 

Lit dimly by skylights far above, forklifts prowl stadium-size warehouses among eight-foot stacks of copper plates. With their rippled edges, the plates resemble yard-square postage stamps.

Here on former farmland flanked by freeways, rail lines and stucco tract homes, Metropolitan International Trade Services stores copper central to the scandal that has cost trading giant Sumitomo Corp. at least $1.8 billion.

Bundles of plates are matched by numbers to warrants each representing 25 tons of copper. Metro International, under a storage contract with the London Metal Exchange, issues the warrants in England, from where LME dominates world copper trading.

Sumitomo blames the debacle on a decade of secret transactions by a former star trader, Yasuo Hamanaka. Hamanaka was nicknamed ``Mr. 5 Percent'' and ``The Hammer'' for the share of the global copper trading market he was believed to control and the power that control gave him.

Last October, copper prices ricocheted up and down on rumors Sumitomo was keeping prices high and that Hamanaka controlled warrants for 70 percent of the 39,025 metric tons then stored in Long Beach. It appeared that massive amounts of copper were going into the warehouses, but little was coming out.

Regulators at the U.S. Commodity Futures Trading Commission opened an investigation in November of Long Beach deliveries and withdrawals that continues today, Metro International's president, William Whelan, said Monday.

``We are in contact with the CFTC, but that's an ongoing process,'' he said.

But it was not until early May that Sumitomo removed Hamanaka and copper prices plunged amid rumors the Japanese company was liquidating its positions.

``May was an extremely busy month for us,'' Whelan said from Metro International headquarters in Romulus, Mich. He declined to elaborate on why.

He and his on-site manager and vice president, John Yeskel, said they cannot disclose publicly who delivers and picks up the copper. They denied knowledge of trading in the warrants. The company's job is only to keep precise tabs on inventory and arrange pickup and delivery if asked, they said.

``It has no effect on me what Sumitomo wants to do. It would only affect the traders,'' Yeskel said, gesturing toward a warehouse as big as two football fields. ``I have no idea who owns the warrants to anything out there.''

Metro International operates warehouses in foreign trade zones in Long Beach, Detroit and San Diego. Goods are technically in the custody of U.S. customs authorities while stored there duty free. Companies can assemble, repackage, inspect or test goods and pay applicable duties only when the goods are shipped out.

In addition to metals, Metro International warehouses goods including electronics, apparel and liquor, Whelan said. It won a contract from London Metal Exchange five years ago to store metals including aluminum alloy, zinc and tin.

Business skyrocketed in April 1994, when the LME established huge copper warehouses in the United States as well as countries like the Netherlands and Singapore. Copper now constitutes 70 percent of Metro International's metals warehousing and half its total business in Long Beach, Whelan said.

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Photo

Photo: Metro International Trade Services warehouse storescopper central to the scandal that has cost Sumitomo Corp. at least $1.8 billion.

Associated Press