Citic Pacific, the Hong Kong-listed arm of conglomerate China International Trust and Investment Corp, is facing about US$2 billion in foreign exchange losses due to unauthorized one-way bets against the US dollar, the Financial Times reported. Citic Pacific engaged in hedging contracts that bet on the rise of the Australian dollar and Euro, in a botched attempt to hedge currency risks related to massive investments in an Australian iron ore mine. The contracts turned loss-making when both currencies fell against the US dollar. "These contracts were done without proper authorization and the potential maximum exposure under these contracts was not evaluated correctly," Citic Pacific chairman Larry Yung was quoted as saying, adding that there was "no reason to believe fraud or other illegal activities were involved." The group’s financial director and financial controller have resigned over the losses. Citic Pacific will receive a US$1.5 billion standby loan from its parent.