China Aviation Oil affair will impact trade

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23 December 2004

China Aviation Oil (CAO), which holds a near-monopoly on jet fuel imports to China, is embroiled in Singapore's biggest trading scandal since Nick Leeson brought down Barings in 1995. Investigations by Singaporean authorities stepped up with the arrest of chief executive Chen Jiulin in early December as CAO appealed for more time to devise a restructuring plan.

Bail-out talks are being pursued with Temasek, Singapore's state-run investment agency as investigations by the police, the financial regulator and the stock exchange continue. The focus of the investigation is on losses amounting to at least $550 million from derivatives trading and the sale in October of a 15% stake in the company by parent CAO Holding.

Chen had left Singapore for China on November 30 having announced the estimated $550 million losses from failed bets on oil prices. He was arrested on his return on the morning of 8 December, but later released on bail....

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