China Aviation Oil Loses $550 Million On Derivative
Trades
China Aviation Oil (CAO), China's leading supplier of
jet fuel, has lost US$550 million in losses incurred by
the surge in oil prices in October. The losses were incurred
in Singapore on the local exchange.
This is the biggest financial scandal to hit Singapore
since the Nick Leeson scandal brought down Barings Bank.
A rescue plan has been launched, and the company has retained
Deloitte & Touche as its financial advisor.
China Aviation Oil is owned by China Aviation Oil Holding,
a Chinese state-owned corporation. The chief executive
of the company, Chen Jiulin, flew to China after the company
collapsed. The Singapore Exchange, Singapore's regulatory
body, has asked that he return to the island state and
cooperate in the investigation. Trading of the company
has now been suspended.
Deloitte's rescue plan includes a US$100 million cash
injection, with the Chinese parent and Temasek Holdings,
Singapore's state investment agency, each providing US$50
million.
The company had been doing well until the sudden collapse,
apparently because of a breakdown of trading and settlement
controls.
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