China aviation fuel CEO may face charges
SINGAPORE - The suspended chief executive of China's main jet fuel
supplier may face criminal charges linked to risky oil trades that pushed the
company to the brink of bankruptcy, with losses of over half a billion U.S.
The Chinese company is based in Singapore, Asia's leading oil-trading center.
Singapore authorities began a criminal investigation of Chen and China Aviation last year, after the company shocked markets by revealing it had lost more than US$500 million by placing bets on the future price of oil. It began losing money in the first quarter of 2004 and sought court protection from creditors in December.
Wednesday's statement said Chen -- whose whereabouts are unknown -- may be charged under the Penal Code, Companies Act and Securities and Futures Act. It was not immediately clear what specific charges he might face.
China Aviation's head of finance, Peter Lim Tiong Sun, and three directors, Jia Changbin, Li Yongji and Gu Yanfei, have also been notified that they may be charged, the statement said.
The announcement follows a special auditor's report, released last week, which said Chen was primarily responsible for the losses and the company's nondisclosure of its mounting financial crisis, but that failures had occurred "at every level of the company."
The auditing firm, PricewaterhouseCoopers, also said "no steps were taken by the management or those directors of the company, who were aware of the true position, in particular Jia, Li and Gu, to rectify the situation."
Gu was sent to Singapore from Beijing to manage the company when it sought court protection.
China Aviation's spectacular collapse is the biggest financial scandal to hit Singapore since the fall of Britain's Barings Bank 10 years ago, when rogue trader Nick Leeson's market gambles lost Barings nearly US$2 billion.
China Aviation's abrupt downfall has been a major embarrassment for China and its state-backed companies, many of which have been trying to improve their reputations.
The Singapore-listed company is a subsidiary of China Aviation Oil Holdings Co., which is linked to the Chinese government and had initially attempted to distance itself from its Singapore offshoot's losses.
Singapore police declined comment Wednesday, saying investigations were continuing.
Also Wednesday, about 100 creditors were expected to vote on China Aviation's proposed debt restructuring plan.