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China aviation fuel CEO may face charges
(Agencies)
Updated: 2005-06-08 14:52
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.
dollars.
"China Aviation Oil (Singapore) would like to announce that its
suspended chief executive officer, Chen Jiulin, has been notified that he may be
prosecuted for a total of 15 offenses," the company said Wednesday in a
statement to the country's stock exchange.
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.
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