Investing in China: a follow-up

Wednesday, December 29, 2004 | 0 comments »


Yesterday's piece was written blind. That is to say, without knowledge of the recent happenings involving China Aviation Oil, which now lend the article more resonance. The first paragraph from the Interfax report Feature: China Aviation Oil - China's "Barings" (link available via the China Aviation Oil news page below) sums up the scandal neatly:

"Last week, shocking news hit the world's financial market. China Aviation Oil (Singapore) suddenly submitted a voluntary bankruptcy petition and debt reorganization plan to avoid liquidation. According to the disclosure, CAO Singapore had incurred huge losses of USD 550 mln from oil options trading. More seriously, as a publicly traded company, its parent company, the state-owned and Beijing-headquartered China Aviation Oil Group, sold a large number of shares in the company, accounting for 15% of the total stake, on October 21, 2004, obtaining proceeds of SGD 196 mln in the process. Because this sale took place after the losses were made but before the information was disclosed, CAO may be guilty of fraud. Right now, an investigation is underway by the Singapore regulatory authorities."

The words "state-owned" just seem to jump off the page.

Here are a few more related links, none so fascinating as the near sadistic pleasure China Aviation Oil takes in lighting up its own web pages with the media coverage:

China Aviation Oil News Page
Le directeur de China Aviation Oil arrêté à Singapour (in french)
Losses at China Aviation Oil Investigated

And no, Capital Chronicle finds no joy in the story. Who would want to be in CEO Chen Jiulin (pictured above) shoes when he gets back home?

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