Authorities arrest five over risky oil trades in Singapore

The suspended chief executive of China's main jet fuel supplier and the chairman of its parent company in China were arrested by Singaporean authorities yesterday, linked to risky oil trades that pushed the company to the brink of bankruptcy with losses of over US$500 million.

Chen Jiulin (陳久霖) and the president of the Singaporean company's Beijing parent, Jia Changbin (莢長斌), have been arrested and will be charged in court Thursday, Singapore police spokeswoman Lily Lee said.

Three others, including two directors from China, were also arrested and face a similar court appearance. Lee did not provide further details.

Singaporean authorities began a criminal investigation of Chen and China Aviation Oil (Singapore) (中國航油) 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 last year and sought court protection from creditors in December.

The Chinese company is based in Singapore, Asia's leading oil-trading center, and is a subsidiary of China Aviation Oil Holdings Co.

China Aviation's head of finance, Peter Lim Tiong Sun, Li Yongji (李永吉) and Gu Yanfei (顧炎飛), have also been arrested in the biggest corporate scandal to hit the city-state since the fall of the UK's Barings Bank 10 years ago, when rogue trader Nick Leeson's market gambles lost Barings nearly US$2 billion.

Li and Gu are from China.

In a statement earlier yesterday to the Singapore stock exchange, China Aviation Oil said Chen may be prosecuted on 15 charges under the Penal Code, Companies Act and Securities and Futures Act. It was not immediately clear what specific charges he might face.