In November 2004, China Aviation Oil (CAO) announced that it had lost S$550m on speculative oil derivate trading and requested a trading halt until it had come to a satisfactory arrangement with creditors. CAO's parent company, China Aviation Oil Holding Co (CAOHC), had been made aware of the losses some two weeks earlier and had sold a 15% stake in the intervening period. A completed investigation established that China Aviation Oil concealed derivatives losses and issued misleading financial statements. Its CEO and other officers/directors faced individual convictions; the parent separately settled an insider-trading civil action. CAO had not been accounting for the marked-to-market (MTM) derivative losses correctly, making it difficult to identify beforehand. On 29 March 2006, trading resumed in the company's shares. Sources: PwC final executive summary; Investigation completion announcement; 2008 court decision; 2012 court decision; Issuer announcement; EGM circular.

Last updated September 2021

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