ChinaAviationOil'sCollapse:

SingaporeInc.'sChallenges
'Theirbusiness
is thejet fuelbusiness...theyshouldhaveconcentratedon that."1
- OngEngTong,an independentoil consultant
'Thereis a saying,if a companyloses $50 million, it's the company's problem. But if it loses $500 million,
it's the system'sproblem."2
- A Singaporeoiltrader

OnNovember 17th2004,SouthAfrica's Standard Bank, threatened to open insolvencyproceedingsagainst

Singapore-basedChinaAviationOil(CAO),unlessthe companyrepaid$14millionitowedbeforeDecember9th2004.3
Whatmade thisnewsbizarrewasthefactthatthe aviationfuelimportingunitof Chinesestate-ownedenterpriseChina
Aviation
OilHolding
Company, CAO,whichwaslistedon the SingaporeExchangehadseenitsprofitsgrowby morethan
three
timestheprofitssinceits listingin 2001,andthe companywas votedthe "mosttransparent"companylistedin
Singapore,
Itsshareswererankedamongthe bluechipindices.WhatwasunknowntotheinvestorswasthefactthatCAO
hadlost$550millioninspeculativeoiltrading,leavingit bankrupt.Thiswasthe secondmajorderivativescandalat the
SingaporeExchange. Thefirstonewas the collapseof UK's BaringsBank in 1995.The derivativesscandalraised
considerable
concern onthecreditabilityof Singapore,whichhadthe reputationof being,Asia'sbest-regulatedfinancial
centre,
AlsowerethequestionsaboutcorporatetransparencyamongChinesecompaniesandthe roleof independent
directors.
CAOhadmanagedabailoutplan,butitwasSingapore,whichwaspayiogthe pricefor its roleinthe scandal.

China
AviationOil'sCollapse
China istheworld'ssecondlargestconsumerofjet aviationfuels,andaccordingto anestimateby InternationalEnergy
Agency,jetaviation
fuelimportsaccountfor abouta thirdof China'stotalconsumption,whichisabout230,000barrelsper
day,4China Aviation
OilCorpLtd,establishedin 1993,is a multinationalinvestmentandoilinfrastructurecompanywithits
headquarters inSingaporeandisthesoleimporterofjet aviationfuelin China.Itis majorlyownedby ChinaAviationOil
HoldingCompany (CAOHC)(Exhibit1),astate-ownedenterprise(SOE)thatenjoys100%monopolyin thesupplyofjet
fuels
inChina.CAOCH suppliesjet fuelsto morethan100airportsacrossChinaanditsbusinessisestimatedto beworth
onebillion
dollarsannually,S

In2001,CAOstockswerelistedontheSingaporeExchangeandwereoneofthefavouritesamongtheinvestors.With
thehugeincrease inairtravelvolume,bothdomesticandinternational,Chinabecamea majorbuyerof airlinersand
aviation
fuel.CAO'sbusinesswasprospering,butits incomewassubjectto the highvolatilityin oil prices.Toreducethe
impact
ofoilpricefluctuations
onitsearnings,CAOusedoilsw~psfor hedgingpurposes.In2003,inorderto increaseits
'C se~I ~aderloses 550 milliondoll.. in derivate trading', httpJlbreaking-news.news.designerz.com, December l' 2004
Tailahashl,
Kosuke'Jet fuel scandal deals China a body blow", www.atimes.com. December 7" 2004
'A coIapsethatwavesa 'big red flag' about business with Beijing', Financial nmes. January 21' 2005
, 'CADSubsidiarySeeksJet Fuel Imports For China', http://news.airwise.com, December 13" 2004
Ibid
earnings,itbegantradinginfuturesforpurelyspeculative
reasons.CAO'smanaging directorandChiefExecutive Officer,
ChenJiulin(Chen)wasresponsible forthespeculative
tradingattheSingapore Exchange.Inearly2004,Chenspeculated
thattheoilpricewouldbearound$38perbarrel,inthefourthquarteroftheyear.Hewasexpecting theoilpricestofall.But
inOctober 2004,oilpriceswentskyward. Withoilpricesover$55perbarrel,ithadwellpassedChen'sexpected priceand
helostthebet(Exhibit
2).Accordingtothecontract,CAOhadtopaythebanksandfinancials institutions
theearnest money,
whichwas$5000foronedollarriseinoilpriceperbarrel.
Havingexhausted itsownresources topayforthemargincall,itturnedtoitsparentcompany forfunds.CAOHClent
$108milliontoCAO.Thisamount wasraisedbyselling15%ofitsstakeinCAO,whichreduced theparentcompany's share
from75%to60%.According tomediareports,CAOHCapproached Deutsche Bankforhelpinsellingthestakethrougha
blocktrade.Insuchadeal,aninvestment bankpurchases alargeblockofsharesfromanissuer- thecompany orabig
shareholder - andresellsthesharesata discounttoasmallcadreofprofessional investors.
According toSingapore
regulations,Deutsche Bankwasnotrequired toperformextensive
duediligence onthecompany andrestricted
itselftoa
shortsetofquestions aboutitsfinancialrecordsandwhethertherewereanyissuesthatcouldhaveamaterialadverse
impactonthebusinessor itsfinancialcondition.Onreceivinga favourableresponseDeutscheBanksubmitted the
regulatoryfilingwiththeexchange. Finally,DeutscheBankoffered145millionCAOsharesat S$1.35each,with14%
discounttothemarketprice.Byindustrymeasures, thedealwasasuccess.
Withtheparentcompany'shelp,CAOmanaged tosettlefewofthedeals.But,bylateNovember,CAOhadreceived
paymentdemandsformarginpaymentsandsettlement of derivatives
tradesfromJ Aron,Mitsui& CoEnergyRisk
Management, BarclaysCapital,SouthAfrica'sStandardBank,Sumitomo MitsuiBankingCorporation,
FortisBankand
Australia's
Macquarie
Banktotalling$247.5million(Exhibit
3).6Unabletosecuremorefunds,Chenmadeit knowntothe
publicthathiscompany hadcollapsed with$550millioninderivativelosses.CAOSingapore'sstockpricefellsteadily-
losing39%beforetradingwassuspended onNovember 26111
2004.Chenwasarrestedforhisinvolvementinthecollapse.
Assetsbeinginsufficient
toservicethedebt,creditorsbeganexpecting parentcompany toprovideadditional
resources
tofinancethedebt. Withpressuremounting fromitscreditorsforpaymentsandto avoidbankruptcy, CAOputupa
reorganization plan.According
totheplanCAOHC wouldconvertpartofa$118millionloantoCAOintoequityandinvest
additional$50million.Singaporestateinvestment agencyTemasek HoldingsPIe.Ltd.wouldinvestanother
$50million.But
theinvestment wouldnotproceedunlessthecreditorsaccepttherepayment plan,Le.CAOwouldrepayatotalof$220
milliontoitscreditors,
ofwhichitwouldpay$100millionimmediately andtheremaining $120millionwouldbepaidovera
periodofeightyears.MichaelColeman, managing directorof Singapore-basedAislingAnalyticsPte,said,"It'snota
compelling case,yougottowaiteightyears.Youarenotgettingbackenoughupfronttomakeitworthwaiting."7 Creditors
wouldhavetowriteoff60%ofthemoneytheyloaned.OfficialsfromtheSin,gapore-based Overseas ChineseBanking
Corp.,oneofthecreditors, said,"Theproposed schemeofarrangement isagoodstartingpointforfurthernegotiations
between allthecreditors
andCAO."8 CAOalsoappointed consultantDeloitte&Touche toactasitsfinancial
adviser.Even
thoughthecompany hadmanaged a bailout,itfacedlegalandcriminallawsuitsinSingapore.

Singapore Inc's Challenges

Thescandalhadraiseddoubtsaboutthereputation ofSingapore, whichwasregardedasawell-regulated financial
centre.Singapore's PrimeMinister,LeeKuanYew(Lee),whoisalsothefatherof modernSingapore, alongwiththe
governmentandpeopleofSingapore hadworkedhardtocreateacorruption-free economy supportedwithinfrastructure
andstablepolitical
andfinancial
system. Leesaid,'Wehavepursued forward
lookingrational andprudent policies.
Wehave
investedheavilyinourpeopleandbuiltastableandcohesive society.Anoasisinaturbulent region."9EventheSingapore
Exchange hadmadetremendous effortstobecome aninternational
exchange. Itreceiveditsfirstoverseas
applicationfrom
HongKongin 1993,andsincethenhadaccepted176foreignlistingsby2004,accounting for27%of itstotalof 625.
Singaporeprovided agoodalternative toHongKong,asChinese companies founditdifficulttogetdomesticlistingsdueto
poormarketcondition andregulatory restrictions.
Morebver,
listingonaforeignexchange broughtprestigeandcredibility.
In2004,theSingapore Exchange had85stockissuesandabout40%wereChineseIPOs.
, Sawyer.Nick'A wrong-wayber. http://db.riskwaters.com.
January2005
, 'ChinaAviationOil ParentMayHaveto OfferMoreCash(Update1 r. www.bloomberg.com.
February5" 2005
. Subrahmaniyan, NesaandChanSueLing'CreditorswantmorefromChinaAviation",www.ihtcom,February7" 2005
9 'Singaporefaces'mostseverechallenges"in yearsahead:presidenr,www.singapore-window.org.
March25" 2002
.
ChinaAviationOil'sCollapse:
Singapore
Inc.'sChallenges

Critics
saythattheCAOscandalhadbroughtintospotlight theshortcomings inthecity-state's
financialliberalization
process.Thiswasnotthefirstcorporatescandalto happenattheSingapore Exchange.In November 2004,three
employees fromtheGovernmentofSingapore Investment
Corp,whichmanages Singapore'sforeignreserves, werefined
forinsider
trading
inJapaneseshares.InApril2004,aformerfinancemanager withAsiaPacificBrewerieswasjailedfor42
yearsforcheating GermanandJapanesebanksof $71million.In 2001,Singapore-listed AsiaPulpandPaper,an
Indonesianwood andpulpconglomerate,
defaultedondebtstotalling
$13.9billion.1OThemostinfamous ofallthescandals
was thecollapseoftheUK'sBaringsBankin 1995afterit lost$1.2billiononderivatestradingby'roguetrader'11 Nick
Leeson(Box 1).

Box1
Collapseof BaringsBank
'Wewerealldriventomakeprofits,profits,andmoreprofits..."saysNickLeeson(Leeson)in hisautobiographyRogue
Trader,
Leeson hadshakenthefinancialworldin 1995whenhe single-handedlybroughtdownoneof the oldestand
revered
merchant banksinUK.TheBaringsBankwasbankruptbecauseofunauthorizedtradinglosses.
LeesonhadworkedbrieflyforMorganStanleybeforejoiningBarings.Atbothfirms,heworkedinoperations,butshortly
after
JOining
Barings,
hewastransferredtotheJakarta,whereheeamedanameforhimselfbyhishardwork.So,in 1993,
whenBarings
Securities
(Singapore)Limited(BSS),purchaseda seatfortradinginfuturesontheSingaporeIntemational
MonetaryExchange(SIMEX- today'sSingaporeExchange)the Barings'managementpromotedhimas thegeneral
managerofBarings
Futures(Singapore).
LeesonwasBarings'starSingaporetrader,bringingsubstantialprofitsfromthe
SIMEX andhadmademorethan£1Om- about10%of Barings'totalprofitfor 1993.He himselfhadeameda bonusof
£130,000
onhissalaryof£50,000.
Hisposition
authorizedhimtodotwotypesoftransactions.Transactingfuturesandoptionsordersforclientsorforother
firms
within
theBarings organization,
andarbitragingpricedifferencesbetweenNikkeifutures(Nikkei225)tradedonthe
SIMEX andJapan'sOsakaExchange.Leesonexecuteda tradingstrategyknownas a "straddle,"withtheobjectiveof
makingaprofit
bysellingputandcalloptionsonthesameunderlyingfinancialinstrument.A straddlewillgenerallyproduce
positive
eamings whenmarketsarestablebutcanresultin largelossesifmarketsarevolatile.
Leesontookmassive risksonBarings'financesbecausetherewerehugefinancialincentives.Thelargertheprofitsthe
traders
made,thegreaterweretherewards.But,hewaslosingmoneyandbythe autumnof 1994,thelossesstoodat
£208m. HehadtopaythoselossestoSIMEXintheformof marginandforwhichhe neededcash.Hefalsifiedrecords,
fabricated
letterstodeflectquestionsfrommanagement,auditorsandevenrepresentativesof SIMEXandcontinued
obtaining
cashfromBarings.Hewasableto concealhis unauthorisedtradingactivitiesfor over a yearbecausehe
managed boththetradingandbackofficefunctions.Leesonhadhiddenthelossesin an accountcalledErrorAccount
88888,andwaspubliclyrecordingprofitsinthreearbitragetradingaccounts,numbers92000,98007and98008.This
wasaccomplished throughcross-tradeswithaccount88888.Byperformingfuturestransactionsat off-marketprices,
Leesonwasabletoachieveprofitsinthearbitrageaccountswhileplacingoffsettinglossesintheaccount88888.Leeson
requested
andobtained extrafundstocontinuehistradingactivities,asheattemptedtoextricatehimselffromthefinancial
messbymoreandmorefreneticdeals.Havingbecomeincreasingly desperate,LeesonbetthattheNikkeiindexwouldnot
dropbelow 19,000 points,andthebetseemedreasonablefor,theJapaneseeconomywasrebounding.OntheJanuary
17~,
adevastating earthquake hitJapanandthatcauseda steepdropin theNikkei225index.Leeson'sunauthorized
trading
positions
suffered hugelossesandhisoperationwasunraveled.
Leeson's
trading
hadcreatedliabilitiesworth$1.3billionfor Barings,whichwasmorethantheentirecapitalandreserves
ofthebank.The223-year-oldBaringsbankbecamebankruptandin March1995it was boughtfor £1, by the Dutch
banking
andinsurancegroupING.
Leesonwasarrestedandconvictedof fraudby the Singaporeanauthority.He wassentencedto six anda halfyears
imprisonment
butforgoodbehaviour,hewasreleasedfromprisonearlyinJuly1999.

Source:Compiledby IBS-CDCfrom "Business:The EconomyLeeson scandal 'could happen again''', http://

news.bbc.co.uk,
June22""1999, "Business:TheEconomyHowLeesonbrokethebank",http://news.bbc.co.uk,
June
22""1999and"NickLeesonandBaringsBank",www.bbc.co.uk
'Chlna'A.alronof ScandalPuts Singapore'sReputation Under Scrutiny". www.cgfrc.nus.edu.sg. December 3" 2004
h ISa generictermusedfortraderswho make derivative losses,
 A Singaporeoiltradersaid,"SomeoneintheSingaporegovernmentwassleeping.Lossesofthismagnitudesuggestthe
SGX(SingaporeExchange)andMAS(MonetaryAuthorityof Singapore)failedto enforcecorporategovernance.The
entireSGXtradingsystemandtheMAS'ssupervisoryroleneedto beexamined."12 Toattractforeigncompaniesto listtheir
sharesontheSingaporeExchange,theexchangehadeasedmanyrulesandregulations,Theexchangehadswitchedits
systemof listingfroma merit-basedsystemto onerelyingon corporatedisclosurethatputsmoreonuson the investorto
adopta 'buyerbeware'attitude.EswaranRamasamy, directorforenergyinformationproviderPlatts,said,"(Theexchange)
hastobefaultedfor notsayinganythingaboutit (CAO).SGXbeingtheexchangeshouldbewaryof allthesethings...to
put it bluntly,theyhavenot donetheirjOb,"13Butthe factremainedthat CAOmadelosseson oil swaps,whichare not
regulatedby theexchange.
ButCAOhadviolatedmajorlaws.Accordingtothe"Noticeon furtherstreamliningandstandardizingfuturesmarket",
issuedbythe StateCouncilonAugust1st1998,enterpriseswithoverseasfuturespermitcanonlybe allowedtoengagein
hedgetransactionsandtheyarenotallowedtoengageinspeculativetransactions.CAOnotonlyindulgedinspeculationbut
itsthevolumeoftransactions alsoexceededthetotalofspottradinglimit.Itstartedspeculating
with2millionbarrelsinitiallyand
thenumberhadreached52millionbarrelsbythetimethescandaltookplace.Ithadexhaustedits$5minternaltradinglimits
backin2003,but keptdoublingup its speculativebids,in an attemptto makegoodthe deficitandtoldnobodyaboutits
mountinglossesforoverayear.Ithadalsomisrepresented itsfinancialstatements.Accordingtothefinancialstatementthe
totalassetsof CAOinJune2004was$515millionandtheassets-liabilities ratiowas73%.Thelong-termaccountreceivable
was$141million,whichwas equalto the accountpayable.Judgingfromthe account,therewas no problemwiththe
businessoperations.Butactuallythefirmsufferedpotentiallossesof$3.58billioninoilfuturestradingandthiswasnotshown
initsfinancialstatement.CAO'scorporategovemanceandriskmanagementpolicieshadfailedandregulatoryauthorities
hadfailedinidentifyingtheflaws.ItalsohadposedcredibilityquestionforotherChinesecompanies.Chinesecompanies
hadenjoyeda highertradingfrequencyamonglocalinvestorsthanotherstocksbut afterthe scandal,investorstook
cautiousapproach.

Thecollapseof CAOhadraisedquestionsonthestandardsofcorporategovemanceinChinesefirmsandhighlighted
the flawsthatare often overlookedin the generalenthusiasmaboutthe country'semergenceas a globaltradingand
economicpower.A majorityoftheChinesecompanieswerestate-ownedenterprisescontrolledbyentrepreneursorfamily
memberswhohadlittleexperienceinlookingafterminorityshareholdersandonlya partialunderstanding ofconceptssuch
asboardindependence, independentauditingof resultsandtheneedforproperriskcontrol.Limiteddisclosureandlackof
transparencyin dealingshadcompoundedthe problemof compliance.There weremediareportsthat the corporate
governanceof Chinesefirms,listedin Singaporeespeciallywasworsethanthoselistedinothercountries.MakYuenTeen,
co-directoroftheCorporateGovernanceCentreattheNationalUniversityof Singapore,arguesfora returntostricterrules
by SingaporeExchangeto avoida raceto the bottom,since"smallerexchangeslike Singafdoremaybe a fourthor fifth
choicefor Chinesecompaniesthatcannotget to theUSor HongKong."14
WithChinesecompaniestumingtoforeignmarketsto raisefunds,it hadalsoraisedan alarmforthecreditorsaboutthe
risksofinvestingin Chinesefirmsespeciallythestate-ownedenterprises.Earlier,creditorswereeagerto lendto Chinese
firmsinthehopeof tappingChina'spotentialastheworld'sfastestgrowingmajoreconomy.Nowthereweredoubtsonthe
abilityof Chinato deliveron the promiseon whichso manybigtimeinvestorshadputtheirtruston, InCAO'scase,25
creditorsstandto lose60%oftheirinvestments(Exhibit4).
Worriedthatthe CAOdebaclemightcauseinvestorsto shunChina-relatedstocks,andinturnaffectthe transaction
volumesattheExchange,theSingaporeExchangemadeknownthat"themarketshouldconsidereachcompany,beitlocal
orforeign,on itsmerits".ISTakingcorrectiveaction,it suspendedthe tradingin CAOstocksanddirectedCAOtoappointa
specialauditor,PricewaterhouseCoopers, toinvestigatethecircumstances thatledtothelosses.ThepolicerunCommercial
AffairsDepartmentinconjunctionwiththecity-state'ssecuritiesandderivativesexchange,theSingaporeExchange,andthe
MonetaryAuthorityof Singaporeinitiatedacriminalinvestigationto lookintothe possibilityof white-collarcrimeat CAO.
Singapore'sgovernmentmadeit clearthatit considersthe investigationintoCAOascrucialfor upholdingthecity-state's
reputationas a financialcentre.Butt~einvestigationwassensitivebecausethe Chinesegovernment- a closetrading

" "JetfuelscandaldealsChinaa bodyblow".op.eit

" "ChinaAviationOil ScandalPutsSingapore's
ReputationUnderScrutiny",www.egfre.nus.edu.sg.
December3" 2004
" "Fools rush in", www.eeonomist.com. December 10. 2004
" Burton,John"Singapore
triesto limitCAOITadingscandal",http://news.ft.com,
December1" 2004
partner
ofSingapore, ownedtheparentcompany.BobBroadfoot,themanagingdirectorof thePoliticalandEconomicRisk
Consultancy(PERC) inHongKong,saidthatthelatestscandalshouldnotnecessarilytamishthe reputationof Singapore
financial
authorities,
TheSingaporeExchangeappearedtobedoingthings"bythebook"in managingthescandal,through
measuressuchasthePriceWaterhouseCoopers auditandensuringthatthe companyfileda courtaffidavit."[Corporate]
governanceisnotdefinedbynothavinganyviolationsatall; itis definedby howthey[financialauthorities]managethose
violations,"16

Theindependent directorsandlawsgoverningcorporatetransparencywere also subjectsof criticism.Failurein

discharging
theirdutieshadwipedoutCAO'sshareholderequityworth$143.4milliontherebyleavingthesharesof more
than7,000investors 17 Alsoinquestion
ofthecompanyvirtuallyworthless, wastheroleofCEOs- whethertheyshouldaim
fortheobjective
ofprofitmaximization
- towhichtheircompensationislinked,orworkintheinterestoftheshareholdersand
aimforwealthmaximization.

Experts voiced,"WithSingaporemakinggreat stridesin corporategovernance,companiesshouldno longerbe

permittedtoengage inactivities
thatflyunderthesupervisoryradar."18The SingaporeExchangefacedpressureto defend
itsaggressivewooing offoreigncompaniestooffertheirshareshere,Anotherseriousissuewastheregulatorytreatmentof
denvativestrading
whichwasalsotherootcauseofBarings'downfall.Therewereopinionsthatthecity-stateshouldreview
itscorporateandsecuritylawsandtightenthelistingrulesfortheforeigncompanies.ButPrimeMinisterLeewasof theview
thatthecity-state's
corporate regulationsarein linewiththebestpracticesin otherjurisdictions.Hesaid,"Iwouldnot,asa
knee-Jerkresponseeverytimesomethinggoeswrong...say'tighten therules'.Thiswasouroldattitude..,Ithinkthat'snot
possible,
'19

'NewscandiithrowsSingaporeInc.'srepulation into spotlighr, www.manilatimes,net December 4. 2004

'.Ie(fuelscandiide,;s Chinaa bodyblow', op.cil
Ian 'ra<1C1s
W~ ChinaA~ationOil collapsespark changes?", www.commodity1rader.com.December 2'" 2004
'A ccI",sethatwavesa 'big redflag' about businesswith Beijing', op.cil
 Exhibit 1
CorporateStructureof CAD

ChinaAviation
OilHolding
Company
(1)

'l/llill

Public ChinaAviation

.l
OilSupply
Company

llIli,. ':fllill

GreaterChina Compania ShuidongOil SouthChina Other

Shanghai AFSCs
TravelIndustry Logisticade StorageTank Pudong Bluf'sky
(Singapore) Hidrocarburos Farm Intemational AviationOilCo
PteLtd (CLH) (Shuidong) Airport Ltd (Bluesky)
(2) AviationOil
Supply
Company 15AFSCs
(Pudong)

1) ChinaAviationOilHoldingCompany
("CAOHC'1,
astate-owned
enterprise
inthePRC,ownsapproximately
75%of theenlargedsharecapitalofourCompany. According10theprovisionsofthelawofthePeople's
RepublicofChinaonIndustrial
Enterprises OwnedbytheWholePeople,CAOHC's assetsareownedbythe
peopleofthePRC(i.e.theState).TheStateCOuncil
exercises
ownership rightstoCAOHC's assetsonbehaN
oftheState.
2) GreaterChinaTravelIndustry(Singapore)PteLtd wasincorporatedin SingaporeasourCompany's
wholly~wnedsubsidiary./ts
primarybusinessistheprovisionoftravelservices

Source:CorporateStructure,http://caosco.com
 Exhibit2
NewYorkMercantile
Exchange(Nymex)Oil FuturesContractfor2004
65

55

)45
CQ
~

35

25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2004

Source:
Sawyer,
Nick':4 wrong-way bet'~ http://db.riskwaters.com, January 2005

Exhibit3
CAD's PaymentDemandsas of November2!1'2004

I>- Company Dateof demand Amount(US$) Details

Settlementof threederivatives
I
>-
Barc/ays
Capital
October29 26,461,650 transactions

Unwinding of50%volumeofeight
IManagement
Mitsui& CoEnergyRisk November
9 70,331,400 derivatives
contracts

IJAron&Company November16 12,397,805

Settlementofsixswapandoptions
transactions
(Singapore)
r Mitsui
&CoEnergyRisk
Management
November17 73,314,300
Unwindingof remaining50% volume
of eight derivativescontracts
IStandard
BankLonclon November17 14,430,398.90 Margincall

l Macquarie
Bank
November19 2,610,000 Margincall

Demandfor repaymentof short tenn

ISumftomo
MitsuiBanking
Corporation
November23 113,72639.02 creditfacility, plusinterestand
defaultinterest

IFortisBank November 24 33,100,000 No details

I JAron& Company November24 3,500,000 Margin call

(Singapore)
0

Total 247,518,192.92

Source:
Sawyer,
Nick "A wrong-waybet'~ http://db.riskwaters.com, January 2005
 Exhibit4
MainCreditorsof TroubledCAOandTheirinvestments
'S.No Creditors Amountin$, million
1. ChinaAviationOilHoldingCo 118.0
2. SatyaCapitalLtd. 51.7,
3. StandardBankLondonLtd.: 34.1,
4. SumitomoMitsuiBankingCorp. 26.1,
5. Industrial& Commercial
Bankof China(Shanqhai
branch) 26.1,
6. ChinaEverbright Bank 26.1,
7. Bankof Communications (Singapore) 25.9,
8. BPSinqapore Pte.Ltd 23.3,
9. ChinaMerchants BankCo.Ltd. 19.3,
10. BarclaysBankPic. 18.5,
11. BeijingCityCommercialBank 17.4
12. ChinaOil(HK)Corp.Ltd. 16.4,
13. SingaporePetroleum Co.Ltd. 15.4,
14. GlencoreInternational
AG 15.0,
15. Oversea-Chinese BankingCorp.Ltd. 15.0,
16. SKEnerqyAsiaPte.Ltd. 14.3,
17. SocieteGenerale 13.8,
18. Norddeutsche LandesbankGironzentrale 13.0
19. ShanqhaiPudongDevelopment Bank 13.0,
20. ItochuPetroleum Co.(S)Pte.Ltd 12.4
21. Bankof Communications (Shanghai) 10.6
22. UnitedOverseasBankLtd.(Singapore) 9.7,
23. Industrial& Commercial
BankofChina,Macau, 9.7
24. J Aron& Co. 7.7
25. MacquarieBankLtd. 6.1

Source:"FACTBOX-Main
creditorsoftroubledCAOSingapore",www.reuters.com.
January24111
2005