SINGAPORE : Singapore's white collar crime buster, the Commercial Affairs Department, has arrested China Aviation Oil's beleaguered chief executive, Chen Jiulin.
Chen returned to Singapore from China on Wednesday morning.
In a statement, the CAD said Chen has been placed under arrest and is currently assisting in investigations under the Securities and Futures Act.
When contacted, CAD would not say if any charges have been filed, except that "investigations are still ongoing".
China Aviation Oil stunned financial markets on November 30 by revealing that it had lost more than S$900 million from trading oil derivatives.
It has applied for court protection from creditors, while the CAD has started a probe into problems at the company.
Analysts say one aspect that the CAD could be probing is whether there had been insider trading at China Aviation Oil.
The key question is whether CAO knowingly misled investors by predicting record full-year profits when it unveiled its third quarter results in November, even as it chalked up massive losses from oil trades.
Another aspect is how the losses were allowed to balloon to crisis proportions without being disclosed or reflected in the company's accounts.
Court documents filed on behalf of suspended CEO Chen last week showed that CAO's Beijing-backed parent had sold a 15 percent stake in CAO on November 20.
This was 10 days after being told of the unit's financial losses.
Under the Securities and Futures Act, a listed company must not "intentionally" fail to disclose information required by the stock exchange.
Legal experts say an offence under this section could result in a fine of S$250,000 or a jail term of up to seven years, or both. - CNA
CAO chairman regrets trading debacle, parent backs restructuring
SINGAPORE : China Aviation Oil Singapore Corp's chairman Jia Changbin has expressed "regret" at the company's US$550 million oil derivatives trading losses and said its parent company will fully support a restructuring, the Singapore Exchange has said.
The exchange said Mr Jia, who is also president of CAO's state-owned parent China Aviation Oil Holdings Co, met with SGX chief executive Hsieh Fu Hua and Yeo Lian Sim, head of risk management, on Tuesday.
"We will do our utmost as a responsible parent company to provide our full support for the restructuring effort of CAO," Mr Jia said during the meeting, the statement said.
Mr Jia also reiterated that CAO's suspended chief executive Chen Jiulin will return to Singapore this week.
The SGX had request Mr Chen's return to assist with investigations into the scandal.
Mr Chen flew to China soon after after he was suspended and the financial authorities ordered an investigation into CAO's US$550 million in losses from speculative derivatives oil trading.
He had asked the Singapore High Court to grant the company protection from its creditors.
The Singapore-listed jet fuel supplier is being investigated by the Commercial Affairs Department, SGX and the Monetary Authority of Singapore.
China Aviation Oil faces fines for not disclosing the massive losses until last week.
Investigators are also looking at a controversial share sale in October, when the parent sold a 15 percent stake in CAO.
In an affidavit filed in the High Court, Mr Chen alleged that CAO's parent was aware of the losses 10 days before the sale. - CNA
That man looks decent, but I can't believe he had done such a thing.