Subject category:
Finance, Accounting and Control
Published by:
IBS Case Development Center
Length: 8 pages
Data source: Published sources
Topics:
China Aviation Oil Corp Ltd; China Aviation Oil Holding Company; Nick Leeson ?Rogue Trader?; Barings Bank; Derivative scandal; Speculative oil trading; Oil swaps; Speculation and straddle; Hedging; Corporate transparency; Singapore Stock Exchange (SGX); Chinese state-owned enterprise; Lee Kuan Yew; Corporate governance; Jet Aviation Fuel Company
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Abstract
China Aviation Oil (CAO), voted as the most transparent company listed on Singapore Exchange, had collapsed because of a US$550 million loss in speculative oil trading in 2004. This was the second major derivative scandal at the Singapore Exchange. The first one was the collapse of UK''s Barings Bank in 1995. The derivatives scandal raised considerable concern on the creditability of Singapore as a secure financial destination, which until then had the reputation of being Asia''s best-regulated financial centre. Also, questions were raised about corporate transparency among Chinese companies and the role of independent directors. The case study throws light on the scandal and offers scope for discussing the challenges facing Singapore. Meanwhile, CAO had managed a bail-out plan, and it was Singapore, which was paying the price for its role in the scandal.
Location:
Industry:
Size:
USD1 billion (2003 sales)
Other setting(s):
2001-2004
About
Abstract
China Aviation Oil (CAO), voted as the most transparent company listed on Singapore Exchange, had collapsed because of a US$550 million loss in speculative oil trading in 2004. This was the second major derivative scandal at the Singapore Exchange. The first one was the collapse of UK''s Barings Bank in 1995. The derivatives scandal raised considerable concern on the creditability of Singapore as a secure financial destination, which until then had the reputation of being Asia''s best-regulated financial centre. Also, questions were raised about corporate transparency among Chinese companies and the role of independent directors. The case study throws light on the scandal and offers scope for discussing the challenges facing Singapore. Meanwhile, CAO had managed a bail-out plan, and it was Singapore, which was paying the price for its role in the scandal.
Settings
Location:
Industry:
Size:
USD1 billion (2003 sales)
Other setting(s):
2001-2004