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Last Updated: Thursday, 2 December, 2004, 15:40 GMT
China Aviation seeks rescue plan
Chen Jiulin, China Aviation Oil's suspended chief executive
The Singapore Exchange wants Chen Jiulin to help with inquiries
Crisis-hit jet fuel supplier China Aviation Oil (CAO) has launched a rescue plan after running up $550m (284m) in trading losses.

The Singapore-based firm said it had appointed consultant Deloitte & Touche to act as its financial adviser.

CAO collapsed on Wednesday after amassing trading losses on oil futures in October, when global prices surged.

The financial scandal is the biggest to hit Singapore since trader Nick Leeson brought down Barings Bank in 1995.

The Singapore-based British trader famously lost $1.2bn in speculative currency deals, eventually causing the collapse of the UK bank.

Chief's return

Deloitte said it was putting together a rescue deal that would see CAO, which is currently seeking court protection from creditors, receive a $100m cash injection.

CAO's Chinese state-owned parent, China Aviation Oil Holding, and Singapore's state investment agency, Temasek Holdings, would each provide $50m under the plan.

CAO is China's biggest supplier of jet fuel.

Separately, Singapore's securities and derivatives exchange, the Singapore Exchange, called for the return to the city-state of suspended CAO chief executive Chen Jiulin, who flew to China after the company's collapse.

Lapse in controls

The exchange said it wanted Mr Chen to help with inquiries into CAO's collapse.

Traders expressed surprise that the company - which has been one of the best performers in Singapore this year - could allow such a major lapse in controls designed to limit trading losses.

Hugh Young, director at Aberdeen Asset Management Asia, told the BBC's World Business Report: "Everyone puts in place controls, sometimes these controls work. This is a classic case where the controls did not work at all, or were overridden and resulted in disaster."

Shares in CAO were suspended on Monday, after sliding 23% last week.

Hugh Young, Aberdeen Asset Management Asia
"People are sitting on tremendous losses."

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