China's state assets watchdog said here Wednesday that China Aviation Oil,
losing massive funds in the derivatives trading, are looking for potential
investors and handling its debt issues in line with international practice.
Li Yizhong, secretary of the State-owned Assets Supervision and
Administration Commission (SASAC) committee of the Communist Partyof China, said
at a meeting of state company leaders that his commission supports the
Singaporean government and concerned parties to investigate the massive losses.
He also asked China Aviation Oil (Singapore) Corp. to cooperatewith
investigators for the case.
After the case is settled, Li said, the SASAC will punish people responsible
for the losses in accordance with the administrative rules and Party codes.
He also warned leaders of other big state-owned companies to effectively
monitor their overseas subsidiaries and control risks.
He said the SASAC only endorsed the Singapore company to do time-bargain
business but it, exceeding its authority, set foot inthe derivatives trading.
In the crisis management rules of the company's board of chairs,Li said, the
Singapore company was only authorized to trade in futures under the ceiling of
five million US dollars worth of transactions or two million barrels of crude
oil.
The company finally transacted 52 million barrels of crude oil,which led to
roughly 550 million-US dollar losses.
Li's remarks were the first of its kind made by SASAC leaders on the losses.
Du Yuanquan, a SASAC spokesman, said over the weekend that the company
seriously violated the decision-making process and made wrong judgments on the
trading.
China Aviation Oil Holding Company, the corporate parent which owns 75
percent of stocks of the Singapore company, is investigating losses, Du said.
With a registered capital of 3.6 billion yuan (435 million US dollars), China
Aviation Oil is controlled and overseen by SASAC. The company established an
aviation oil filling network in nearly 100 domestic airports and provides
oil-filling service for 108 domestic and international airlines.
After the massive losses were released, China Aviation Oil urgently
dispatched a task force to Singapore to take over the Singapore company and
handle business as well as debts of the company.
