A thorough listing of scandals http://www.ex.ac.uk/~RDavies/arian/scandals/classic.

html

National Australian Bank

http://www.thaistocks.com/currency-trading.htm

Allfirst Bank http://www.guardian.co.uk/business/story/0,3604,818620,00.html http://www.rte.ie/news/2002/0206/aib.html China Aviation http://db.riskwaters.com/public/showPage.html?page=202422 Dissolve mystery of China Aviation Oil incident (Videos at bottom of webpage)

An enterprise, making a successful overseas buying and known as "buying an oil empire", has suffered the loss of 554 million US dollars on derivatives trading and the enterprise was named as the most transparent listed company in Singapore in 2004. Chen Jiulin, the suspended chief of Singapore-based China Aviation Oil was arrested by local police as the Police detained Chen Jiulin investigation was made into the loss of (L), the suspended chief US$554 million on derivatives trading. executive of China Aviation Oil's subsidiary, in Singapore after he returned to the city-state Wednesday, Dec. 8, following the company's announcement of massive trading losses. It is the China Aviation Oil Corp Ltd, a subsidiary of the China Aviation Oil Holding Company in Beijing that is under international spotlight. The scandal not only makes the star company with full potentials fall down, but also let people heave a sigh. The exposure of the China Aviation Oil Corp Ltd incident makes one think of lacking the state supervision over its national property and managers. Ii is an urgent task on how to supervise and restrict big-sized State-run enterprises in their further deepening reform, make them take the regular road for setting up a modern enterprise system and reduce the loopholes in the running in period of the old and new systems.
Making bold on bet

China Aviation Oil Corp Ltd is an overseas controlling subsidiary of the China Aviation Oil Holding Company and its president is also the deputy general manager of the holding company. Hai Liancheng, deputy general manager, secretary of the Party committee and senior accountant of the China Aviation Oil Holding Company made it clear on how the China Aviation Oil Corp Ltd suffered losses on derivatives trading. Approved by relevant departments and authorized by the China Aviation Oil Holding Company, the Singapore firm started oil securities transactions from 2003. During the period Chen made bold in enlarging the business scope. Starting from 2003 he engaged in derivatives

trading, which is just like gambling. Chen Jiulin signed contracts with banks including Japan's Sumitomo Mitsui Banking Co, French Societe Generale, Britain's Barclays Capital PLC, and Australia's Macquarie Bank. Chen took a gamble on 38 US dollars per barrel of oil. He did not expect that there was a continual rise on oil price and he lost. Since October 2004, the price for oil derivatives in Singapore has passed the expected price greatly. According to contracts, earnest money should be paid to banks and financial institutions. Singapore firm should pay banks the guaranty money worthy of 5,000 US dollars for one US dollar oil price rise per barrel, which leads to depletion of the firm's circulating funds. From October 26 to the present, the actual and potential losses reached some 554 million US dollars.
Prohibiting speculative transactions by explicit order

Chinese government prohibits by explicit order the oil speculative transactions done by the Singapore firm. "Enterprises with overseas futures permit can only be allowed to engage in hedge transactions and they are not allowed to engage in speculative transactions" according to the "Notice on further streamlining and standardizing futures market" issued by the State Council on August 1, 1998. "Enterprises with overseas futures permit can only be allowed to engage in hedge transactions and they are not allowed to engage in speculative transactions" stipulated by the second article of the "Guide to the management system on the overseas hedge business for State-owned enterprises" issued by China's Securities Regulatory Commission on October 11, 2001. "Futures transactions must be only made inside the futures exchanges and over-the-counter futures transactions are not allowed" stipulates the fourth article of the "Temporary regulations on the management of futures transactions" issued by the State Council on June 2, 1999. The 48th article of the regulation stipulates "State-run enterprises can only do hedge business in futures transactions and the total volume should be in line with the total volume of all spot trading in the same period".
Deceive superiors with false accounts

According to Hai Liancheng's analysis, there are three violations for the Singapore firm. First it did what the State prohibits doing; second, did over-the-counter trading and third the volume of transactions exceeded the total of spot trading. Hai Liancheng said the Singapore firm has engaged in the trading for more than a year from the initial 2 million barrels to 52 million barrels, which it had never told its parent company, the China Aviation Oil

Holding Company, about the trading until it was difficult to pay the guaranty money and hard to continue its business. However, the firm did not tell the actual facts when it informed the parent company in its urgent report. Without any supervision, Chen deceived his superiors by cooking the books. The reporter of People's Daily glanced over the financial statistics for June this year handed over to the parent company by the Singapore firm. According to the statistics statement the total assets in June was 4.26 billion yuan or 515 million US dollars with net assets worthy of 1.1 billion yuan or 133 million US dollars and with assets-liabilities ratio being 73 per cent. The long-term account receivable was 1.17 billion yuan or 141 million US dollars with account payable as the same as that receivable. Judging from the account, there was no problem with sound business. But actually the firm suffered potential losses of 3.58 billion US dollars in oil futures trading and there was not any sign shown on its financial statement. Die to the over-the-counter transactions the parent company could not discover Chen's secrets through the normal financial statement. The local supervision institutions in Singapore did not discover it too and the firm was named as the most transparent listed firm in Singapore in 2004.
There is no time to delay for recouping the losses

What will the Singapore-based China Aviation Oil Co do after suffering severe losses? Zhou Tianyong, deputy director with the economic research center of the Party School of the Central Committee of the Chinese Communist Party, suggests the relevant big-sized State-run enterprises including China Petrochemical Corporation, China Petroleum Corporation and COCSO Group should be encouraged to invest and buy shares from the Singapore firm and fill the loss hole to save it from bankruptcy. Zhou deems that the firm incident is a typical example of lacking supervision over State-run enterprises and shortage of perfect modern enterprise system for controlling State-run enterprises. Chen is independent of the leading squad of the China Aviation Oil Holding Company and has twice changed the financial managers sent by the parent company. However, the parent company had no way to control Chen, which shows the China Aviation Oil is far away from the modern enterprise system in its reform of modern enterprise system while the

loopholes in the old enterprise did not be mended timely. With loopholes Chen's antagonist is an international financial giant "Hedge Fund". The Hedge Fund has been stirred up troubles in the world for many years. The old Barings Bank was forced to close by the Hedge Fund. Zhou said Chen could not win in the bet as he had not powerful funds for backing. Chen said in his report to a Singapore court that French Societe Generale encouraged him to engage in futures transactions with loans on very favorable terms. Chinese overseas enterprises indeed face a hostile market environment. If there is not a perfect supervision and management system it is equal to jumping with open eyes into the fire made by the antagonists for Chinese enterprises in doing such business while being ignorant if it. By People's Daily Online