SINGAPORE : Singapore-based China Aviation Oil (CAO), which has
sought court protection after a half-billion-dollar trading fiasco,
has been hit with a third class-action lawsuit filed in the United
States.
The law firm Christopher J Gray, P C said in a statement seen in
Singapore on Tuesday it filed the suit before a district court in
New York on behalf of clients who bought CAO shares between
February 5 and November 30 last year.
It followed similar complaints filed in New York by two other law
firms specialising in class-action lawsuits - Lerach Coughlin Stoia
Geller Rudman Robbins, as well as Murray, Frank and Sailer
LLP.
The three suits revolve around the failure of CAO and its
Beijing-based parent company to disclose massive derivatives losses
totalling US$550 million.
CAO, which sources jet fuel for China but is listed on the
Singapore stock exchange, has asked the Singapore High Court to
protect it from creditors seeking more than 250 million dollars
from the company.
The court gave the company until January 21 to submit a
restructuring plan while trading of CAO shares has been suspended
since the scandal broke out in late November.
The US lawsuits similarly accuse CAO of issuing "false and
misleading statements regarding the company's business and
prospects" and "concealed material facts from the investing
public."
They add that "as a result of the defendants' false statements,
China Aviation shares traded at inflated levels" during the period
in question.
The "false and midleading statements" also helped CAO's parent firm
to complete the sale of a 20 percent stake, worth US$120 million
while knowing the losses were coming, they charge.
Contrary to the company's prospectus, CAO did not have the
necessary risk management controls in place for hedging and
trading, they said.
The suit by the Christopher J. Gray law firm said any investor who
wants to be the lead plaintiff should petition the court no later
than March 7.
All three lawsuits do not mention specific damages sought from
CAO.
CAO spokesman Gerald Woon said Tuesday the company has not been
served legal papers so far.
"When we receive the papers, we will take the appropriate action,"
he told AFP.
The CAO financial scandal is the biggest in Singapore since rogue
trader Nick Leeson bankrupted Britain's Barings Bank in 1995 after
losing over one billion dollars on bond derivatives.
Leeson was given a jail term of six-and-a-half years and eventually
served about half his sentence.
Meanwhile CAO is also facing a separate suit in Singapore from
Indonesian investment group Satya Capital for allegedly backing out
on a deal to buy its 20.6 percent stake in Singapore Petroleum
Corp.
One of CAO's creditors - Standard Chartered Bank - has also filed a
statutory demand for US$14.4 million. - AFP