Creditors spare China Aviation Oil, but Singapore charges Chen Jiulin, 4 others Five top managers of China's main jet fuel supplier will be charged today in a Singapore court over its listed arm's US$550 million losses on oil-price speculation - hours after its creditors accepted a deal saving the business from liquidation. Police detained Chen Jiulin , the suspended chief executive of China Aviation Oil (CAO), head of finance Peter Lim, the president of its Beijing parent company, Jia Changbin, and two Singapore-based executives ahead of today's hearing. Chen, 43, who faces 15 charges, fled Singapore before the firm disclosed its massive losses but returned to face the music. He had been on police bail since his arrest last year. Jia, president of China Aviation Oil Holdings, may face an insider trading charge related to the sale of a 15 per cent stake worth about S$196 million (HK$919 million) barely a month before CAO sought court protection from creditors. The decision to arrest him has major political implications and would not have been taken lightly by the Singaporean government. 'This is the way Singapore can demonstrate to the world that our corporate governance standards are preserved,' said David Gerald, a former judge and president of the Securities Investors Association in Singapore. Beijing had no comment on Jia's arrest and calls to China Aviation Oil Holdings headquarters went unanswered. The Beijing-based state company's listed arm collapsed in November in Singapore's biggest corporate scandal since the 1995 fall of Barings Bank. Its market capitalisation of US$550 million was effectively wiped out by the huge losses it ran up on derivatives trading as surging demand for oil and concerns the Iraq war and terrorist attacks may disrupt supply pushed the price of New York oil to a then record high of US$55.17 last October. Trading in its shares was suspended on November 29. CAO was saved from liquidation yesterday when 126 creditors agreed overwhelmingly to accept the company's offer to pay them 56.6 US cents for every dollar owed. 'Ninety-seven per cent of our creditors, representing US$539 million, voted to accept our restructuring programme,' said CAO spokesman Gerald Woon. CAO's meltdown raised serious questions about the corporate governance standards of overseas-listed Chinese companies. PricewaterhouseCoopers, which investigated the company for the Singapore stock exchange, said: 'This financial debacle could only happen because of a failure at every level of the company.' Its report showed that in five years CAO had changed its primary business model from physical trading to speculative trading. The auditor blamed the company's collapse on gross incompetence, a fundamental lack of understanding of derivatives trading and the management's attempts to cover up losses. The acceptance of the restructuring plan by creditors means the company can now expect to be relisted on the Singapore exchange in October, according to Mr Woon. China Aviation was granted the monopoly on jet fuel imports to China in 2001 but after its fall from grace other state petrochemical traders, including Sinopec and Petrochina, have taken up some of the US$1 billion-a-year business.