How Singapore’s investor watchdog fought for small shareholders in China Aviation Oil scandal

Boardroom Knockout tells the story of the Securities Investors Association (Singapore) and its battles against corporate malfeasance. The following excerpt from Chapter 4 of the book details how SIAS tackled the fallout from the US$550 million financial fraud at China Aviation Oil after its then CEO bet and lost big on oil futures.

Dawn was just breaking at six o’clock on December 1, 2004 when David Gerald’s mobile phone rang, jerking him from slumber. He glanced at the unknown number and hesitated for a second, wondering if it was a crank call or an urgent appeal for help from a SIAS member.

He picked up the phone and was surprised to hear a booming voice with an American accent: “Hello, are you Mr David Gerald?”

“Yes, I am. Who are you?” he responded groggily.

The caller, who identified himself as an editor of a Boston newspaper, got straight to the point: “Did you know that China Aviation Oil [CAO] has collapsed due to derivatives trading losses?”

Gerald stifled a groan as he struggled to process how the Chinese state-linked giant – a Singapore-listed red chip whose lucrative monopoly on imports of jet fuel into China led many investors to believe in its high-flying prospects – could suddenly go belly-up overnight.