Published January 21, 2009

Former CAO boss returns to China

Chen Jiulin was granted an early release from Changi Prison for good behaviour

By LYNETTE KHOO

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(SINGAPORE) The former boss of China Aviation Oil (CAO), Chen Jiulin, who was released from Changi Prison yesterday, headed straight to the airport to return to his hometown in Hubei, China.

Mr Chen: '...I have already borne the biggest responsibility.'

In a closely watched corporate scandal a few years back, Mr Chen was sentenced to jail in 2006 and fined $335,000.

He had presided over US$550 million in derivative losses for betting on the wrong direction of oil prices, shocking the corporate world in 2004, and getting thousands of investors burnt.

Now, at age 47, the once high-flyer and 'super-CEO' - who had been sentenced to jail for four years and three months - was granted early release on good behaviour. Sources said he was escorted by Immigration and Checkpoint Authority officers in a car to the airport.

Mr Chen appeared to have made peace with his past, although physically, he has lost weight, according to an interview with a Lianhe Zaobao reporter who paid him a visit recently. He said his time in prison had been spent reading, reforming and in retrospect.

Looking back at the CAO fiasco, he told Zaobao: 'Until now, I still maintain the view that while this incident has done investors wrong, I have already given my best effort to salvage.

'I did not harbour personal interests, and for this matter, I have already borne the biggest responsibility,' he added.

The CAO case was noteworthy for the fact that it was the biggest corporate scandal to hit Singapore since 'rogue trader' Nick Leeson brought down Britain's Barings Bank in 1995. Mr Chen was also the first person in Singapore jailed for insider trading.

He was given four months' jail for his role in a 15 per cent stake sale by CAO's parent company, China Aviation Oil Holding Company (CAOHC). CAO failed to disclose its massive losses to investors who bought the shares.

Mr Chen's jail term on this offence ran concurrently with his four-year jail term for cheating Deutsche Bank into handling the same stake sale. He had also pleaded guilty to breach of director's duties, making false and misleading statements on CAO's performance, and failing to inform the Singapore Exchange (SGX) of CAO's options losses.

Besides Mr Chen, some former senior executives at CAO were also convicted. Peter Lim, then-CAO finance head, was sentenced to a two-year term for cheating Deutsche Bank and fined for not disclosing losses. It was said that Lim served one more year in jail in place of paying the fine.

'There should be allowance for people to make mistakes,' Mr Chen was quoted as saying in the Zaobao interview. He added that when it comes to evaluating mistakes, one should consider what the intent and the conditions were at the time.

For CAO, where a series of mistakes led to its near-collapse, the company was eventually brought back to its feet by a restructuring and injection of cash by new investors, BP Investments Asia and Temasek Holdings. CAO shares resumed trading in March 2006. BP still held a 20 per cent stake as of March 2008.

Mr Chen expressed gratitude and thanks to the public and friends who have cared for him all this while, but shied away from the reporter's question on his future plans. He returned home yesterday, accompanied by his younger brother.