Shipping Fuel Scandal Sends Traders Scrambling

Shipping Fuel Scandal  Sends Traders Scrambling
Shipping Fuel Scandal  Sends Traders Scrambling

Traders and shipping companies scrambled to source fuel and take over supply contracts on Friday after Danish marine fuel supplier OW Bunker said a suspected fraud at its Singapore subsidiary had pushed it to the brink of bankruptcy, Reuters said in a report.

The alleged fraud at Singapore-based subsidiary Dynamic Oil Trading is potentially one of the biggest financial market scandals to hit the city state since 2004, when China Aviation Oil (Singapore) ran up oil futures losses of $550 million.

Some institutional and individual investors in Denmark said they were considering taking legal action against the firm.

The collapse of Denmark's third largest company by revenue with around 20,000 shareholders came as a shock to the Danish Shareholders Association, which hosted special events with management from OW Bunker ahead of its March initial public offering. Denmark's Berlingske newspaper cited OW Bunker chairman Niels Henrik Jensen as saying Dynamic's head, Lars Moller, and some of his colleagues arrived unexpectedly at OW Bunker headquarters in Norresundby, Denmark, this week and explained the situation to chief executive Jim Pedersen.

Moller's lawyer said in a statement that Moller denies any illegal activities have been going on. Andersen said that what had happened was due to an "untimely lack of care" and that OW Bunker has been too quick to jump to conclusions about the situation.

"The case is not that somebody has stolen money, billed fictitious trades or given kickbacks. The case is that a big credit given to one customer was built up," Andersen said.

The Danish company said earlier this week it had been informed about a fraud committed by senior employees in Singapore. OW Bunker announced that investors needed to assume that the company's equity had been wiped out due to losses at Dynamic estimated to be around $125 million. The company did not give any details of the alleged fraud, but several traders said the problem was likely to be related to the recent sharp fall in oil prices. The company, whose shares have been suspended, said it had fired its head of risk management. According to Singapore's Maritime and Port Authority, OW Bunker went from 30th biggest bunker supplier in 2012 to 13th place a year later, judged by volume. The company is estimated to have about 7 percent of the global market for bunker, a liquid fuel refined from crude oil and used to power ships, competing with companies such asWorld Fuel Services Corp, Chemoil Energy and Aegean Marine Petroleum Network.