Crash landings do not come much more spectacularly than that of China Aviation Oil (CAO). The Singapore-listed subsidiary of mainland China's monopoly supplier of jet fuel sought court protection on November 29th after racking up $550m of losses trading oil derivatives. It is hard to decide which part of the tale is most hair-raising. CAO freely acknowledges that it speculated in crude-oil futures, rather than just hedging its position, and bet wrongly that prices would fall. It blew through its own $5m internal trading limits back in 2003, but kept doubling up in an attempt to make good the deficit and told nobody about its mounting losses for over a year. And as recently as October 20th, its parent sold $120m-worth of shares in the subsidiary to outside inves- tors to cover losses, without telling those investors that anything was amiss.
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