OW Bunker and the failure in governance
Lack of transparency and conflicts of business roles are among the underlying causes of the collapse of the global marine fuel logistics firm.
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ON NOV 6, 2014, news broke about an alleged fraud and risk-management failure at Dynamic Oil Trading (DOT), one of the two Singapore subsidiaries of OW Bunker A/S, a Danish global marine fuel logistics company which listed on the Nasdaq OMX Copenhagen on March 28 last year.
Apparently, DOT's CEO and finance manager had extended a credit of US$125 million to Tankoil Marine Services, a Singapore bunker supplier, without the approval of the parent's board of directors. A loss of US$150 million was also discovered after a review of the company's risk exposure. OW Bunker and several subsidiaries then filed for bankruptcy. Two key DOT employees were reported to the authorities and the chief risk officer (CRO) was fired.
OW Bunker's initial public offering (IPO) prospectus described approval authorities for credit lines in some detail. Non-compliance with authorisation limits and poor risk management were the proximate causes of the company's collapse. However, media reports and public disclosures by the company suggest a number of underlying causes.
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