OW Bunker Reports 2 Employees to Police, Declares Bankruptcy

OW Bunker (OW) A/S, a Danish shipping fuel provider that went public in March, has declared bankruptcy and reported two employees at its Singapore unit to the police following allegations of fraud.

“The board of directors and management deeply regret to inform that it has not been possible to find a sustainable solution,” the company said late yesterday in a statement. As a consequence, OW Bunker A/S, O.W. Bunker & Trading A/S and O.W. Supply & Trading A/S will file for bankruptcy, it said.

OW Bunker said Wednesday shortly before midnight it had lost $275 million through a combination of fraud committed by senior executives at its Singapore office and poor risk management. Trading in its shares was suspended on Nov. 5 and the company said its banks had refused to provide more credit. Just eight months ago, investors drove OW Bunker’s shares up 21 percent in their first day of trading, following an initial public offering that valued it at almost $1 billion.

Police in Denmark are still trying to establish the jurisdiction of the case and whether fraud was actually committed, Inspector Michael Kjeldgaard said yesterday by phone. His office wasn’t aware of any case having been filed with police in Singapore, he said.

‘Not Guilty’

Arvid Andersen, the defense lawyer representing the two Singapore-based employees, says his clients reject the allegations.

“My clients state that they’re not guilty” of breaching Danish penal code section 299, as alleged by OW Bunker, Andersen said today by phone. He declined to identify the two.

Calls and e-mails to OW Bunker Chairman Niels Henrik Jensen went unanswered. Spokesman Per Bech Thomsen says he no longer works for OW Bunker and declined to comment.

The company said it lost $125 million through the alleged fraud at its Singapore office. Separately from that, it said it also lost $150 million following a “significant risk management loss” and has as a result fired its head of risk management, Jane Dahl Christensen.
Banks Shocked

The banks who helped bring OW Bunker to market all say they’re as surprised as anyone else by its revelations over the past few days. Its shares had lost 42 percent since the March IPO before trading was halted.

Nordea Bank AB (NDA), which helped arrange the sale and had been urging clients to buy OW Bunker shares since Oct. 24 until suspending its recommendation this week, says it’s “shocked” by the company’s subsequent collapse.

“No one can foresee fraudulent activity by individuals,” Stephan Ghisler-Solvang, the bank’s spokesman in Copenhagen, said in a phone interview. “No one could foresee that the company would incur losses of this magnitude after the IPO.”

Nordea was a bookrunner on the IPO, together with global co-leads Carnegie Investment Bank and Morgan Stanley.

Altor Equity Partners, a private equity fund that had owned OW Bunker since 2007 until its IPO, said it is “deeply disturbed” by the revelations of fraud.

“This situation has snowballed over an extremely short period of time,” Soeren Johansen, a partner at Altor and a member of OW Bunker’s board, said in a statement.

At Carnegie, which is 68 percent owned by Altor, the view is that the bank is “just as much a spectator to this as anyone else,” spokesman Rickard Buch said.

OW Bunker’s March share sale gave the company a value of 5.33 billion kroner ($900 million), making it Denmark’s largest IPO after cleaning services provider ISS A/S (ISS), which went public in February in a 21.9 billion-krone listing.
Source: OW Bunker