Reuters reported that China's customs authorities detained a Glencore trader as part of an investigation into the potential evasion of millions of dollars in taxes on fuel imports.

Mr Li Buhua, a Chinese national who is a member of Glencore's Beijing based trading team, was detained by local customs authorities and released last week on bail.

As per report, Chinese customs authorities have since late last year been looking into imports of power kerosene, a fuel of a quality between diesel and kerosene that can easily be turned into diesel, but is not subject to a hefty consumption tax which otherwise applies to diesel or kerosene. China levies a consumption tax of about USD 125 per tonne on imports of diesel or jet kerosene, but power kerosene is exempt.

The investigation involves a 100,000 tonne cargo Glencore brought in through China's Zhuhai customs port late last year. On those figures, the shipment would be worth around USD 80 million and value of the tax would be about USD 12.5 million.

Glencore confirmed an employee had been detained but did not identify him. It said it sold 120,000 tons of mixed kerosene and power kerosene, which was stored at a Singapore tank farm. The customer, Guangdong Zhenrong Energy, took the cargo away in four ships over a period of about two months.

A Glencore spokesman said “These were cargoes that were sold FOB Singapore to a Chinese customer and the title and economic interest transferred to the customer at Singapore. It's not clear to us why our field officer was arrested. We presume it was to help the authorities.”

(Sourced from Reuters)