Kevin Foster of global energy and commodity price reporting agency Argus Media on Thursday (6 August) published an article outlining the details in Lim Oon Kuin, founder of Hin Leong Trading’s criminal charges following the company’s financial collapse:
The founder of Singapore’s Hin Leong Trading, Lim Oon Kuin, has been charged with abetting forgery, in the first criminal case to emerge from the collapse of the oil trading company earlier this year.
Lim has been charged with instigating a Hin Leong employee to forge a document stating that the company had transferred more than 1mn bl of gasoil to China’s state-controlled China Aviation Oil (CAO), the Singapore Police Force (SPF) said today. This document — issued by Hin Leong’s storage arm Universal Terminals — was allegedly used to secure more than $56mn in trade financing from an unnamed financial institution.
The charge, which carries a prison term of up to 10 years, resulted from an investigation by Singapore’s Commercial Affairs Department into Hin Leong. Lim is being investigated for other alleged offences, the SPF said.
Lim, known commonly as OK Lim, founded Hin Leong in 1963 and built the company into one of Asia-Pacific’s largest independent oil trading firms with revenues of more than $14bn/yr.
Hin Leong sought court protection in mid-April because of “severe financial difficulties” caused by falling oil prices, moves by bank lenders to reduce their exposure to the commodity financing industry and a drop in demand for oil and bunkers because of Covid-19. Hin Leong has liabilities of $3.5bn and assets of about $257mn, court filings show.
Allegations of fraudulent activity related to cargo financing at Hin Leong and two other Singapore companies, Hontop and Zenrock Commodities Trading, have sparked a crisis in confidence in the trading sector and caused some financial institutions to cut lending. Dutch bank ABN Amro, which had one of the largest exposures to Hin Leong, said this week it would withdraw entirely from commodities and trade financing.
PricewaterhouseCoopers (PwC), Hin Leong’s court-appointed judicial manager, said in a June court filing that it had found evidence suggesting the company overstated the quantity of inventories on vessels when obtaining inventory financing, securing financing by pledging cargoes that it did not own or did not exist.
Evidence suggests Hin Leong ran up derivatives trading losses of around $808mn over the past 10 years, which it concealed by overstating derivatives gains by as much as $2.1bn in its financial statements. Hin Leong “fabricated documents on a massive scale” to facilitate this, including bank statements, bills of lading and swap trade documents, PwC said.
CAO is China’s sole jet fuel importer and trades other oil products. There is no indication that it, or other counterparties involved in the allegedly questionable trades at Hin Leong, were party to any wrongdoing.
Photo credit and source: Argus Media
Published: 17 August 2020
