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An octogenarian oil trader has been convicted of “cheating” HSBC and abetting forgery after a lengthy trial in Singapore, drawing a line under an oil dealing scandal that left banks facing hundreds of millions of dollars in potential losses.
Lim Oon Kuin, the 82-year-old founder of Hin Leong Trading, was found guilty on Friday of two charges of cheating HSBC and one of encouraging a Hin Leong contracts executive to forge a document. A sum of US$111.7mn was involved.
Hin Leong, one of the most powerful names in Asia’s oil trading industry, had been hiding losses from trading in futures markets and selling off oil inventories that had already been pledged as collateral for loans, according to legal filings.
The Singaporean tycoon will be sentenced in October and faces a maximum 10-year jail sentence for each of the three charges. He had become one of the city-state’s wealthiest people before his empire collapsed in 2020 as oil prices tumbled.
With its low corporate tax rates and stability, coupled with a location straddling the shipping lanes that connect China with global markets, Singapore has become one of the world’s biggest commodities hubs, competing directly with London, Geneva and Houston.
But the wrongdoing exposed at Hin Leong, along with other commodities trading scandals, have raised questions about the integrity of Singapore’s regulatory framework and its oversight of commodities trading houses.
A high-profile accounting scandal in 2018 at commodities business Noble Group’s Singapore entity brought the business to the brink of collapse, while Japan’s biggest trading house Mitsubishi Corporation was forced to liquidate its Singapore unit Petro-Diamond in 2019 after a rogue trader lost more than $300mn through unauthorised transactions.
HSBC and DBS, Singapore’s biggest lender, were among the bank creditors that provided trade financing to Hin Leong for years, with Lim originally being charged in 2020 after confessing to hiding US$800mn in losses and directing the company’s finance department not to disclose the losses, suffered in futures markets.
He also revealed he had sold a “substantial part” of the company’s oil inventories and used the cash as general funds, even though it was the subject of inventory financing agreements with banks.
He was later hit with more than 100 other charges, but prosecutors proceeded to trial on just three of them. Lim remains at liberty on a S$4mn (US$3mn) bail.
