The founder of heavily-indebted Singapore oil trader and bunker supplier Hin Leong Trading (HLT) told staff not to declare futures losses of about $800m over several years, a Singapore court filing has revealed.
The affidavit signed by Lim Oon Kuin was part of a Singapore High Court filing on Friday that protects HLT and its subsidiary Ocean Tankers from creditors for 30 days, Reuters reported.
In that time, the court will decide whether to grant a six-month repayment extension on debts of $3.85bn owned to 23 banks.
Lim — who is in his 70s and widely known as O K Lim — said in the filing that “HLT has not been making profits in the last few years” despite reporting net profit of $78.2m for the business year to the end of last October.
The filing has not been made public but has been reviewed by Reuters and followed up by Bloomberg.
The company, which is one of Asia’s largest oil traders, “suffered about $800m in futures losses over the years but these were not reflected in the financial statements,” Lim stated.
“In this regard, I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong.”
The affidavit said Lim was resigning immediately as director of the family-held company he founded half a century ago from a single delivery truck.
The filing cited a collapse in the oil price and the coronavirus pandemic, which has hit oil demand but increased costs for HLT.
The statement did not detail over how many years the losses were incurred or why he was blaming HLT’s difficulties on problems that arose largely in the past few months, Reuters reported.
TradeWinds reported last October that Ocean Tankers had emerged as the top player in floating oil storage off the Malaysian coast, with at least eight of its VLCCs being used to store low-sulphur fuel oil (LSFO) ahead of the January IMO 2020 deadline.
According to Singapore’s Business Times, HSBC has the largest exposure out of HLT’s 23 banks at $600m.
ABN Amro is own $300m, while three Singapore banks — DBS, OCBC Bank and United Overseas Bank — have a combined exposure of at least $600m. DBS is owned around $290m, OCBC Bank $220m, and UOB $100m.
