A scathing report submitted to the High Court of Singapore by the interim judicial managers of Hin Leong Trading last week prompted company founder Lim Oon Kuin, also known as OK Lim, and his family to make their first public statement since the outfit first started to collapse in April.
PricewaterhouseCoopers Advisory Services (PwC), which is Hin Leong’s court appointed interim judicial managers, stated emphatically that the company had “no future as an independent firm” as it had liabilities of $3.5bn and assets of only about $257m.
PwC claimed its investigations had unearthed a large number of irregularities in Hin Leong’s finances.
It found that the oil trader had overstated its assets, including at least $2.23bn in accounts receivables. Evidence also suggested that Hin Leong had hidden about $808m in losses from derivatives trading over the past 10 years by overstating derivatives gains by as much as $2.1bn.
It allegedly “fabricated documents on a massive scale” to give the impression that customers were paying the company, helping to inflate its accounts receivables and secure financing.
Furthermore, there was evidence to suggest that the company had bought and sold cargoes that did not exist to increase immediate liquidity.
PwC managers concluded that there was no chance of rehabilitating Hin Leong unless it merged with the Lim family’s other companies — including Ocean Tankers, Xihe Group, Universal Group Holdings and Universal Terminal — to create an integrated petroleum trading platform, as well as inject their personal assets into that entity.
But, they lamented, the Lims did not respond to multiple efforts to engage them about the proposal.
Nor, they claimed, did family patriarch OK Lim respond to requests for information needed for investigative purposes.
OK Lim and his family lashed out against allegations of a lack of communication in a statement released last Thursday, claiming that they had been denied "basic natural justice".
The family said they were not given a reasonable opportunity to put forward facts and arguments in justification of their conduct, and to respond to any criticism against them.
OK Lim had been unable to respond due to ill health. Several doctors, including a respiratory medicine specialist, a cardiologist and a psychiatrist had declared him unfit to report to work from 20 April to 20 June.
Supporting medical certificates had been provided to PwC but not mentioned in the report, they claimed.
The Lim family also took issue that PwC did not apply to seal the report, but instead published it.
“Their reason for not doing so is curious,” they stated.
The family said they would address the report and all other matters “in the appropriate fora”.
