Singapore police launch probe into oil trader Hin Leong

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Singapore authorities have launched an investigation into Hin Leong Trading, the heavily indebted oil trader that has admitted to US$800 million ($1.3 billion) of undisclosed losses and filed for bankruptcy protection.

The probe led by the police commercial affairs department comes as lenders scramble to cut their exposure to the distressed group.

ABN Amro is the latest lender to seek to limit its losses, filing claims against Hin Leong linked to irrevocable letters of credit it issued to the company, according to filings to Singapore's Accounting and Corporate Regulatory Authority on Friday. Société Générale also made claims against the company last week.

The French and Dutch banks are among more than 20 lenders exposed to Hin Leong's debts of US$3.85b. HSBC has the biggest exposure at US$600m, followed by ABN at US$300m, while SocGen has lent the company US$240m.

ABN and SocGen declined to comment.

Hin Leong filed for bankruptcy protection on Friday after failing to reach an agreement with its lenders on a debt moratorium.

In a filing to Singapore's High Court, founder Lim Oon Kuin said he had directed the company's finance department not to disclose US$800m of losses sustained in futures markets.

Hin Leong's troubles have shaken the commodity trading hub of Singapore, where billionaire Lim — who started the business in 1963 with a single truck supplying diesel to local fishermen — is one of the best known figures in the industry.

Hin Leong, family shipping business Ocean Tankers, Lim and his company director son Evan Lim did not immediately respond to requests for comment. Rajah & Tann, one of Hin Leong's legal advisers, said it was unable to comment as the matter was before the courts.

With Singapore's courts only sitting for urgent and critical cases because of the south-east Asian city-state's coronavirus restrictions, it is not clear when Hin Leong's bankruptcy petition will be heard.

The company's lenders have appointed Drew and Napier, one of Singapore's leading law firms, to represent them and have held talks with Lim's advisers on next steps.

According to people with knowledge of the situation, the banks are expected to oppose Hin Leong's bankruptcy filing and ask Singapore's High Court to appoint an independent third party to run the company, a process known as judicial management, while they try to restructure its debt.

"There's no way the lenders will want Evan Lim running this business," one lawyer said.

Hin Leong's lenders are also likely to push for judicial management at Ocean Tankers, which has also filed for bankruptcy protection and is run by Evan Lim.

In a court document seen by the Financial Times, Evan Lim said Ocean Tankers faced potential liabilities of up to US$2.67b in respect of trades entered into by Hin Leong.

Most of the oil traded by Hin Leong was carried on ships operated or chartered by Ocean Tankers.

Deloitte — which was appointed Hin Leong's auditor in 2003 and signed off on the financial statements that Lim said failed to record losses — did not respond to requests for comment.

- Additional reporting by Stephen Morris and Nicholas Megaw.

Written by: Stefania Palma in Singapore and Neil Hume

© Financial Times