Lim Oon Kuin, founder of collapsed Singapore oil trading and tanker empire Hin Leong Trading, was found guilty on Friday of two counts of cheating and one count of encouraging forgery with intent to deceive.
State Courts judge Toh Han Li ruled that the 81-year-old Lim cheated HSBC Holdings of $111.7m by instructing a Hin Leong employee to forge documents.
According to the prosecution, Lim defrauded HSBC through his employees by making it appear as though Hin Leong had signed two oil sales contracts with China Aviation Oil (Singapore) Corp and Unipec Singapore.
Two invoice financing applications were made based on those alleged transactions. However, they were total fabrications, generated on the accused’s direction, lead prosecutor Christopher Ong said at the beginning of the trial in April 2023.
The alleged deception led to HSBC paying Hin Leong $111.7m as part of a Silent Confirmation and Discounting Agreement, a financing facility under which Hin Leong, as the seller in the transactions, sold the unpaid invoices to HSBC for a discounted upfront payment, leaving the bank to recoup payment from the buyers at a later date when the invoices became due.
According to HSBC, it sent letters seeking payment of the amounts owed under the invoices to China Aviation Oil and Unipec on 20 April 2020. However, both companies denied engaging in those purported transactions with Hin Leong.
The court ruled on Friday that the discounting applications were backed by falsified or forged evidence, and the two transactions were total fabrications created under Lim’s orders, which tricked HSBC into giving Hin Leong $111.7m.
Hin Leong collapsed in 2020 when banks withdrew their financing after Lim admitted the company had lost large sums of money in the forward freight agreement markets. Affiliated tanker operator Ocean Tankers and tanker-owning company Xihe went into liquidation shortly thereafter.
Lim was then hit by 130 criminal charges in which prosecutors alleged that 16 banks in Singapore suffered monetary losses of $291.9m out of the $2.7bn in loans they were tricked into extending to Hin Leong by the actions of Lim and family members involved in the business.
The now-defunct oil trader was estimated to owe $3.5bn in debt to 23 banks at the time of its collapse.
Through Ocean Tankers and Xihe, Lim controlled a fleet of more than 115 tankers, with vessels in almost all tanker subgroups. Xihe’s liquidator conducted a staggered mass sell-off of this vast fleet over a period of more than two years.
Lim, who has appeared at court hearings in a wheelchair and looking frail, now faces a possible 10-year jail term and a potential hefty fine for each charge. Sentencing is scheduled for 3 October and he remains out on bail until then.
His remaining 127 criminal charges have been stayed until a later date.
Hin Leong was founded in 1973 and its collapse has been described by prosecutors as “one of the world’s largest collapses of an oil trading firm”.
