Singapore — The Singapore Police Force is conducting an investigation into oil trader Hin Leong Trading Pte. Ltd., a spokeswoman confirmed Tuesday, without providing additional details.
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The investigation comes after Hin Leong's managing director Lim Oon Kuin, or OK Lim, and his son and company director Lim Chee Meng said in two separate court filings for bankruptcy protection dated April 17 that the company suffered about $800 million in futures losses over the years that were not reflected in financial statements.
Hin Leong also racked up another $1.136 billion of inventory losses in a span of under six months, according to the filings. Its inventory value fell 89% to $141 million as of April 9 from $1.277 billion as of October 31, 2019, and its inventory volume fell to 608,745 mt from 2.61 million mt over the same period, the filings showed.
Hin Leong Trading's liabilities exceeded its assets by $3.336 billion as of April 9, with total liabilities of $4.050 billion and total assets of $714 million, the filings showed.
"The police confirmed that investigations are ongoing," a spokeswoman said.
OK Lim said in one filing that payments made by Hin Leong Trading or HLT to satisfy margin calls for derivatives losses were reflected as "accounts receivables" and he had given instructions to the finance department to hide the losses and told them that he would be responsible if anything went wrong.
"Further, over the years, HLT had, on my instructions, sold a substantial part of the inventory and used the proceeds as the general funds of HLT, even though the inventory was the subject of inventory financing provided by bank lenders," Lim said.
"I wish to explain that each of such transactions was documented based on a transaction where cargo was actually shipped, so as to raise additional financing which HLT knew it had to repay. This was not done with the intention to defraud or deceive any party," Lim said.