THE high-profile trial of Singapore’s fallen oil legend Lim Oon Kuin – on charges related to cheating and forgery that the city-state’s prosecutors slapped against him following the collapse of the Hin Leong empire – began on Tuesday (Apr 11) at the State Courts.

Singapore prosecutors proceeded to trial with three of the over 100 charges against Lim, better known as OK Lim. The 80-year-old, who appeared in court in a wheelchair, pleaded not guilty to all three charges, two of which involved cheating. 

Senior Counsel Davinder Singh of Davinder Singh Chambers, who is representing Lim, sought the court’s permission for the accused to remain seated when the court rises or adjourns, citing medical reasons. Judge Toh Han Li allowed this.

In his opening statement, deputy public prosecutor Christopher Ong said Hin Leong’s collapse has been described as “one of the world’s largest collapses of an oil trading firm”.

According to prosecutors, the offences committed between Mar 19, 2020, and Mar 23, 2020, had allegedly “induced” HSBC to disburse nearly US$112 million to Hin Leong Trading. The offences carry a maximum sentence of 10 years imprisonment and fines.

Singapore prosecutors accused Lim of cheating HSBC by representing to the bank through Hin Leong’s employees that the company had entered into two contracts for the sale of oil with China Aviation Oil (Singapore) Corporation (CAO) and Unipec Singapore, and submitting two invoice-financing applications on these purported transactions. 

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

“In fact, the two transactions were complete fabrications, concocted on the accused’s directions, and the invoice-financing applications were supported by forged or fabricated documentation,” said Ong on Tuesday. 

To prove the case against Lim, Singapore prosecutors will rely on testimony from HSBC employees who dealt with Hin Leong, employees of Hin Leong as well as representatives of the purported counterparties CAO and Unipec. 

Ong said the prosecution’s witnesses will be supported by “ample documentary evidence”, including the documents forged and fabricated. In addition, the prosecution will also admit statements made by Lim to the Commercial Affairs Department in the course of investigations.

Hin Leong, an oil trading and offshore empire built by Lim, suffered an ignominious fall in 2020 at the height of the Covid-19 pandemic, which had sparked a historic oil crash. 

The group’s flagship company Hin Leong Trading was wound up three years ago, after it buckled under hefty debts of US$4.6 billion owed to more than 20 banks. The troubles at the firm and related entities also brought to the fore hidden financial woes and irregularities. 

In the ensuing months, Lim and his children would face multiple charges, most of which were related to forgery and cheating. 

In his opening statement, Ong said that HSBC had lodged a police report in April 2020, stating its concerns that two invoices submitted by Hin Leong for discounting, in relation to two contracts for the sale of oil with CAO and Unipec, were “fraudulent”.

The invoices were submitted based on the “silent confirmation and discounting agreement” – a financing facility offered to Hin Leong where it could apply to HSBC to discount invoices for the sale of oil to customers.

(“Discounting” refers to accounts receivable financing, where a seller “sells” unpaid invoices to a financial institution. The seller typically receives a slightly discounted upfront payment, in circumstances where the credit terms for the transaction would mean that the seller would otherwise only receive payment from the buyer at a later date.)

To make a discounting application (DA), Hin Leong was required to submit supporting documentation relating to the transaction. This included the sales contract, commercial invoice, and bill of lading or inter-tank transfer certificate evidencing the delivery of the oil that it had sold. 

On Mar 19, 2020, two accounts executives at Hin Leong’s “banker” department sent e-mails to HSBC’s commodity and structured trade finance department in support of a DA concerning a purported sale of oil by Hin Leong to CAO, where CAO was to pay US$56.07 million to Hin Leong. This transaction did not exist, and the application was supported by forged or false documents e-mailed to HSBC, claimed Ong.

“The underlying transaction between Hin Leong and CAO was a fabrication. No such contract had been concluded between Hin Leong and CAO. Instead, the entire transaction had been concocted on the accused’s instructions,” said Ong. 

Based on Lim’s alleged deception, HSBC was dishonestly induced into disbursing US$56.07 million to Hin Leong’s HSBC account. 

HSBC was also similarly allegedly deceived into disbursing US$55.8 million to Hin Leong, on the basis that the oil trading firm had entered into a contract with Unipec for the said sum. 

On Apr 8, 2020, Hin Leong notified HSBC that it was facing liquidity issues, and would be requesting a standstill agreement with its lenders. 

Four days later, Lim and his two children, Lim Huey Ching and Lim Chee Meng, held a teleconference call with HSBC representatives and informed the bank that, due to “miscommunication” within Hin Leong, the DAs for the sales to CAO and Unipec had been mistakenly submitted to HSBC, when in fact, the deals with CAO and Unipec had not materialised.

On Apr 20, HSBC wrote to CAO and Unipec, notifying them of the DAs submitted by Hin Leong, and demanding payment of the outstanding sums under the invoices. CAO and Unipec responded that they had not entered into, nor had any record of, the alleged transaction with Hin Leong. HSBC then moved to lodge the police report. 

“For the avoidance of doubt, the prosecution does not accept that the discounting applications were made mistakenly... these applications were intentional deceptions, made on the accused’s directions,” said Ong. 

On the first day of the trial on Tuesday, the prosecution called in its first of some 28 witnesses who are expected to testify in the trial. The witness Chua Pei Pei, HSBC’s senior vice-president of commodity and structured trade finance in Singapore, testified on the e-mail correspondences between Hin Leong and the bank in relation to the alleged forged or false documents.

The matter is fixed for trial over several dates in April, May and June till Jul 20.