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Legal tussles snarl millions in oil from Hin Leong deals
[SINGAPORE] Millions of dollars of oil stored in tanks and ships in Asia and Europe has become caught in a web of lawsuits related to trade and financing deals by Singapore's Hin Leong Trading, according to court documents and shipping data.
A report filed this week in Singapore's High Court and reviewed by Reuters found Hin Leong obtained financing from various banks for cargoes of oil which did not exist, complicating the competing claims of ownership.
The oil inventories that Hin Leong did have include diesel on three tankers that arrived fully loaded in Europe last month, and which have since been floating off the United Kingdom and France, shipping data on Refinitiv's Eikon showed. The ownership of the fuel on four floating storage units (FSUs) off Malaysia is also in dispute, the report said.
Hin Leong, one of Asia's largest oil traders, was placed under so-called judicial management in April owing US$3.80 billion to 23 banks as oil prices crashed and the coronavirus swept across the globe.
The report by interim judicial managers from PricewaterhouseCoopers Advisory Services (PwC) found that Hin Leong's total oil inventory stood at US$212 million as of May 20, less than a third of the US$646 million owed to banks that provided inventory financing facilities.
Hin Leong and PwC did not immediately respond to emailed requests for comment. A spokesperson for Rajah & Tann, legal advisor to the interim judicial managers, declined comment.
Hin Leong's oil inventories "are likely to be subject to multiple claims by creditors", according to PwC. The accountancy firm plans to sell some of the inventory, which is currently incurring storage costs, to minimise costs.
The sale proceeds would be set aside while ownership of the oil was determined, which it expected would take a "significant time" to complete.
Determining who owns the oil is part of a wider restructuring of Hin Leong, which PwC has said has no future as an independent company after it "grossly overstated" the value of its assets by at least US$3 billion.
Unipec Singapore, the trading arm of Asia's largest refiner Sinopec, has sought delivery of diesel aboard the three tankers - very large crude carrier Qi Lian San and two Aframax-sized ships Ocean Voyager and Ocean Taipan - under sales contracts with Hin Leong, PwC said.
The tankers were chartered by Ocean Tankers, owned by Hin Leong's founder Lim Oon Kuin, widely known as OK Lim, and his family. Ocean Tankers has also been placed under judicial management.
Unipec, Ocean Tankers and its interim judicial manager EY did not immediately respond to emailed requests for comment.
Davinder Singh Chambers, the Lim family's legal advisor, and nTan Corporate Advisory, its financial advisors, did not immediately respond to emailed requests for comment.
PwC said HSBC, Societe Generale, ICICI Bank, Natixis and Credit Agricole Corporate & Investment Bank have made claims on cargoes onboard the FSUs. It named the vessels Wu Yi San, Chang Bai San and E Mei San.
Sembcorp Cogen, a unit of Sembcorp Industries, Cooperative Rabobank Singapore and Unipec are claiming ownership of oil stored at various tanks in Universal Terminal which is 41 per cent owned by the Lim family, according to the report.
Separately, oil trading companies Winson Oil Trading, Trafigura and Glencore Singapore have requested documents which give proof of ownership on some of the cargoes following deals with Hin Leong.
Winson Oil and Sembcorp did not immediately respond to emailed requests for comment. Glencore and Trafigura declined to comment.
Societe Generale confirmed that it is a lender to Hin Leong, declining to elaborate further due to ongoing investigations. Natixis and HSBC declined comment. Credit Agricole, ICICI and Cooperative Rabobank did not immediately respond to emailed requests for comments.