THE court-appointed liquidators of beleaguered oil trader Hin Leong Trading, as well as its largest creditor HSBC, are seeking US$3.5 billion from the company’s founder Lim Oon Kuin (better known as OK Lim), as well as his children Evan Lim Chee Meng and Lim Huey Ching.

In a civil suit, the trial for which commenced on Thursday (Aug 10), the liquidators are asking the Lims in question to be “personally responsible” for all the company’s debts.

They are also alleging that Hin Leong’s business was conducted with the aim of defrauding its creditors, and that the company had obtained financing through improper means.

Opening remarks for the cases were delivered at the High Court of Singapore, with Justice Philip Jeyaretnam presiding over the cases. The liquidators – Chan Kheng Tek and Goh Thien Phong – are represented by solicitors from Drew & Napier led by Cavinder Bull, while HSBC is represented by Shook Lin & Bok’s Sarjit Singh Gill and his team.

OK Lim is represented by lawyers from Davinder Singh Chambers. Evan Lim is represented by lawyers from Damodara Ong, and Lim Huey Ching by lawyers from Advocatus Law.

Drew & Napier’s Bull, in his opening remarks, said Hin Leong had been incurring losses for years, but was “falsely portrayed” as a profitable company.

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He said Hin Leong had been “insolvent” since end-October 2012, but the Lim family had led the company to continue trading on the basis that it was profitable. 

The liquidators are also alleging that losses of US$800 million over the past few years were concealed through the creation of fictitious gains, forgery of documents, improper accounting entries and the overstatement of its inventory. 

Meanwhile, the Lims had pocketed dividends of US$90 million in 2017 and 2018, even though there were no profits.

OK Lim has denied allegations of forgery. He also pleaded not guilty in a criminal trial this year. 

Bull argued that the “Lim family’s fingerprints are all over” certain transactions – namely interbank transactions from one Hin Leong account to another Hin Leong account.

These interbank transfers were all authorised by at least one of the Lim family trio, he said. 

Representing HSBC, Gill of Shook Lin & Bok said in his opening statement that there were “numerous” transactions created to obtain financing from the bank.

“These are not inadvertent errors,” he said. Gill noted that Hin Leong was also facing margin calls and repayment deadlines from banks, and it did not have the funds to make these payments because its financial statements were “inflated”. 

“It is really neat of them to try and portray these two transactions as mistakes,” he said, with reference to the transactions underlying the discounting applications that Hin Leong had made to HSBC. 

First liquidator takes the stand

In the afternoon session of the hearing, liquidator Goh took the stand. In his cross-examination of Goh, Davinder Singh questioned the figure of US$3.5 billion that the liquidators are seeking from OK Lim.

He pressed Goh for details on how the figure was reached, and whether US$3.5 billion was the final figure. 

Goh, in response, said the adjudication process is ongoing. As of Thursday, he said, the US$3.5 billion figure “still stands”, but Hin Leong’s total liabilities could increase following the completion of the adjudication.

In response to Singh’s question on why liquidators are still unsure of the final figure when some three-and-a-half years have passed, Goh said the adjudication entails a “complex process”. He said the liquidators arrived at the figure based on the principal amounts the banks are owed, but without factoring in interest payments.

Goh added the liquidation process has been made challenging by a lack of documents, as well as multiple or duplicate claims that need to be verified.

Singh asked Goh why documents related to the adjudication process had not been provided to the court, and suggested that the liquidator’s claim of US$3.5 billion has “no basis”.

In response, Goh said the numbers were supplied by Hin Leong’s management under oath.

“I suggest to you that the reason you are saying what you are now is that you don’t want these documents to surface in this court, because they question the very claims you are seeking to recover,” said Singh.

“I totally disagree,” said Goh, adding that he is answerable to stakeholders, creditors and the court for the acceptance or rejection of each claim.