How an Epic Gamble Exposed the Rot Inside an Oil Empire

Published on : 2020-04-21

The letters started to arrive in early April. One after the other, the titans of global finance, from JPMorgan Chase & Co. to HSBC Holdings Plc, demanded the immediate and urgent repayment of hundreds of millions of dollars in loans.

On the receiving end was Hin Leong, one of the most powerful and secretive names in oil trading. Founded in 1963 by a Chinese immigrant known to everyone in the industry as OK Lim, it was a giant in the world of shipping fuel from its base in Singapore.

Over the decades it had become one of the most fabled trading houses, the source of a billion-dollar fortune, and the subject of stories about legendary deals that made rivals sweat. But earlier this month, as oil prices collapsed in the fallout from the coronavirus, its foundations crumbled.

Banks had already been pulling credit lines, spooked by defaults at other trading houses. Smelling something wrong at Hin Leong, they started to ask for their money. When it failed to repay promptly, they called in their lawyers, and the game was up.

Lim Oon KuinSource: The Business Times

OK Lim, known formally as Lim Oon Kuin, has fallen on his sword, revealing he hid more than $800 million in losses speculating in oil futures over the years. Worse still for the banks, Lim said he had secretly sold some of the million of barrels of oil inventories the company had pledged as collateral for its loans. The gap between the company’s assets and its liabilities stands at $3.34 billion.

The Singapore police force is now investigating the company while the Monetary Authority of Singapore, the nation’s financial regulator and central bank, has been in contact with Hin Leong’s bank creditors, according to people familiar with the matter.

The closely knit trading community in Singapore, where players bet hundreds of millions of dollars every day on the price of oil, is in shock at the downfall of one of its biggest names. Hin Leong, which means “prosperity” in Chinese, sought protection from its creditors in Singapore on April 17. Having spent decades keeping the inner workings of his company secret, Lim came clean in a startling mea culpa.

“I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong,” Lim said in an affidavit seen by Bloomberg News. Although Hin Leong Trading (Pte) Ltd.’s official accounts showed a profit of $78 million in its 2019 fiscal year, “in truth,” Lim explained, the company “has not been making profits in the last few years.”

Related Articles

Kuwaiti petroleum firm discovers natural gas, condensate in Indonesia

Kuwait Foreign Petroleum Exploration Company, or Kufpec, has discovered natural gas and a light form of oil in Indonesia

Read More

Gazprom Daily Gas Exports in January Fall to Lowest Since 2015

Gazprom daily gas exports to its main markets shrank in the first 15 days of the new year to the lowest since 2015 while criticism is growing that it’s withholding supplies to Europe.

Read More

Abu Dhabi NMDC bags $21. 5mln dredging contract in Egypt

Abu Dhabi-based National Marine Dredging Company (NMDC) announced on Thursday that it has been awarded 79-million-UAE-dirham ($22 million) contract for dredging works at the entrance to the navigation channel and the trench of the quay wall in Safaga Port in Egypt.

Read More
Wintershall Deaneptune LogoSIEnppipetrojetTransGlobe SCHNEIDER-ELECTRIChempleEgypt gasNorthAlmansooriSKY CTS exxonmobilSchlumberger