Here’s a peek at how an epic gamble exposes the rot inside Singapore tycoon Lim Oon Kuin’s Hin Leong oil-trading empire
- Hin Leong hid more than US$800 million in losses speculating in oil futures, according to an affidavit
- The gap between the company’s assets and its liabilities stands at US$3.34 billion
The letters started to arrive in early April. One after the other, the titans of global finance, from JPMorgan to HSBC Holdings, 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.
OK Lim, known formally as Lim Oon Kuin, has fallen on his sword, revealing he hid more than US$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 US$3.34 billion.
The Singapore police force is now investigating the company while the Monetary Authority of Singapore (MAS), 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.