Wednesday, 20 October 2021

Singapore oil trader Hin Leong hid $800M in losses

(File photo: Reuters)

The son of the legendary founder of Hin Leong said the Singapore oil trader hid about $800 million in losses racked up in futures trading, suggesting a much bigger hole in the company’s finances than thought, according to people with knowledge of the matter.

The downfall of Hin Leong Trading (Pte) Ltd., one of the biggest and most secretive forces in the world of physical fuel-oil trading, shows the depth of the fallout from the dramatic drop in oil prices so far this year as a consequence of the Saudi-Russia price war and the coronavirus pandemic.

Lim Chee Meng, the only son of Lim Oon Kuin, said the company also sold some of the million of barrels of refined products it had used as collateral to secure loans from its banks, according to the people, citing an April 17 email sent by the shipping affiliate of Hin Leong, notifying recipient parties of proposed moratorium proceedings.

As a result, the company faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. That potentially means huge losses for the banks which provided the merchant with billions in loans as the collateral they thought they have as a guarantee isn’t there.

The trouble at Hin Leong is the latest to hit the commodity trading community in Singapore, among the largest hubs alongside Geneva, London and Houston. Over the last three years, the city state has seen the collapse of two other big names in the industry: Noble Group and Agritrade, and a rogue trader raking up millions in losses.

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