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The company epitomized Singapore’s success in the commodity business. But the oil broker Hin Leong has just gone bankrupt, victim of coronavirus and management, to say the least, opaque.
A society born at the time of Singapore’s independence collapsed under the shock of the coronavirus. Hin Leong was a family company, not an oil trading giant like Vitol or Trafigura, but still one of the biggest Asian companies distributing petroleum products, in particular “bunkering”, to refuel the holds of ships. This activity had transformed the city-state into a major stopover then into a veritable “hub” of raw materials. The founder Lim Hoon Kuin was a billionaire, he was nicknamed OK Lim or the “Singapore wolf”.
Fraudulent practices on hydrocarbon stocks
But the company was unreasonably speculating on the price of hydrocarbons. The system has held up for years. He cracked with the appearance of the coronavirus and the plunge in crude prices. The margin calls were getting colossal. The bankruptcy forced the new director, son of the founder, to confess $ 800 million in losses, hidden in the accounts. An investigation is underway for fraud, Hin Leong sold the same physical stocks several times to obtain new bank financing.
A slate in European banks
Banks will have to pay off a huge debt, $ 4 billion, loaned including by European financial institutions: HSBC, Societe Generale, Natixis or Crédit Agricole. ” All banks that finance raw materials are involved, underlines Jean-François Lambert, consultant in risk management in this sector. They will have to be more demanding with companies and audit firms. Three major bankruptcies in Singapore in less than two years, Coastal Oil, Agritrade and Hin Leong, that’s a lot. And Dubai traders may in turn hold surprises.
” The weaknesses are revealed in the crises, of real estate in 2008, with the Kerviel affair, of oil today, judge Alexandre Baradez, analyst at IG. Hin Leong’s fraud was a bet that would never have been discovered if the barrel had remained above 50 dollars “