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Fuel trader Winson Oil has failed to overturn a court ruling that it made false representations to Standard Chartered and OCBC when seeking payment for trades involving scandal-hit Hin Leong. 

Singapore-headquartered Winson previously filed lawsuits against the two lenders, arguing it was owed over US$60mn from the sale of gasoil cargoes to Hin Leong in March 2020. The transactions were part of a circular series of trades, starting and finishing with Hin Leong. 

Hin Leong failed to pay, and soon collapsed amid allegations of fraud that left creditors as much as US$3.5bn out of pocket. 

Standard Chartered and OCBC had each issued letters of credit (LCs) for those purchases but refused to pay, arguing that supporting documents had been forged by Hin Leong and that no goods had actually been shipped. 

Singapore’s High Court backed the lenders in an August 2023 judgment, ruling that Winson was recklessly indifferent as to whether the transactions or documents were legitimate, and so acted fraudulently when seeking payment under the two LCs. 

Winson appealed that ruling, but in a judgment handed down today, three Court of Appeal judges dismissed the trader’s claims. 

Winson’s appeal argued that recklessness alone should not allow a bank to invoke the fraud exception – a narrow clause that permits refusal of payment under an LC. 

It cited a 2022 ruling in favour of PPT Energy against Crédit Agricole, where PPT was not deemed an active participant in a fraud scheme orchestrated by collapsed trader ZenRock, despite likely being aware of the arrangement. That ruling was later overturned on appeal. 

Winson argued that considering recklessness as fraudulent conduct would represent an “expansion” of the fraud exception, weakening the LC as an instrument and potentially bringing trade “to a grinding halt”. 

But the Court of Appeal concluded that recognising recklessness does not broaden the fraud exception, and in other jurisdictions where similar conclusions have been reached, there have not been “the dire policy consequences which Winson claims would ensue”. 

The banks’ defences had argued that Winson’s conduct raised several red flags. For example, when OCBC challenged Winson on the grounds no goods were shipped, the trader immediately prepared new invoices and letters of indemnity rather than seeking to understand OCBC’s decision. 

Winson also requested payment despite receiving no loading documents or inspection certificates, and refused to repurchase the cargo to sell to an alternative buyer when prompted by OCBC, even though that may have been in its interest if it previously had title to legitimate goods. 

Winson’s appeal argued that it conducted several relevant checks once OCBC raised concerns, and that in its normal course of business it would present documents based only on copies of bills of lading (BLs), rather than loading or inspection documents. 

But the court found the checks Winson described – including a purported call to its seller, Trafigura, and inquiries to the International Maritime Bureau – are “troubling” in their own right. 

“The most obvious and effective option was to approach Hin Leong or Ocean Tankers for the documents to evidence the loading,” it said, noting that all relevant parties were based in Singapore. “This also illustrates Winson’s abject indifference.” 

The appeal also addressed a WhatsApp message where a Winson executive director, Crystal Tung, asked an OCBC representative to “check if the title [to goods] is clean”. 

Winson argued Tung did not have doubts over whether the company had legitimate title to the goods, but rather did not appreciate the significance of the BL as evidence of transfer. But the court ruled that it “beggars belief” she would not have understood the role of the BL. 

Last year’s ruling was hailed by industry experts as a “significant victory” for banks, particularly after the since-overturned ruling in favour of PPT against Crédit Agricole. 

Winson, Standard Chartered and OCBC did not comment when contacted by GTR.