Related News

Stenn goes into administration following HSBC application

HSBC files to place Stenn into administration

Maersk ordered to pay US$39mn to UOB in Hin Leong misdelivery claim

Euler Hermes and development banks help power Turkey wind farms

For the first time, ICC defines sustainable trade finance

The founder of commodity trader Hin Leong has been sentenced to more than 17 years in prison for his role as “mastermind” of a trade finance fraud scheme that sent shockwaves through the trade finance sector. 

Hin Leong collapsed in 2020 after revealing it had suffered huge undisclosed losses, leading to court-appointed judicial managers unravelling a pattern of fraudulent transactions and forged documents “on a massive scale”. 

The company’s founder and chairman Lim Oon Kuin, known as OK Lim, was convicted in May on two counts of cheating and one count of instigating forgery.  

The court found that 82-year-old Lim had deceived HSBC into providing nearly US$112mn in financing for oil trades that did not actually occur. The company used forged documents to show purported oil sales to China Aviation Oil and Unipec, and was unable to repay HSBC before its demise. 

A Singapore State Courts judge ruled on November 18 that Lim would serve 17.5 years in prison, comprising two 8.5-year sentences running concurrently for the first two charges, and an additional 9 year sentence for the third. 

Judge Toh Han Li said the sums involved were “staggeringly large” and that the case “certainly stood at the top tier of cheating cases” in Singapore. 

Lim’s defence lawyer Davinder Singh said he is appealing the verdict, according to Bloomberg, and will not begin serving the sentence until after an appeal hearing. 

Prosecutors had sought the maximum term of 20 years’ imprisonment, arguing that “the amounts cheated in the present case were quite unprecedented in Singapore’s criminal history”, according to a transcript of the oral judgment. 

Although HSBC was able to recover around US$26mn from Hin Leong, its losses still stood at US$85mn. 

In monetary terms, prosecutors pointed out the sum is second only to that in the case of Lulu Lim – the former chief financial officer of Agritrade, who was last year sentenced to 20 years’ imprisonment for fraud – and differs because she was not deemed the “mastermind” of that scheme. 

Prosecutors also argued Lim’s offences “affected Singapore’s financial services and economic infrastructure and… potentially undermined public confidence in Singapore’s oil industry”. 

They cited a joint statement from Singapore authorities issued in April 2020 urging financial institutions to avoid “rely[ing] on broad-based sector de-risking” as evidence of these concerns. 

In mid-2020, industry insiders reported widespread nervousness in the trade finance sector following the collapse of Hin Leong, Agritrade and a number of smaller trading houses accused of involvement in fraud. 

Several banks went on to reduce their exposure or withdraw entirely from the commodity finance market, and many lenders remain reluctant to provide facilities to smaller trading houses. 

Lim’s defence disputed those suggestions, arguing there was no basis for finding the Hin Leong case undermined confidence in the city state’s oil trading industry. 

But the judge ruled that Lim’s offences “would have the potential to impact the bunkering and oil trading sector as [Hin Leong] was one of the largest players in the industry and the offences involved trade financing fraud by [Hin Leong] of financial institutions in oil trading”. 

“A deterrent sentence is warranted to prevent offences from pervading Singapore’s financial ecosystem, which may lead to banks imposing stricter rules of compliance or withdrawing their trade financing services entirely,” he found. 

Lim’s defence also argued for a lesser sentence due to his advanced age and deteriorating health, but that argument was rejected by the court.