Singapore is one of the world's
biggest oil-trading centers and Hin Leong is a homegrown
oil trader in Singapore. Hin Leong has also always
been very secretive. It's held by its founder Oon Kuin Lim, his son and his daughter. So very little is actually
known about Hin Leong. And we've also got this fallout from the Singapore oil trader, Hin Leong. Investigations started in April after Hin Leong filed for
bankruptcy protection. It was revealed that Lim
had asked the company to hide nearly a billion dollars in losses from speculating oil
futures over the years. So it all started when
we heard that major banks were pulling financing from
the oil trader Hin Leong. And at first, we were shocked
to hear this information. Hin Leong is such a big name in the Asian oil-trading industry and why were the banks
unwilling to finance Hin Leong any further. All the answers only
came to us much later. My name is Alfred Cang. I'm a senior reporter with Bloomberg News. I'm Serene Cheong. I'm a reporter at Bloomberg. Serene and I and other
colleagues in Singapore office wrote the story about the
collapse of Hin Leong, one of the biggest independent
oil traders in the world. So Hin Leong is in the business of what we call bunkering, which is to supply shipping
fuel to all the vessels that come into the Singapore
ports for refueling. It's actually owned and
founded by Lim Oon Kuin, also known as OK Lim. OK Lim was born in
Fujian province of China. He immigrated to Singapore in 1950s. From the associates who've
known OK Lim for decades, OK Lim was described as a low-key, humble, aggressive oil trader and always honest to his origin. OK Lim likes dining in a
Singapore-based chain restaurant which serves his homeland food. He is also known as a keen poker player. He started off as a
one-man, one-truck business. He would buy fuel from oil majors, parcel it up into smaller volumes and resell it to taxi
companies, to bus companies as well as to fishing boats. OK Lim's business later developed to involve a lot more of these tank trucks and later on, it also developed to include an entire fleet of vessels that will actually work as
an integrated supply system to allow him to buy, float
and sell fuel to customers around the region. Hin Leong actually developed alongside the Singapore oil trading hub. And as more and more
boats came to Singapore to dock and refuel, Hin Leong grew because
it was opportunistically at the right place at the right time. So different from stock-market trading, where information are
basically available publicly, oil traders in the world
rely on the information private to a small group and
find the business opportunity. Our understanding of OK Lim is that he is a trader with
a very big appetite for risk. He's also one that
thrives in the very opaque and secretive market
of oil trading in Asia. So for example, at any one
point in the Asian market, no one trader would actually know exactly how much supply
and how much demand there is at any given time. OK Lim would reach deep into his resources and leverage on his relationships
with his counterparts to actually figure out
what exactly was happening in the market and therefore to make bold
decisions to dominate the market and create a trading position
that's beneficial for himself. Once they purchased
enough physical stockpiles in the market and created disruptions in a certain time of
period and a certain area, it did squeeze the market
and push the prices higher. In that case, Hin Leong
and OK Lim can always sell the inventories and sell
the products to end users or other merchants for profit. This strategy was one of
the source of his success for decades but not for this time. In April of 2020, my colleague and I had heard that banks were pulling
financing and credit lines away from Hin Leong. And as we know, financing,
credit lines and liquidity are the lifeblood of trading. So we knew that something big was brewing, but we just didn't know what it was yet. And it was only in the coming weeks that more information and
the answers were unveiled. Covid-19 brought the global
economy to a screeching halt and one industry hit
particularly hard was oil. In the USA, the price of oil
has collapsed to a record low as demand dries up and storage runs out. The price of a barrel of
West Texas Intermediate, which is the benchmark for U.S. oil, today traded as low as -$40 a barrel. It's the first time the
price has turned negative in history. According to the documents we've seen, Hin Leong barely hedged
the physical stockpiles it's purchased. So all of its physical stockpiles are purely exposed to
the market fluctuations. Because the oil benchmark prices slumped on coronavirus
outbreaks in the world. The value of physical
stockpiles of Hin Leong reduced. We know from our sources that
OK Lim made opposition bets on the oil prices because he believed China will soon put the
coronavirus in control and the demand will recover very quickly. So OK Lim was right in the
first half of his prediction. China did contain the
outbreaks of coronavirus, but what OK Lim didn't see is the outbreak turn into a pandemic and create larger demand destructions. And banks start coming after him, asking him to repay the unpaid debts. Dozens of commercial and
investment banks in Singapore have a combined exposure of
US$3.5 billion to Hin Leong, of which HSBC had the biggest
exposure of $600 million. And other banks, such as DBS and ABN, had more than $200 million
exposure to Hin Leong. So from speaking to our sources and from documents that we obtained, we came to realize that Hin
Leong had actually not made any profits for a couple of years and that some of the oil
that Hin Leong had used for collaterals were
actually already resold to other customers. It was shocking to see that
the company had actually hid $800 million in losses. The growth model of Singapore, the Southeast Asia and
China has been changed through these years. And that could be part of the reason why Hin Leong didn't make any profits. Many countries start seeking replacement of traditional fossil energy, replacing them with renewable
energy such as solar. The coronavirus outbreak
is just the trigger of its collapse. The founder of homegrown oil-trading firm Hin Leong Trading has been
charged with abetment of forgery for the purpose of cheating. Lim Oon Kuin allegedly asked an employee to forge a document to state
that Hin Leong had transferred more than 1 million barrels of gas oil to China Aviation Oil Corporation. This document was allegedly used to secure almost $77 million in trade funds from a financial institution. If found guilty, Lim could
be jailed for up to 10 years and fined. Hin Leong and Lims is
one of the most secretive family businesses in Singapore. Multiple attempts to Hin Leong
and Lim's family for comments went unsuccessful. So after the Hin Leong episode, when some banks found themselves
with hundreds of millions of dollars of losses, we're seeing that the oil industry in Asia is going through somewhat of an evolution where smaller companies
are finding it harder to get credit lines and financing, and even bigger companies,
more reputable companies, are also finding that credit
lines are being shrunken.
