Briefs

Hin Leong — the oil trading giant that is now under interim judicial management — has fabricated documents on a “massive scale” to conceal losses of some US$800 million ($1.1 billion) chalked up over the past decade. “The scale and regularity of the fabrication suggests that the practice was routine and pervasive,” says the interim judicial managers Goh Thien Phong and Chan Kheng Tek of PricewaterhouseCoopers Advisory Services (PWC), in their report dated June 22.

The company — founded by Lim Oon Kuin, who keeps a low-profile but is known within the oil trading circle as “OK Lim” — was found to have overstated its assets by an “astonishing” sum of more than US$3 billion, the report notes.

The bulk of the overstatement consists of US$2.23 billion in accounts receivables which have no prospect of recovery, and another US$0.8 billion in inventory shortfalls.

“Documents that have been forged or are at least of dubious authenticity include bank remittance advices, bank statements, bills of lading, sales contracts, sales invoices, swap trade confirmations, swap trade tickets, deal settlement slips and inter-tank transfer certificates,” says PWC in its report.

Hin Leong filed for bankruptcy protection in April, owing more than a dozen banks and business partners some US$3.5 billion versus assets worth US$257 million.

PWC believes that Hin Leong on its own has no reasonable prospect of being restructured or rehabilitated, unless it is packaged together with other companies controlled by Lim’s family — including the shipping unit Ocean Tankers Pte Ltd — and the Universal Terminal storage facility be bundled together as integrated petroleum trading platform, for any viable restructuring or rehabilitation to be carried out for the benefit of the creditors.

PWC raised several other flags in the report. For example, despite the losses for the past few years, privately-held Hing Leong paid out dividends of US$60 million and US$30 million for FY2018 and FY2017 respectively. PWC also found out that there have been numerous occasions where the same inventory, carried onboard the massive storage tankers, has been sold to at least two buyers. When Hin Leong repurchased from one of the buyers, it was then able to obtain a letter of credit facilities amounting to tens of millions.

PWC also found traders purportedly with access to the company’s futures trading systems, not listed as Hin Leong employees. According to PWC, records kept by Hin Leong — like those for inventories — appear “highly questionable”. Meanwhile, the employees also gave conflicting and inconsistent answers when interviewed, adds PWC.

PWC tried to interview OK Lim, but was told by his lawyers he is not medically able to go through the process. A written response to questions posed by PWC was agreed to but remains unanswered as of date of the report.

Iswaran: Singapore never excluded any 5G vendors

Singapore’s communication minister said the government never excluded any company from being vendors for the nationwide rollout of high-speed 5G technology, and is satisfied with the outcome of its telecom operators’ selection.

Singapore’s biggest telecom operators chose Ericsson and Nokia as their main 5G network providers, leaving China’s Huawei Technologies with less significant contracts after the city-state gave final approval for the rollout of nationwide 5G coverage on June 24. Singapore Telecommunications chose Ericsson while a group that includes

StarHub opted for Nokia. “We never explicitly excluded any vendor,” and the city-state has very clear security and resilience requirements, Minister for Communications and Information S. Iswaran. “You have a diversity of vendors involved in different aspects of the 5G system and that is in fact a positive outcome from our perspective,” he said.

Huawei, which has become a point of contention in tensions between the US and China, still has a foothold in the market as a provider for TPG Telecom’s smaller, local network system. — Bloomberg

Canada’s rating downgrade may end up benefiting Singapore debt

Canada’s loss may be Singapore’s gain. Fitch Ratings stripped the North American nation of an AAA sovereign rating on June 24, reducing the number of economies to just nine that all receive top sovereign ratings from the three major agencies.

“The club of countries with AAA ratings from S&P, Moody’s, and Fitch is small,” strategists at TD Securities, including Andrew Kelvin, wrote in a research note. “We could see some investment flows diverted from Canada” to those that retain the ratings and have positive nominal 10-year bond yields, they said.

That would be Australia, Norway and Singapore, TD Securities added. Among AAA rated 10-year government bonds, Singapore offers the highest yields both on a nominal and inflation-adjusted basis, according to data compiled by Bloomberg. Its benchmark 10-year bond yielded 0.94% on June 24, implying a real yield of 1.44%.

The data also shows that while Australia’s debt has the second-highest in nominal terms, its real yield is below what Switzerland offers. Singapore’s central bank uses the exchange rate, rather than a policy rate, to control inflation, so weak consumer prices don’t necessarily correspond with low bond yields. That helps support the nation’s real yields. — Bloomberg