(June 5): The spectacular collapse of Singapore oil trader Hin Leong Trading (Pte) Ltd. has sparked another legal skirmish between one of its banks and a trading rival.
Winson Oil Trading Pte. Ltd. took Oversea-Chinese Banking Corp. to court, demanding payment for a sale of fuel to the troubled trader that was financed by the bank. The Singapore lender says it doesn’t have to pay Winson because it has “serious doubts” about Hin Leong’s paperwork and cargo backing the finance deal, according to court documents.
The Winson suit comes just weeks after a Singapore court dismissed an application by Unipec Singapore Pte. for an injunction to stop Credit Agricole SA from paying Hin Leong for a diesel shipment. The Chinese oil trader made similar claims of fraud against Hin Leong, which collapsed in April after its legendary founder Lim Oon Kuin admitted the company hid millions in losses and unloaded fuel pledged for loans. Some 23 banks, including OCBC, are owed almost US$4 billion (S$5.60 billion) by the trader.
In a June 1 statement filed to the High Court of Singapore, Winson said OCBC, Singapore’s third-biggest bank, failed to pay US$30.4 million from a letter of credit it issued to finance a diesel trade for Hin Leong. The breach of the payment has caused loss and damage to Winson, it claims.
OCBC spokeswoman Koh Ching Ching declined to comment. Winson and Hin Leong didn’t respond to email inquiries seeking comment.
See also: Petrobras CEO says Yemen crisis could send oil above US$90
The letter of credit for Hin Leong was issued by OCBC in favour of Winson on April 6 and was irrevocable, Winson said in the court document. OCBC missed the payment deadline of May 18, and the letter of credit was to expire June 2, it said.
On April 23, OCBC sent an email to Winson saying the bank wouldn’t be honouring the letter of credit.
“There are serious doubts over the authenticity of the documents presented to us, and/or the transaction contemplated therein, and/or the existence of the cargo that is to be pledged to the bank,” OCBC was quoted as saying in Winson’s statement.
See also: RH Petrogas commences drilling of new exploration well
In the message, OCBC said Hin Leong admitted to executing “fraudulent paper transactions,” for the deal.
Established in 1998, Winson is a regional energy company whose businesses span from oil trading to bunkering to supply chain services, with offices and projects in Hong Kong, Singapore, Taiwan and mainland China, according to its website. The company said in April that it doesn’t have any open account receivables with Hin Leong.
The case is scheduled for a pre-trial conference on July 8, according to the court documents.
See also:
- Oil trader Hin Leong set to hand over management from founding family to PwC
- Singapore oil trader Hin Leong failed to declare losses of US$800 mil
- Potential reprieve for Hin Leong as Sinopec eyes oil terminal
- Hin Leong bankruptcy may cause local NPLs to rise
- Banks freeze credit to Singapore oil trader after price crash
- Standard Chartered hit by bad loans including Hin Leong
- MPA awards two new bunkering licenses to fill void left by Hin Leong
