SG is financial loss/fraud/scam hub. Huat ah!

#4

HSBC sues Lim family, saying they ‘fraudulently deceived’ bank into lending US$111.7 million to Hin Leong

HSBC is the first bank to take legal action against oil tycoon Lim Oon Kuin.
ST PHOTO: KELVIN CHNG, WONG KWAI CHOW

Grace Leong
Senior Business Correspondent

NOV 5, 2020,

SINGAPORE – HSBC Holdings is suing the Lim family and an employee of bankrupt oil trader Hin Leong Trading to recover US$85.3 million (S$115.8 million) of US$111.7 million that they allegedly obtained with bogus invoices and forged documents, according to court papers seen by The Straits Times.

HSBC, which is the firm’s largest creditor with about US$600 million owing, is the first bank to take legal action against oil tycoon Lim Oon Kuin, better known as OK Lim, and his two children to recover their losses.

It is also suing Ms Serene Seng Hui Choo, a manager of the corporate affairs department at Hin Leong.

The suit filed on Oct 21 in the High Court came two months after the firm’s judicial manager, PricewaterhouseCoopers (PwC) Advisory Services, sued Lim, are Evan Lim Chee Meng and daughter Lim Huey Ching, both executive directors for more than 20 years, for US$3.5 billion in outstanding debt.

PwC alleged that they breached their fiduciary duties as directors and engaged in fraudulent trading.

It also comes after Elder Lim was hit with two charges for the abetment of forgery for the purpose of cheating relating to a fake China Aviation Oil (Singapore) Corporation (CAO) charge sale.

The fake CAO charge sale is the subject of HSBC’s lawsuit.

The Straits Times understands that if the State Courts make factual findings in the criminal proceedings related to HSBC’s claims, the bank could rely on those findings to bolster its case and potentially seek judgment against the Lims.

HSBC alleged that the defendants “fraudulently deceived” the bank into lending Hin Leong US$111.7 million by signing forged invoices that were submitted to obtain discount financing earlier this year.

One sales invoice was purportedly for cargo sold to CAO for US$56 million; the other for cargo sold to Unipec Singapore for US$55.7 million.

The suit alleges that Elder Lim had instructed Hin Leong employees to “fabricate” a CAO inter-tank transfer certificate claiming that the company had transferred 1.05 million barrels of diesel to CAO on March 18.

But Hin Leong never sold or transferred the cargo to CAO and no cargo inspection had been conducted, the suit said.

HSBC alleges that the defendants “disguised the fact that Hin Leong was insolvent” to deceive the bank into lending it money. It added that Hin Leong had suffered US$800 million in losses that were not reflected in his financial statements, and that Elder Lim had told his finance department to hide these losses from the accounts, adding that he “would be responsible if anything went wrong “.

On April 9, 2020, about eight days before payment was due from CAO, Ms Seng, who was in charge of Hin Leong’s finance and accounts department, allegedly told HSBC that Hin Leong “foresaw some ‘issues’ with repayment from CAO and Unipec” .

She told HSBC that Hin Leong will be “remitting funds by way of a ‘refund’… and instructed the bank to ‘set off’ these incoming funds.”

That day, the Lim family credited US$17.5 million into Hin Leong’s account with HSBC, the suit said. But on April 12, before the payment due date of these invoices, the Lims told HSBC in a teleconference that “due to a purported ‘miscommunication’ within Hin Leong, the financing documents had ‘inadvertently'” been sent to HSBC due to an ” operational error”, the suit said.

They claimed the transactions with CAO and Unipec “did not go through” and apologized for the “errors.”

They also agreed to “refund” HSBC, and authorized the bank to “debit any funds standing to the credit of Hin Leong’s account… and to set off such funds against the amounts owing to HSBC.”

Between April 13 and April 16, the Lim family credited US$7.81 million into Hin Leong’s account with HSBC, of ​​which US$4 million was transferred by Mr Evan Lim from his personal account, the suit said.

Three companies related to the Lim family have been placed under interim judicial management – ​​Hin Leong, its shipping arm Ocean Tankers and Xihe Holdings, which is owned by Lim and his son Evan.

Hin Leong and Ocean Tankers had initially sought a six-month moratorium on debts of more than US$3.6 billion to 23 banks, but withdrew this application.