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.