DBSDY DBS Group Holdings Ltd (PK)

By Chong Koh Ping 

Singapore police said Tuesday they are investigating a major energy trading firm, after revelations that it may have suffered hidden futures losses of about $800 million over several years.

Last Friday, closely held Hin Leong Trading Pte. Ltd. and an affiliated shipping company, Ocean Tankers Pte. Ltd., filed for protection against creditors for 30 days at the Singapore High Court, according to an executive at one of its creditors.

That filing said Hin Leong Trading owed $3.85 billion to 23 banks, the executive said, including about $600 million to HSBC Holdings PLC, and a total of around $600 million to three Singapore banks, DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. The Journal hasn't been able to obtain the filings.

The filings said it was seeking to extend its debt repayments after suffering from the effects of the coronavirus pandemic and the oil-price collapse, this person said.

Rajah & Tann, the law firm advising Hin Leong on its restructuring, declined to comment. Hin Leong didn't immediately respond to an email seeking comment.

"The Police confirmed that investigations are ongoing," a Singapore Police Force spokesman said in an email Tuesday, without elaborating.

Hin Leong's founder, Lim Oon Kuin, said in a court filing the company had been loss-making for the past few years and had suffered about $800 million in futures losses that weren't reflected in its financial statements, according to an excerpt viewed by The Wall Street Journal.

"I had given instructions to the finance department to prepare the accounts without showing the losses and told them that I would be responsible if anything went wrong," said the filing from Mr. Lim, who is often known as O.K. Lim.

Before the troubles emerged, Forbes had estimated Mr. Lim to be the 18th richest person in Singapore, with a net worth of $1.3 billion.

The corporate drama is unfolding alongside extraordinary turbulence in global commodity markets, with U.S. oil prices plunging below zero for the first time this week.

It also follows other problems in Singapore's sizable commodity-trading industry that have emerged in recent years. These include the 2018 restructuring of Singapore-listed trading house Noble Group Ltd. and a $320 million rogue-trading loss last year at a Singapore unit of Japan's Mitsubishi Corp.

A group of banks has hired Drew & Napier LLC, a local law firm, to seek a court-appointed independent administrator to manage the business and assets of Hin Leong, a person familiar with the matter said.

Mr. Lim set up Hin Leong in 1963. He migrated to Singapore from a small town in southern Fujian province in China, starting with a one-man operation driving a single truck that delivered diesel to small fishing boats.

The company's shipping arm, Ocean Tankers, owns and operates more than 130 vessels. Its bunkering arm was the third largest shipping-fuel supplier in the city-state last year, according to the Maritime and Port Authority.

Costas Paris and Quentin Webb contributed to this article.

Write to Chong Koh Ping at chong.kohping@wsj.com

(END) Dow Jones Newswires

April 21, 2020 11:48 ET (15:48 GMT)

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