SINGAPORE (awp / afp) – Singaporean oil magnate O.K. Lim had built his group by perseverance and bluffing which made him a legend among black gold brokers.
But its oil brokerage and distribution empire, Hin Leong Trading, collapsed last month, a victim of the unprecedented crisis in the oil markets destabilized by the coronavirus pandemic.
Lim Oon Kuin, commonly known as O.K. Lim, is, under a discreet appearance, an all risk, according to those who know him, and has speculated excessively on oil futures contracts. Cornered by the banks, he had to initiate bankruptcy in April.
In an explosive sworn statement seen by AFP, Lim reveals that his company has “in reality (…) not made a profit for several years”, despite the publication in 2019 of a comfortable profit.
He admitted that his company, founded in the 1960s after emigrating from China, had concealed losses of $ 800 million over several years. It also had nearly $ 4 billion in debt from banks.
Lim said he asked his employees not to report the losses, and secretly sold crude stocks that were supposed to guarantee loans.
The Hin Leong group, which means “prosperity” in Chinese, is one of the biggest victims to date of the collapse of the crude markets. And his bankruptcy proceedings mark the sudden fall of magnate O.K. Lim.
Poker player
Lim Oon Kuin started out very young with a single tanker truck to deliver oil to Singapore before the independence of the city-state in 1965.
His company quickly became a key supplier of fuel for the holds of ships and grew rapidly as the port of Singapore became a major commercial and financial center in Asia.
And it then diversified into chartering and managing ships with a subsidiary of more than 150 boats.
But the image Lim returns is complex. The ex-billionaire cultivated an image of discretion and humility but managed Hin Leong with an iron fist, like “a typical Asian patriarch who takes all the decisions of his family business”, according to an oil broker wishing to keep the ‘anonymity.
Jorge Montepeque, a senior executive in the petroleum sector, in business with Lim for a decade until 2001, recalls that the tycoon could appear “almost detached”, as absent, during meetings.
“But it was not true, he knew very well what it was about”, the reality was that this passionate about poker “was taking major risks”, he tells AFP.
“too big to sink”
The fall of the group triggered the start of a police investigation, sending a shock wave through the financial community.
According to an industry broker, “no one would have thought something was going on”. “The general feeling was that Hin Leong was too big to sink,” he told AFP.
A presentation by Hin Leong to his creditors before bankruptcy shows a total debt of $ 4.05 billion, for assets estimated at $ 714 million.
Most of the debt, $ 3.85 billion, is owed to several banks. The most exposed is HSBC (600 million USD), but the French bank Société Générale also has a receivable of 240 million.
The risks taken by the company, which had not covered itself against a fall in the market, turned out to be fatal for Hin Leong, suffering both the repercussions of the coronavirus and the price war between Saudi Arabia and Russia having causes crude prices to fall by two thirds.
In its latest operations, the company had bet that China would succeed in containing the virus and that the crisis in the oil market would be short-lived.
But such a strategy amounts to “betting everything we have on red at roulette in a casino,” notes Jorge Montepeque.
The group did not respond to requests from AFP.
mba / sr / rbu / dan / lgo / lth
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