Bank of China Ltd (中國銀行) has sued BP PLC in Singapore over its alleged role in fabricating oil deals with collapsed trader Hin Leong Trading Pte Ltd (HLT, 興隆貿易), in the latest effort by a creditor to recover losses after one of the biggest trading scandals in decades.
The Chinese bank requested that BP repay US$125.7 million that it withdrew from the lender earlier this year based on sales of gasoil cargoes to Hin Leong, documents provided by the Supreme Court of Singapore showed.
The deals were part of “fictitious purchase scheme conspiracy” to maintain Hin Leong’s liquidity since no real transactions took place, the bank said.
Photo: Reuters
The lender also demanded US$187.2 million from Hin Leong founder, Lim Oon Kuin (林恩強), and his two children, the documents showed.
The total sum includes the deals linked to BP and some other overdue payments on short-term loans, or letters of credit.
BP strongly refutes the allegations by Bank of China and would defend its position, the company said in a statement, without elaborating.
Lim has earlier denied forging documents in a case brought by HSBC Holdings PLC, saying they were “mistakenly” issued.
Hin Leong’s creditors, which also include HSBC and Singapore’s DBS Group Holdings Ltd, are fighting to recover funds from the insolvent firm, which has US$3.5 billion in outstanding debt.
Bank of China’s case, filed in late last month, came after HSBC and the trader’s court-appointed managers PricewaterhouseCoopers started taking legal action against the Lim family.
The disputed gasoil deals took place in the first two months of this year, when BP withdrew a total of US$125.7 million on three letters of credit in early February from Bank of China, the court document showed.
Hin Leong purchased a combined 1.5 million barrels of gasoil from BP in the deals and the oil major was able to present documents to prove the authenticity of the trades.
Hin Leong’s judicial managers later informed the bank that these trades were fabrications backed by nonexistent cargoes financed by at least 27 letters of credit, including the three from Bank of China.
The suit alleges that Hin Leong was able to maintain a semblance of financial stability and liquidity by selling and repurchasing forged cargoes backed by letters of credit worth US$624 million.
“HLT fabricated documents on a massive scale,” Bank of China said in its suit. “The forged documents enabled HLT to mislead banks into extending financing to it and also acted as supporting documentation for fictitious gains or profits.”
Bank of China cited the court-appointed manager as saying that the trading firm sold gasoil to BP, which the oil major then sold back to Hin Leong at a higher price.
Given the gap between the sales price and purchase prices and the short time period between the deals, it appears that the transactions were intended solely to provide liquidity for Hin Leong, the bank said, citing the appointed managers.
Bank of China claimed that it was not aware of the “simultaneous sale” and buy-back transactions, alleging that documents were forged to “induce” the bank to make payments.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) founder Morris Chang (張忠謀) yesterday said that Intel Corp would find itself in the same predicament as it did four years ago if its board does not come up with a core business strategy. Chang made the remarks in response to reporters’ questions about the ailing US chipmaker, once an archrival of TSMC, during a news conference in Taipei for the launch of the second volume of his autobiography. Intel unexpectedly announced the immediate retirement of former chief executive officer Pat Gelsinger last week, ending his nearly four-year tenure and ending his attempts to revive the
WORLD DOMINATION: TSMC’s lead over second-placed Samsung has grown as the latter faces increased Chinese competition and the end of clients’ product life cycles Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) retained the No. 1 title in the global pure-play wafer foundry business in the third quarter of this year, seeing its market share growing to 64.9 percent to leave South Korea’s Samsung Electronics Co, the No. 2 supplier, further behind, Taipei-based TrendForce Corp (集邦科技) said in a report. TSMC posted US$23.53 billion in sales in the July-September period, up 13.0 percent from a quarter earlier, which boosted its market share to 64.9 percent, up from 62.3 percent in the second quarter, the report issued on Monday last week showed. TSMC benefited from the debut of flagship
TENSE TIMES: Formosa Plastics sees uncertainty surrounding the incoming Trump administration in the US, geopolitical tensions and China’s faltering economy Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday posted overall revenue of NT$118.61 billion (US$3.66 billion) for last month, marking a 7.2 percent rise from October, but a 2.5 percent fall from one year earlier. The group has mixed views about its business outlook for the current quarter and beyond, as uncertainty builds over the US power transition and geopolitical tensions. Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported a monthly uptick of 15.3 percent in its revenue to NT$18.15 billion, as Typhoon Kong-rey postponed partial shipments slated for October and last month, it said. The
RSS