The prosecution’s case is that Lim cheated HSBC through his employees, by making it seem like Hin Leong had entered into two contracts for the sale of oil with China Aviation Oil (Singapore) Corporation and Unipec Singapore.
Based on those purported transactions, two invoice financing applications were submitted, but the transactions were “complete fabrications, concocted on the accused’s directions”, said Mr Ong.
As a result of the alleged deception, HSBC disbursed US$111.7 million to Hin Leong.
Around Apr 8, 2020, Hin Leong informed HSBC that it was facing liquidity issues and would be requesting a standstill agreement with its lenders.
On Apr 12, 2020, Lim and his two children, Lim Huey Ching and Lim Chee Meng, held a teleconference call with representatives of HSBC.
HSBC was told that, due to “miscommunication” within Hin Leong, the discounting applications for the sales to CAO and Unipec had been mistakenly submitted to HSBC when in fact, the deals with CAO and Unipec had not materialised.
On Apr 17, 2020, Hin Leong filed for insolvency, in what was described as “one of the world’s largest collapses of an oil trading firm”, said Mr Ong.
The Commercial Affairs Department of the Singapore Police Force began investigating shortly after, and Lim was eventually charged with 130 counts of cheating and forgery-related offences.
HSBC wrote to CAO and Unipec on Apr 20, 2020, demanding payments of the sums outstanding under the invoices, but both companies said they had not entered into those alleged transactions with Hin Leong.
HSBC lodged a police report the day after, stating their concerns that two invoices submitted by Hin Leong for discounting were fraudulent.
The invoices had been submitted under the Silent Confirmation and Discounting Agreement, a financing facility offered to Hin Leong where it could apply to HSBC to discount invoices for the sale of oil to its customers.
Discounting refers to accounts receivable financing, where a seller “sells” unpaid invoices to a financial institution and typically receives a slightly discounted upfront payment, in circumstances where the credit terms for the transaction would mean that the seller would otherwise only receive payment from the buyer at a later date.
If the discounting application was approved, the bank would pay the seller the invoice amount and charge a fee for the transaction.
The case began in the morning with the prosecution’s first witness, an employee of HSBC, taking the stand. Other witnesses expected to testify include HSBC employees which dealt with the two discounting applications and Hin Leong employees who received instructions from Lim.
The prosecution clarified that they did not accept that the discounting applications were mistakenly made. Instead, they were “intentional deceptions” made on Lim’s directions, they said.
The trial is set to resume in the afternoon.
Lim is out on S$4 million bail. If convicted of cheating or abetting forgery for the purpose of cheating, he could be jailed for up to 10 years and fined per charge.
