Shipping magnate O.K. Lim faces $3.5b suit over alleged fraud
Singaporean shipping and petroleum magnate O.K. Lim faces criminal charges over alleged financial improprieties at his trading house, Hin Leong Trading. Now, he and his family must also contend with a multi-billion-dollar civil suit brought by the judicial manager of the now-bankrupt firm.
The new court-appointed manager, PricewaterhouseCoopers, is suing Lim and members of his immediate family to recover a total of about $3.5 billion in losses that they allegedly caused through “the manipulation of Hin Leong’s accounts through irregular accounting entries” and other fraudulent practices. The suit contends that O.K. Lim, his daughter Huey Ching and his son Chee Meng failed in their fiduciary duties to the firm by deliberately hiding trading losses and making the firm look profitable long after it had passed into insolvency. Their methods allegedly included overstating the firm’s inventory and accumulating more debt by deceiving lenders. O.K. Lim has already admitted to hiding about $800 million in losses at Hin Leong over a ten year period.
Earlier this month, Lim was charged with the crime of “abetment of forgery for the purpose of cheating” in connection with one allegedly fraudulent trade financing transaction at Hin Leong. According to prosecutors, OK Lim instructed a Hin Leong executive to falsify a document on the letterhead of a tank farm operator. The document purported to show a transfer of about one million barrels of gasoil to a Hin Leong customer. This document was then allegedly submitted to a financial institution as part of a fraudulent application for $56 million in trade financing. If convicted, Lim could face a fine and a prison term of up to 10 years. For now, Lim is out and awaiting trial after paying $2.2 million in bail.
Lim’s related businesses, Xihe Holdings and Ocean Tankers, have also been placed under court-appointed management upon requests from their creditors. The judicial manager for Ocean Tankers, Ernst & Young, alleges that the shipping firm transferred $19 million to the Lim family’s personal bank accounts shortly before the company applied for debt relief. E&Y has filed a separate civil suit in an attempt to recover the funds