'The Lim family must be held accountable': Liquidators seek US$3.5 billion from ex-oil tycoon OK Lim
The plaintiffs charged that Lim Oon Kuin and his two children perpetuated fraud to keep financing coming in, while paying themselves dividends when Hin Leong Trading was making no profit, leaving the company with massive debts.
SINGAPORE: Liquidators on Thursday (Aug 10) opened their court case against Lim Oon Kuin, the founder of collapsed oil trading firm Hin Leong Trading, charging that the Lim family must be held accountable for what they say was years of fraud and fork out US$3.5 billion (S$4.7 billion) to pay off the company's debts.
The 81-year-old former oil tycoon, better known as OK Lim, and his children allegedly tried to portray Hin Leong as a profitable and healthy company to continue obtaining financing, even though the company had been incurring massive losses for years.
The company had suffered about US$808 million in losses from futures and swaps from 2010 to 2020, with the losses allegedly concealed by overstating profits by US$2.1 billion in the same period.
The Lims allegedly deceived banks into extending financing by concealing the true financial state of Hin Leong. The alleged ruses include pledging cargo Hin Leong did not own or overstating the quantity it did, selling the same cargo to more than one party and by using fabricated sales contracts and invoices.
Hin Leong, which is in compulsory liquidation, is seeking an order that Lim, along with his son Evan Lim Chee Meng and daughter Lim Huey Ching, pay US$3.5 billion to Hin Leong. This is the full amount of the company's unsecured debts as of April 2020.
The liquidators are seeking a declaration that the three Lims are held personally responsible for all of Hin Leong's debts.
The liquidators are also seeking that the Lim patriarch and his two children return US$90 million in dividends that should not have been paid to them in 2017 and 2018.
Alternatively, they are seeking damages for breaches of fiduciary and other duties by the Lims.
LEAD COUNSEL'S OPENING STATEMENT
Lead counsel for the liquidators, Drew & Napier's chief executive officer Senior Counsel Cavinder Bull, said in his opening statement that the Lim family had deliberately concealed Hin Leong's losses and portrayed the company as profitable when it was, in fact, "massively insolvent".
"They did this through fraudulent and dishonest activity including, among other things, the creation of fictitious gains to conceal accumulated trading and other losses, the forgery of documents, the manipulation of Hin Leong's accounts through improper accounting entries, the overstatement of Hin Leong's inventory and the obtaining of financing through improper means," he said.
Even though Hin Leong had been insolvent since 2012, the Lim family caused the company to continue trading on the basis that it was profitable and to accumulate further liabilities, said the lawyer.
Both Lim children were directors of Hin Leong, with Mr Evan Lim an active trader and his sister in charge of accounts and financing, said Mr Bull.
Not only did the Lim family perpetuate this guise, they also caused Hin Leong to pay them dividends of US$90 million in 2017 and 2018, even though the company had no profits at the time, said Mr Bull.
He charged that the concealing of about US$800 million in losses was done at the instruction of Lim, and he later told employees that he would take responsibility for it.
However, despite initially making admissions over the issue, Lim and his son "sing a different tune" today, denying any fraudulent conduct, said Mr Bull.
Instead, they now point the finger at their employees, he said.
Mr Bull asked the court to consider why "mere employees" who did not stand to profit personally from the fraud would do such a thing.
"What then is their defence?" asked Mr Bull. "First - they refuse to admit anything, even the most basic facts about the financial state of Hin Leong ... Respectfully, your honour, they are trying their luck. They are hoping someone will slip up in their evidence."
"The Lim family must be held accountable for their fraudulent actions," concluded Mr Bull.
The Hongkong and Shanghai Banking Corporation (HSBC) is also suing the Lims over two applications made with allegedly fabricated documents that deceived the bank into disbursing US$111.7 million to Hin Leong in March 2020.
Lead counsel for HSBC, Senior Counsel Sarjit Singh Gill of Shook Lin & Bok, said it was "diabolical" for the Lims to attempt to throw employees, who were "so loyal to them", under the bus when it was the Lims who "stood to gain from all these shenanigans".
Lim is defended by a team of lawyers from Davinder Singh Chambers, led by Senior Counsel Davinder Singh.
His son is defended by lawyers from Damodara Ong LLC, while a team from Advocatus Law represents his daughter.
The opening of the civil case before Justice Philip Jeyaretnam comes as the fallen oil tycoon's trial for criminal offences is ongoing in the State Courts.
His criminal trial is over charges of cheating a bank and instigating forgery involving US$111.7 million.
Lim is due back in the State Courts for the continuation of his criminal trial in October.