A recent report by executives from PricewaterhouseCoopers noted that existing assets at Hin Leong cover just a fraction of its liabilities and that rehabilitation prospects were slim for the oil trader as a standalone entity.
At $257 million, this accounted for just 7 percent of the $3.5 billion in liabilities at Hin Leong, according to the report authored by PwC’s Chan Kheng Tek and Goh Thien Phong who were also apportioned as interim judicial managers in April this year to oversee the company.
Based on previous court affidavits, the amount is less than half of the estimate by founder Lim Oon Kuin and his son Evan Lim.
«[Hin Leong] systematically manipulated its accounts to inflate the value of its accounts receivables,» the report said, adding that there was «no reasonable prospect» of rehabilitation without support from other entities.
Banks Misled
23 banks were reportedly misled by Hin Leong, including HSBC which suffered the greatest exposure at around $600 million. The oil trader overstated the value of assets by at least $3 billion, the report explained, by transferring money between bank accounts to create a false impression that accounts receivables were collected when no payments was actually received.
«The scale and regularity of the fabrication suggests that the practice was routine and pervasive,» the report said.
«These forged documents enabled the company to mislead banks in extending financing to the company and also acted as supporting documentation for fictitious gains and profits.»
Hin Leong Downfall
According to the PwC report’s recommendations, the Hin Loneg and other Lim-owned sister companies should be merged as an integrated trading platform for restructuring with asset injections from the family which received $90 million in dividends in 2018 and 2017.
The Lims have not responded to the suggestions through their legal advisors, the report added, who have said that the patriarch will be unable to assist «for a prolonged period of time» due to health reasons.
