Fraud alleged in oil deal between Singapore trader ZenRock and China Aviation

ZenRock was placed under interim judicial management in May after being accused of engaging in a series of "highly dishonest transactions".
ZenRock was placed under interim judicial management in May after being accused of engaging in a series of "highly dishonest transactions".PHOTO: REUTERS

SINGAPORE (REUTERS) - Banque de Commerce et de Placements, DIFC Branch, has sued Singapore-listed China Aviation Oil (Singapore) Corp over an alleged fraudulent deal as the Swiss bank seeks to reclaim the US$19 million (S$25.9 million) it paid to CAO for a cargo, a court document showed.

In a writ of summons filed to the Singapore High Court, BCP said it issued a letter of credit in January on behalf of ZenRock Commodities Trading Pte Ltd to finance its purchase of about 260,000 barrels of gasoil from CAO.

CAO is the largest jet fuel trader in Asia and is majority owned by a Chinese state-owned company.

Singapore-based ZenRock had intended to sell the cargo to PetroChina International (East China) Co Ltd, BCP said.

CAO and KMPG, ZenRock's interim judicial manager, declined to comment. BCP and its lawyer did not respond to emailed requests for comment.

PetroChina did not immediately respond to an emailed request for comment.

ZenRock was placed under interim judicial management (IJM) in May after one of its creditors HSBC Holdings alleged that it engaged in a series of "highly dishonest transactions".

BCP paid CAO about US$19 million in March after the seller presented documents to show that the cargo had been loaded onto a tanker in Malacca, Malaysia, and that ZenRock had taken delivery, according to the court document.

BCP said CAO's "representations were in fact false in that, no cargo was shipped and/or delivered pursuant to the CAO-ZR contract".

 
 

By presenting the documents, CAO "had acted in breach of the letter of credit", BCP added.

BCP has claimed damages and interest on top of the amount it paid for the cargo, according to the document.

A hearing for the case is scheduled for Sept 2.

Last week, Lim Oon Kuin, founder of another troubled Singapore oil trader, Hin Leong Trading, was charged in court with abetment of forgery for the purpose of cheating.

Hin Leong, one of Asia’s largest oil traders, was placed under judicial management in April after banks demanded repayment of loans as oil prices crashed amid the coronavirus pandemic - a collapse that revealed earlier financial troubles.

Lim, known as O.K. Lim, was accused of instigating a Hin Leong employee to forge a document supposedly issued by UT Singapore Services Pte Ltd stating that Hin Leong had transferred more than one million barrels of gasoil to CAO. The document was then allegedly used to secure more than US$56 million in trade financing from a financial institution.