The spectacular collapse of Singapore oil trader Hin Leong Trading has sparked another legal skirmish between one of its banks and a trading rival.
Winson Oil Trading has taken OCBC Bank to court, demanding payment for a sale of fuel to the troubled trader that was financed by the bank.
The Singapore lender says it does not have to pay Winson because it has "serious doubts" about Hin Leong's paperwork and cargo backing the finance deal, according to court documents.
The Winson suit comes just weeks after a Singapore court dismissed an application by Unipec Singapore for an injunction to stop Credit Agricole from paying Hin Leong for a diesel shipment.
The Chinese oil trader made similar claims of fraud against Hin Leong, which collapsed in April after its founder Lim Oon Kuin admitted the company hid millions in losses and unloaded fuel pledged for loans.
Twenty-three banks, including OCBC, are owed almost US$4 billion (S$5.6 billion) by the trader.
In a June 1 statement filed to the High Court, Winson said OCBC, Singapore's third-biggest bank, failed to pay US$30.4 million from a letter of credit it issued to finance a diesel trade for Hin Leong. The breach of the payment has caused loss and damage to Winson, it claims.
OCBC spokesman Koh Ching Ching declined to comment. Winson and Hin Leong did not respond to inquiries seeking comment.
The letter of credit for Hin Leong was issued by OCBC in favour of Winson on April 6, and was irrevocable, Winson said in the court document. OCBC missed the payment deadline of May 18, and the letter of credit was to expire on June 2, it said.
On April 23, OCBC sent an e-mail to Winson, saying it would not be honouring the letter of credit.
"There are serious doubts over the authenticity of the documents presented to us, and/or the transaction contemplated therein, and/or the existence of the cargo that is to be pledged to the bank," OCBC was quoted as saying in Winson's statement.
In the message, OCBC said Hin Leong had admitted to executing "fraudulent paper transactions" for the deal.
Established in 1998, Winson is a regional energy company with businesses ranging from oil trading to bunkering and supply chain services. It has offices and projects in Hong Kong, Singapore, Taiwan and mainland China, according to its website. The company said in April that it does not have any open account receivables with Hin Leong.
The case is scheduled for a pre-trial conference on July 8, according to court documents.
BLOOMBERG
