‘My uncle Robert Kuok would expel me’ if true: Kuok Khoon Hong rejects conviction of Wilmar’s China unit
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Wilmar chairman and CEO Kuok Khoon Hong said he is “deeply shocked” that a China subsidiary of the group had been found guilty of contract fraud.
ST PHOTO: KUA CHEE SIONG
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SINGAPORE - Wilmar International’s chairman and chief executive officer Kuok Khoon Hong said he is “deeply shocked” that a China subsidiary of the group has been found guilty of contract fraud
The palm oil billionaire said it was “absolutely inconceivable” for the group to jeopardise its longstanding China commitment or to “tarnish the strong reputation the Kuok family has built over decades”.
He added in a bourse filing on Nov 22 that the group would not do so “all for the sake of such a minor potential benefit and by assisting in defrauding a state-owned enterprise”.
“If I had truly done such a thing, I believe my uncle, Robert Kuok, would expel me from the Kuok family even before any punishment from Chinese judicial authorities,” he said.
Yihai (Guangzhou) Oils & Grains Industries Co (Guangzhou Yihai) was sued by the public prosecutor in China in January 2024 as an “accomplice” in contract fraud related to palm oil trades between state-owned enterprise Anhui Huawen and a privately owned counter-party, Yunnan Huijia Import & Export Co. The alleged fraud led to a 5.2 billion yuan loss for Anhui Huawen.
The judgement was handed down on Nov 19 by the Intermediate People’s Court of Huaibei City against Guangzhou Yihai – a subsidiary of Wilmar’s Shenzhen-listed arm, Yihai Kerry Arawana (YKA). YKA is 89.99 per cent owned by Wilmar.
“As a member of the patriotic overseas Chinese Kuok family, the family has… cared deeply for China for decades,” YKA said in the bourse filing, which summarised what transpired during an investors’ briefing on Nov 21.
To date, YKA has invested nearly 100 billion yuan in China and has been “deeply cultivating the Chinese market for over thirty years”, Mr Kuok said.
Combined with the related investments from the Kuok family’s businesses, such as Shangri-La and Kerry Properties, the total investment in China by the Kuok family exceeds 250 billion yuan.
According to YKA, the essence of this case was that Yunnan Huijia colluded with Anhui Huawen to jointly fabricate transactions, resulting in massive losses of state-owned assets.
“Anhui Huawen concealed these losses for nearly a decade. After the involved executives were subjected to criminal investigation for duty-related crimes, Anhui Huawen attempted to illegally shift the responsibility for the massive losses onto Guangzhou Yihai,” YKA said.
Between 2008 and 2014, the total volume of palm oil imported by Anhui Huawen on behalf of Yunnan Huijia and stored at Guangzhou Yihai amounted to about 900,000 tonnes, YKA said.
“The goods had in fact been fully released using falsified documents, which were not unilaterally forged by Yunnan Huijia but were jointly fabricated through collusion between Anhui Huawen and Yunnan Huijia,” YKA claimed.
“To conceal the fact that the goods had already been withdrawn and to mislead auditors, Anhui Huawen instructed Yunnan Huijia to create over 30 false inventory records falsely stating that the palm oil remained in storage.”
Anhui Huawen’s claim that more than one million tonnes of palm oil were stored long-term at Guangzhou Yihai fundamentally contradicts basic business logic, YKA said.
“It is impossible for palm oil to be stored for over 10 years without deterioration. Furthermore, Guangzhou Yihai’s total tank capacity is approximately 160,000 tonnes. After deducting the capacity required for its own operational needs, less than 100,000 tonnes were available for external clients.”
YKA claimed that for each transaction, Guangzhou Yihai obtained confirmation from Anhui Huawen’s authorised personnel, in accordance with the terms of the transhipment agreement.
Court hearings confirmed that Guangzhou Yihai regularly mailed authentic inventory confirmation letters to the authorised personnel designated in the contract by Anhui Huawen.
However, YKA claimed Anhui Huawen’s chief financial officer (CFO) “destroyed these documents” to conceal that the goods had been shipped.
YKA also charged that Anhui Huawen used counterfeit seals to execute the transhipment agreement with Guangzhou Yihai and provided forged withdrawal seals as specimens.
The false inventory confirmation records were said to be jointly fabricated by Anhui Huawen and Yunnan Huijia between 2015 and 2021.
YKA said: “At a later stage, the CFO instructed the personnel to deliver the received ‘inventory confirmation letters’ to Yunnan Huijia.
“Yunnan Huijia then affixed forged Anhui Huawen seals to the documents and mailed them back to Guangzhou Yihai.”
Around 2021, Anhui Huawen suddenly presented inventory documents bearing counterfeit seals of Guangzhou Yihai, reporting that 1.07 million tonnes of palm oil remained undelivered, YKA claimed.
The judgement by the Chinese court is “fundamentally flawed”, YKA said.
“As a trader, it was commercially illogical for Anhui Huawen to hold imported palm oil without selling for decades – violating fundamental principles of state-owned asset preservation and appreciation,” said YKA’s chairman and general manager Fang Yan Jang.
Morever, Guangzhou Yihai derived no benefit from the alleged acts, he said.
“Guangzhou Yihai will actively pursue its appeal and exhaust all legal avenues and measures available to clarify the truth and safeguard its legitimate rights and interests,” it said.
When asked whether this incident will affect YKA’s future investments in China, the company said “judicial injustices in certain localities” have undermined the business environment.
YKA said: “The company firmly believes that Guangzhou Yihai is not guilty, and trusts that the second-instance trial will deliver a fair and just judgment to uphold a sound judicial and business environment, thereby boosting the confidence of investors.” THE BUSINESS TIMES
