Winson Oil Trading, a company that sold fuel to the now-collapsed Hin Leong Trading, has moved to court against Oversea-Chinese Banking Corp. (OCBC) for dishonoring a letter of credit issued by the bank.
Reported by Bloomberg on Friday, the Singaporean banking giant withheld payment of $30.4 million from a letter of credit issued to finance a diesel trade for Hin Leong.
According to Winson Oil, the letter of credit issued on April 6 was irrevocable, but the bank missed the May 18 payment deadline and the letter of credit expired on June 2.
The Singaporean bank informed the oil-trading company on April 23 that it would not honor the letter of credit.
The June 1 court filing revealed that the bank has raised serious concerns about Hin Leong’s paperwork and cargo backing the finance deal.
“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 on the court filing.
The collapse of a giant
Hin Leong was one of the largest Asian commodities trading company, but it collapsed in April when its founder Lim Oon Kuin revealed that the company hid millions in losses over the years and unloaded fuel pledged for loans.
The collapsed company now owes as many as 23 banks a total sum of around $4 billion.
Winson Oil is a major regional energy company with a presence in Hong Kong, Singapore, Taiwan, and mainland China.
The new lawsuit came only weeks after a Singapore court dismissed an injunction by Unipec Singapore Pte. to stop Credit Agricole SA from paying Hin Leong for a diesel shipment.
Meanwhile, the oil futures market rebounded significantly recently following the dip in the WTI May futures prices to the negative region.