Lim Oon Kuin came from nothing.
He had become a billionaire who started as a truck driver.
In 2020, Lim filed a direct and blunt legal affidavit. The affidavit was also read by major banks in Singapore.
The banks were flabbergasted. A wave of panic spread.
It led to arrests and sweeping regulatory changes.
But before that, let’s talk about who Lim Oon Kuin was.
Lim Oon Kuin
In the 1960s, Lim Oon Kuin (also known as OK Lim) arrived in Singapore from China. He was only 20 years old.
Singapore back then was not the developed city-state that it is today.
It was undergoing a phase shift. The government was trying to attract investors, encourage economic activity, and solve potential conflicts among different ethnic groups.
OK Lim owned one truck. He bought diesel wholesale, and sold it to fishing boat operators, bus operators, etc.
He wasn’t just a driver, he was also an oil trader.
OK Lim’s company was called Hin Leong Trading.
People who traded or worked with Lim described him as a hard working and determined man. He was able to expand his business and buy more trucks.
In 1968, he bought his first sea vessel.
This purchase changed the nature of his work. He was no longer limited to being a last-mile fuel delivery operator.
By 1973, he had added more vessels to his fleet. Hin Leong became an oil trading company.
Hungry for more, he started trading beyond Singapore and bought oil tanker ships for his operations.
In the 1980s, he started trading oil with China and that monumentally changed his fortunes.
The momentum only grew from there. By the 2010s, he had a fleet of over 100 ocean-going tanker ships.
By 2019, the company reported a revenue of around $20 billion. A staggering number for any company anywhere in the world.
Hin Leong Trading
What made Hin Leong Trading more unique was that this company had cast a wider net than its peers.
Instead of just buying and selling oil, they did other parts of the chain too.
Ocean Tankers was a company run by Lim’s son.
This was the company that owned close to 150 tanker ships that were used to transport the oil.
They also owned moored ships in the ocean that were used not to transport oil but merely as oil storage tanks.
Universal Terminal was another company. It was majorly owned by Lim’s family.
Universal Terminal owned oil storage tanks on land. They were in the business of only storing and not transporting oil.
There were a few other companies that were also owned by family members of Hin Leong.
The First Sin
Hin Leong used to trade in oil futures as a way to hedge against oil price fluctuations.
This can act as an insurance policy against unpredictable price swings.
But Hin Leong went a bit further. They tried to make extra profits using these futures trades.
The challenge with these speculative bets is that they can be a double edged sword as well — when the bets go wrong, losses can be huge.
For several years in the 2010s, Hin Leong Trading had been incurring losses from such speculative trading activities. These losses were hidden.
Fearing a backlash, Hin Leong never disclosed the losses it was suffering in these trades. Over time it had accumulated about $800 million in losses from these speculative trading activities.
To cover up these losses, they needed more cash.
Circle Trade
This is where Hin Leong got into a vicious cycle.
Hin Leong would sell oil to another company (Company 1).
Company 1 would take a loan for this purchase.
Then Company 1 would sell the oil to another company (Company 2).
Company 2 would take a loan to buy this oil. This would be paid to Company 1.
So Company 1 would be able to pay back its loan.
Then, Company 2 would sell the very same oil back to Hin Leong.
And Hin Leong would take a loan for this purchase.
With the money received from the sales, both Company 1 and Company 2 would be able to pay back their loans.
The oil changed hands on paper and returned to Hin Leong.
But now, Hin Leong has some extra cash on its hands.
Because it was technically selling oil successfully, banks were willing to lend it money to buy oil too.
This cycle would continue.
It artificially increased Hin Leong’s revenue to $20 billion.
This is called a circular trade.
Actual trade didn’t happen. But banks gave money to the company for it.
Circle Trade
Didn’t the banks check?
Valid question. Yes, they did.
They were using the oil as collateral. So to check, they would seek certificates of storage and transport from the companies involved.
But remember the two companies run by Lim’s daughter and son?
Universal Terminal, the oil storage company run by his daughter, and Ocean Tankers, the oil tanker ship company run by his son.
They were easily able to give (fake) certificates needed as proof of movement of oil.
There were other non-family-run companies that got in on this trade too, along with Hin Leong. Some claimed to know. Others claimed they weren’t aware of what they were doing.
Could the banks have been more careful?
Yes. But OK Lim’s reputation was such that banks trusted him after doing the basic required due diligence. He had built a name for himself over 5 decades.
Discovery
This was not unravelled by some detective or forensic expert.
Everything was going well.
The $800 million loss was from speculation — Hin Leong was betting the oil prices would rise. But they had not. That is how the losses increased further.
But then, the pandemic hit in 2020 and demand for oil collapsed globally.
His already loss-making futures bets expanded and became even bigger losses.
This made the entire act difficult to hide.
At the same time, remember banks used oil as collateral?
When the price of oil went down, banks called Hin Leong to increase the oil quantity kept as collateral (so that their collateral’s value still matched the loan value).
April 2020, various banks started calling the company asking for more oil, or for their money to be returned.
No replies.
On 17th April, OK Lim submitted a legal affidavit.
Plainly, without hiding behind legal words, he mentioned that he was responsible for all that had happened.
The total loans he had taken were worth $3.85 billion.
The company’s total assets were worth only $714 million.
Because the various banks had no simple way of checking with each other, many banks had given loans keeping the same oil as collateral.
Hin Leong Trading was using borrowed money to buy its own oil back from other companies.
This is called circular trading.
It is illegal.
It is illegal because the sales are not real.
It’s just deceptive accounting to show fake sales.
They sold something, took out a loan, and bought that thing back. The cycle repeated.
Revenue kept climbing.
Nothing the company sold was actually being consumed.
Quick Takes
+India received foreign capital worth $32 billion so far after measures announced on 5 June, said RBI Governor in media interviews. The current scheme has surpassed the 2013 level of $26 billion in 45 days. Majority of the inflows are through FCNR(B) deposits.
+India’s engineering goods exports rose 21% year-on-year in June to $11.48 billion. Shipments to China increased 74% to $361.47 million from a year ago. The US was the largest market for engineering goods at $1.95 billion in June.
+India’s Industrial Output rose 7.3% in June (vs 5.1% in May). This is the fastest pace of growth since July 2024. Manufacturing output increased 7.8% year-on-year in June (vs 5.2% in May).
+India’s exports rose to the highest ever at $863.10 billion in FY25-26. Merchandise exports stood at $441.80 billion and services exports increased to $421.30 billion. FTA’s with UAE, UK and Australia were the core drivers of growth.
+Regional Rural Banks reported the highest ever net profit of Rs 10,177 crore in FY25-26. Credit Deposit Ratio improved to 75.2% (vs 73.4% in FY25). Net NPA stood at 2.1% (vs 2% in FY25).
+India launches its first 40-wagon, direct commercial container freight train to Nepal under the revised India-Nepal Rail Transit protocol.
+Public Sector Banks’ net profit is at record high of Rs 1.98 lakh crore. Gross NPA was at a record low of 1.9% in FY25-26.
+The government released Index of Services Production (ISP) data for May 2026. 16 out of 19 sub-sectors grew, with accommodation & food and real estate growing the most. Air Transport, postal & courier and information and broadcasting were the only ones that fell.
+SEBI will replace the current volume-weighted average price method and use the Close Auction System to calculate the closing prices of shares that have F&O contracts from Monday (3 August).
+The US Federal Reserve kept the benchmark interest rate unchanged at 3.50%-3.75%.
+The government said that the Ethanol Blended Petrol programme trials confirmed that E20 is safe for use under prescribed standards and legacy vehicles do not exhibit any significant variation in performance or abnormal wear and tear due to E20.
+The Bank of England kept interest rates unchanged at 3.75%.
+Veritas Finance re-filed for an IPO with SEBI. The IPO will comprise a fresh issue of Rs 900 crore and an offer for sale of 1.28 crore shares. The company had earlier filed for an IPO in January 2025.
+India’s forex reserves rose by $6.11 billion to $682.35 billion in the week that ended on 24 July.
+India’s fiscal deficit widened to Rs 3.07 lakh crore in the April-June quarter compared to Rs 2.81 lakh crore in the same period a year ago.
+The government approved Rs 84,084 crore for the National Offshore Exploration Scheme of the Ministry of Petroleum and Natural Gas up to FY30-31.
+The government approved Rs 5,070 crore for development of 5,000 MW floating solar photovoltaic projects with energy storage systems.
+SEBI introduced the ‘GARUDA’ framework to simplify and expedite the launch of AIFs effective from 30 July. This allows AIFs to launch 10 day after filing a Private Placement Memorandum (PPM).
The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.
Team Groww Digest