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Singapore: Dynamic Oil Trading claiming USD 103 million from Deloitte & Touche over alleged negligence

Deloitte issued a ‘clean, unqualified opinion’ for DOT’s financial year ended 31 December 2013 on 31 March 2014 in its Audit Report and did not raise any issues or concerns regarding DOT’s financial statements.

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OW Bunker and Dynamic Oil edited

Lawyers representing Dynamic Oil Trading (Singapore) Pte Ltd (in creditors’ voluntary liquidation and receivership) (DOT) and Deloitte & Touche LLP (Deloitte) were scheduled to be present at the General Division of The High Court of the Republic of Singapore on 11 April 2023.

DOT was looking to claim USD 103 million from Deloitte, which was engaged to perform audit of DOT’s financial statements ending 31 December 2013, due to alleged negligence, according to the Statement of Claim (dated January 2020) obtained by bunkering publication Manifold Times.

Background of KMPG involvement

KPMG Services Pte. Ltd. (KPMG) was appointed as joint and several provisional liquidators of DOT on 18 November 2014 and appointed as joint and several liquidators of DOT on 13 February 2015.

Prior to the development, Deloitte issued a “clean, unqualified opinion” for DOT’s financial year ended 31 December 2013 on 31 March 2014 in its Audit Report and did not raise any issues or concerns regarding DOT’s financial statements, highlighted KPMG in the Statement of Claim.

As such, DOT was unaware of misconduct by any of its senior management, officers, employees, and agents for its financial year ending 31 December 2013. 

“Based on this, DOT had, at all material times, been led to believe Deloitte did meet its audit obligations in respect of DOT for the 2013 Audit,” stated KPMG.

Issues between DOT, Petrotec and Tankoil

Petrotec Pte. Ltd. (Petrotec) was DOT’s primary trading partner from October 2012 to March 2013 and Tankoil Marine Services Pte Ltd (Tankoil) was its primary trading partner from March 2013 to early November 2014; both firms were collectively involved in approximately 85% of DOT’s business in 2013.

Tankoil was gradually wound up by DOT and ING Bank N.V. on 31 July 2015 and DOT has not been able to recover the overdue net balance of Tankoil’s liability to DOT amounting to approximately USD 156.3 million as of 18 November 2014 (the date when DOT entered into provisional liquidation).

KPMG, amongst discoveries, found a delay in the booking of invoices raised by DOT to Tankoil in DOT’s financial management systems giving rise to a misleading picture of DOT’s credit exposure in relation to Tankoil.

“Deloitte failed to carry out the necessary inquiries and investigations which would have led it to uncover the nonbooking or delayed booking of DOT’s invoices to Tankoil, which in turn would have enabled Deloitte to form the view that DOT did not keep proper accounting or other records and/or that its financial statements were not consistent or supported by DOT’s accounting or other records,” it stated.

When DOT entered provisional liquidation on 18 November 2014, DOT’s trade receivables amounted to approximately USD 330.5 million, of which approximately USD 222.9 million was due from Tankoil – where the gross balance due from Tankoil amounted to almost 70% of DOT’s total trade receivables.

“DOT’s trade receivables from Tankoil kept increasing in the course of 2013. This should have alerted Deloitte to make further inquiries and/or request further audit evidence as to how DOT was managing these trade receivables and why these trade receivables were not being collected,” said KPMG.

“Deloitte failed to raise issues or concerns with DOT with respect to the stated trade receivables and issued a clean, unqualified opinion.”

According to KPMG, a general trading pattern existed between Tankoil and DOT where Tankoil consistently charged DOT a unit price for bunker oil less than the unit price DOT charged Tankoil for bunker oil; essentially making a loss within this trading arrangement.

KMPG auditors further noted Lars Møller, the former managing director and finance manager of DOT, being charged with aggravated criminal breach of trust under the Danish Criminal Code on 12 July 2017 and convicted of the same on 30 May 2018 by the Court of Aalborg in Denmark. His conviction was enhanced by the 1st Division of the Danish Western High Court on 14 June 2019 to that of fraudulent abuse of a particularly gross nature.

“Had DOT been aware of its true financial position and/or the weaknesses in the design or operation of the accounting and internal control system, the full extent of the impairment of receivables due from Tankoil and/or the unlawful actions by Lars and/or any other officer, employee or agent of DOT would have been discovered earlier and in any event before November 2014 (when the OWB Group collapsed globally) or any earlier date on which DOT knew the extent of impairment of receivables and/or DOT would not have carried on trading with Tankoil and/or DOT’s shareholders would have placed DOT in liquidation earlier and would have avoided incurring further substantial amounts of unpaid receivables,” stated KPMG in the legal document.

KPMG auditors estimated DOT incurred a loss of approximately USD 103 million, being the difference between:

  • Approximately USD 127 million, being DOT’s net liabilities (excluding irrecoverable Tankoil balances) as at the date of liquidation on 18 November 2014; and
  • Approximately USD 24 million, being DOT’s net liabilities (excluding irrecoverable Tankoil balances) as at 31 December 2013 as stated in reflected in the audited accounts dated 31 March 2014.

In November 2018, Deloitte was the subject of investigations led by the Danish Business Authority regarding “significant deficiencies in the work performed” in the auditor’s statements of the O.W. Bunker group.

Stakeholders of the defunct bunkering firm O.W. Bunker A/S (currently in insolvency proceedings) launched a similar claim against Deloitte for damages over “breach(es) of their contractual obligation(s) and/or dut(ies) in their audit of the financial statements of Dynamic Oil Trading (Singapore) Pte Ltd (now in creditors’ voluntary liquidation and receivership), thereby resulting in the Plaintiffs suffering loss and damage.”

Related: O.W. Bunker USA and affiliate O.W. Bunker North America reaches USD 23.5 million settlement with creditors
Related: Dynamic Oil Trading liquidators publish notice of dividend to unsecured creditors
Related: Dynamic Oil Trading liquidators plan to declare interim dividend to unsecured creditors
Related: Singapore: O.W. Bunker A/S stakeholders take Deloitte & Touche LLP to court over alleged negligence
Related: Danish Business Authority finds fault with OW Bunker auditors
RelatedO.W. Bunker verdict: Prison sentence for Lars Moller
RelatedOW Bunker: High Court explains reviewed judgement of Lars Moller
RelatedOW Bunker: Public Prosecutor planning to review judgement
RelatedOW Bunker: Judgement to be appealed
RelatedOW Bunker verdict: Prison sentence for Lars Moller
RelatedOW Bunker: Verdict to be out on Wednesday
RelatedDynamic Oil trial: Lars Moller provides testimony
RelatedAll eyes on Dynamic Oil criminal trial at Denmark
RelatedDynamic Oil criminal trial set to begin in April

 

Photo credit: Manifold Times
Published: 25 April, 2023

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Fuel Testing

Singapore: CTI-Maritec shares testing protocols ahead of mandatory enhanced bunker fuel checks

In light of mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, CTI-Maritec shares recommendations for fuel testing protocols, primarily focused at COCs and SAN detection for bunker supply in Singapore.

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Louis Reed from Unsplash

With mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, bunker fuel testing and marine surveying business Maritec Pte Ltd (CTI-Maritec) has published a newsletter providing recommendations on vital pre-emptive fuel testing measures vessels should be taking as part of their routine fuel testing and also recommendations on optimal testing options available when deep-dive analysis is required to determine a root cause: 

Introduction

On 8 February 2024 the Maritime and Port Authority of Singapore (MPA) issued a Port Marine Circular No 3 of 2024 regarding the implementation of enhanced testing parameters for marine fuel batches intended to be delivered as bunkers in the Port of Singapore in addition to the existing quality assurance measures.

In accordance with the MPA’s Port Marine Circular No 3 of 2024, from 1 June 2024 onwards, bunker suppliers in the Port of Singapore must ensure that:

  • Residual & Bio-residual bunker fuel do not contain Chlorinated Organic Compounds (COC) above 50mg/kg and are free from inorganic acids.
  • COC must be tested using the EN 14077 accredited test method and shall be reported in the “Certificate of Quality” (COQ) provided to receiving vessels.
  • Inorganic acids must use the ASTM D664 accredited test method as prescribed in ISO 8217 and the Strong Acid Number (SAN) (in addition to the Total Acid Number (TAN) shall be reported in the COQ (i.e. SAN = 0) provided to receiving vessels. For distillate / bio-distillate bunker marine fuel batches, SAN must be tested as per ASTM D664 test method and reported in the COQ.
  • Residual marine fuels are free from polystyrene, polypropylene & polymethacrylate. These can be tested by filtration, microscopic examination, & Fourier-Transform Infrared spectroscopy analysis.

Testing Recommendations in line with MPA Enhanced Parameters to Protect Your Vessels:

In view of the above, CTI-Maritec recommends fuel testing protocols as depicted in the chart below (as routine pre-emptive measures and/or for deep dive requirements to detect the root cause) to help safeguard vessel health.

Our recommendations are primarily focused at COCs and SAN detection for bunker supply in Singapore, while recommendations for testing Polymers are advised for requirements of reported problem cases or when highly abnormal GCMS findings of chemical compounds like Styrene, DCPD and Indene are detected.

COC & SAN GCMS testing Packages A to E

Related: Singapore: CTI-Maritec publishes whitepaper on upcoming mandatory enhanced bunker fuel tests
Related: Singapore: Marine fuel quality testing agencies applaud move for mandatory enhanced bunker fuel tests
Related: Singapore: MPA tightens testing parameters to reduce contaminated bunker fuels
Related: MPA: Glencore and PetroChina supplied contaminated bunkers to about 200 ships in the Port of Singapore

 

Photo credit: Louis Reed from Unsplash
Published: 29 May 2024

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Methanol

VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Firm was appointed by OCI Methanol Europe to conduct a quantity and quality assessment of a methanol bunker fuel delivery to “Eco Maestro” in Singapore.

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VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Marine fuels testing company VPS on Tuesday (28 May) said it was appointed by OCI Methanol Europe, part of the OCI Global Group, to conduct a quantity and quality assessment of a methanol fuel delivery to Eco Maestro in Singapore.

Captain Rahul Choudhuri, President Strategic Partnerships, VPS, said VPS survey experts Rafael Theseira and Muhd Nazmi Abdul Rahim were at hand during the methanol bunkering to ensure the 300 metric tonnes of methanol transfer was carried out smoothly, having been involved in the first methanol bunkering a year ago. 

Manifold Times recently reported X-Press Feeders, Global Energy Trading Pte Ltd (GET), and PSA Singapore (PSA) successfully completing the first simultaneous methanol bunkering and cargo operation (SIMOPS) in Singapore.

A X-Press Feeder container vessel, Eco Maestro, on its maiden voyage from Asia to Europe was successfully refuelled with close to 300 mt of bio-methanol by GET, a MPA licensed bunker supplier, using MT KARA

The ISCC-certified bio-methanol used for the SIMOPS was produced by green methanol producer OCI Global and supplied via GET, a ISCC-certified supplier.

Captain Choudhuri said the role of the marine, petroleum or bunker surveyor has evolved over the years in shipping and maritime affairs, but the principles have not - and that is to provide independent assessment of the quality and quantity of the product transfer. 

“This may seem obvious but this quality and quantity control is crucial to avoid commercial discrepancies, shortages or fraud,” he said.

“Safety training is critical and we have been on top of this having completed the required MPA fire-fighting course and the IBIA Methanol training course. We will work more with the Singapore Maritime Academy for trainings in future,” he added.

In August last year, Singapore-headquartered independent common carrier X-Press Feeders launched its first ever dual-fuel vessel Eco Maestro in China.

Manifold Times previously reported VPS stating it was the first company to complete a methanol bunker quantity survey (BQS) operation in Singapore on 27 July last year.

VPS was appointed by Maersk and Hong Lam Marine Pte Ltd, to undertake the very first bunker quantity survey (BQS) of a methanol fuel delivery, supplied by Hong Lam to the Maersk vessel on its maiden voyage to Europe. 

Related: First SIMOPS methanol bunkering operation completed in Singapore
Related: VPS completes quantity survey on Singapore’s first methanol bunkering op
Related: Singapore bunkering sector enters milestone with first methanol marine refuelling op
Related: X-Press Feeders launches its first methanol dual-fuel vessel “Eco Maestro” in China

 

Photo credit: VPS
Published: 29 May 2024

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LNG Bunkering

Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Agreement builds on the success of the previous contract Gasum has had with Equinor; Gasum’s bunker vessels “Coralius”, “Kairos” and “Coral Energy” will be used for the bunkering operations.

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Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Nordic liquefied natural gas (LNG) bunker supplier Gasum on Tuesday (28 May) said it signed a long-term contract with Norway-based global energy company Equinor whereby Gasum continues to supply LNG to Equinor’s dual-fuel chartered fleet of vessels. 

The agreement builds on the success of the previous contract Gasum has had with Equinor. Gasum’s bunker vessels Coralius, Kairos and Coral Energy will be used for the bunkering operations.

The agreement also includes additional support services such as cooling down and gassing up, which has also been a part of Gasum’s previous collaboration with Equinor. 

Gasum has organised three separate LNG cool down operations for Equinor in Skagen so far this year.

Both Gasum and Equinor have committed to sustainability goals to enable a cleaner energy future. Equinor’s ambition is to become a net-zero emissions energy company by 2050.

Using LNG in maritime transport means complete removal of sulfur oxides (SOx) and particles, and reduction of nitrogen oxides (NOx) emissions of up to 85 percent as well as a reduction in CO2 emissions by at least 20%. LNG is interchangeable with liquefied biogas (LBG/bio-LNG), which reduces carbon dioxide emissions by 90% compared to conventional fuel such as marine gasoil (MGO).

With LNG and bio-LNG the maritime industry can reduce emissions already today, instead of waiting for future solutions. Gasum’s strategic goal is to bring yearly seven terawatt hours (7 TWh) of renewable gas to market by 2027. Achieving this goal would mean combined carbon dioxide reduction of 1.8 million tons per year for Gasum’s customers.

Related: Equinor Energy AS extends LNG bunkering agreement with Gasum
Related: Gasum expands LNG bunkering business to ARA region through partnership with Equinor

 

Photo credit: Gasum
Published: 29 May 2024

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