Business

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.

Published

1 year ago

April 25, 2023

Admin

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.”

Photo credit: Manifold Times
Published: 25 April, 2023

Bunker Fuel

SIBCON 2024: Singapore bunker suppliers must provide e-BDN from 1 April 2025

Senior Minister of State Amy Khor also announced MPA will reduce the frequency of verification checks for mass flow meters from twice a year currently, to once a year, from 1 April 2025.

Published

3 hours ago

October 9, 2024

Admin

SIBCON 2024: Singapore bunker suppliers must provide e-BDN from 1 April 2025

From 1 April 2025, all bunker suppliers in the Port of Singapore will be required to provide digital bunkering services as a default, said Senior Minister of State for Transport and Sustainability and the Environment Amy Khor on Wednesday (9 October).

Khor said Singapore will be the first port globally to implement digital bunkering at scale. MPA launched the digital bunkering initiative on 1 November 2023, becoming the first port in the world to implement electronic bunker delivery notes (e-BDN).

“This initiative is expected to save the industry close to 40,000 man-days annually. In addition, MPA will introduce a centralised electronic Bunker Delivery Note record verification facility to enhance the transparency and integrity of transactions in bunkering operations,” she said in her speech at the 23rd Singapore International Bunkering Conference and Exhibition (SIBCON).

She emphasised that the Maritime and Port Authority of Singapore (MPA) will work closely with industry partners and the unions to digitalise and streamline processes to improve efficiency in our port; strengthen our capabilities for the bunkering of future fuels and encourage adoption of these fuels; and upskill our workforce to facilitate the green transition.

Khor also made the following announcements:

From 1 April 2025, MPA will reduce the frequency of verification checks for mass flow meters from twice a year currently, to once a year. Singapore was the first port globally to adopt mass flow meters in 2017, and this new move is expected to help the industry save approximately $300,000 annually.
From 1 January 2025, MPA will roll out two innovative AI applications, DocuMind and DocuMatch, developed in collaboration with cloud service providers to drive greater efficiency in our port. These are expected to accelerate certificate processing time from up to three days currently, to a few minutes for most transactions.
Two ammonia bunkering proposals by Mitsui and Fortescue-Equatorial Marine Fuels have been selected by the consortia for the next round of Request for Proposal to provide a low- or zero-carbon ammonia solution on Jurong Island for power generation and bunkering.
MPA will commit $50 million to support the implementation of the refreshed Maritime Singapore Green Initiative, to further encourage the early adoption of green fuels and technologies across the maritime industry.
Singapore will continue to strengthen international partnerships through initiatives like the Green and Digital Shipping Corridors (GDSCs) to enable the digitalisation and decarbonisation of shipping. On 9 October, MPA and the Shandong Provincial Transport Department will be signing the Singapore-Shandong GDSC at the sidelines of the 25th Singapore-Shandong Business Council co-chaired by Mr Chee Hong Tat, Minister for Transport and Second Minister for Finance, and Mr Zhou Naixiang, Governor of the Shandong Provincial Government.

Photo credit: Singapore Ministry of Transport
Published: 9 October, 2024

Mass Flowmeter

Singapore-based Metcore and LR team up for MFM certification service

Both launched an independent accredited certification service to certify the accuracy and reliability of bunker fuel quantity received via Mass Flow Meters.

Published

3 hours ago

October 9, 2024

Admin

Singapore-based MFM system measurement solutions provider, Metcore International Pte Ltd (Metcore), and classification society Lloyd’s Register (LR) on Tuesday (8 October) launched an independent accredited certification service to certify the accuracy and reliability of the quantity of fuel received via Mass Flow Meters (MFM).

The service provides an additional conformity assessment of the installed meters, positioned, used, maintained and continually certified to the ISO 22192:2021 standard.

The demand for greater accuracy in delivered bunker quantities, coupled with the need for greater transparency, security and process automation, is fuelling the widespread adoption of MFMs across the bunker industry. In 2017, the Maritime and Port Authority (MPA) of Singapore mandated the use of MFM for bunkering operations. SOHAR Port and Freezone has announced a mandate from the start of 2025 and the Port of Rotterdam and Antwerp-Bruges are also set to introduce mandatory use of MFMs in 2026.

To help address the concerns that shipowners and bunker buyers have with the use of MFM on bunker tankers, the LR-Metcore MFM certification service aims to minimise the likely causes of measurement error and ensure that the MFM system serviceability extends beyond its initial qualification at installation. Its post-approval conformity assessment program includes metering-data analysis to monitor crew competency to help maintain secure integrity for continual measurement performance.

In the event of a dispute, the service also offers an independent bunker delivery MFM digital data review as part of the investigation process, helping ensure all parties can carry out a detailed review of the data.

Lewis Cox, LR’s FOBAS Business Development Area Manager, said: “With the potential to eliminate bunker quantity disputes, minimise turnaround time and boost confidence in delivery data – particularly as ship operators seek to account for emissions from the fuel they consume – using Mass Flow Meters seems to be a win for all stakeholders.”

“But the reality of adopting them is not necessarily as straightforward. With the new LR-Metcore MFM certification service, bunkering stakeholders will have peace of mind that their installed meters are certified in conformity with internationally recognised standards for enhanced transparency and trust.”

Photo credit: Metcore International
Published: 9 October, 2024

LNG Bunkering

Seaspan Energy takes delivery of first LNG bunkering vessel

“Seaspan Garibaldi” will take first cargo and finalise commissioning in Vancouver before its first ship-to-ship bunkering in Long Beach, where Seaspan will bunker a series of vessels.

Published

3 hours ago

October 9, 2024

Admin

Seaspan Energy takes delivery of first LNG bunkering vessel “Seaspan Garibaldi”

Seaspan Energy on Monday (7 October) said it took delivery of its first LNG bunkering vessel, the Seaspan Garibaldi and is currently sailing to Vancouver.

Manifold Times previously reported that the vessel is the first of three 7,600m3 LNG bunkering vessels and it is named after Mount Garibaldi, or “Nch'ḵay̓”.

The Garibaldi will take first cargo and finalise commissioning in Vancouver before its first ship-to-ship bunkering in Long Beach, where Seaspan will provide Simultaneous Operations to bunker a series of vessels.

Following its first bunkering, the Seaspan Garibaldi will continue to provide low-carbon solutions to vessels on the West Coast of North America and will soon be joined by Seaspan Energy’s second LNG bunkering vessel, the Seaspan Lions (Ch’ich’iyúy Elxwíkn).

The Seaspan Garibaldi is 112.8 metres in length, 18.6 metres in width, 5 metres in draft, with a design speed of 13 knots.

CIMC Sinopacific Offshore & Engineering (CIMC SOE), a small-scale gas carrier shipyard in the world, was appointed to build all three LNG bunkering vessels.

Photo credit: Seaspan
Published: 9 October, 2024