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Singapore: High Court dismisses UniCredit Bank USD 37 million claim against Glencore over Hin Leong transaction

28 Oct 2022

Editor: The following article is a summary of the full 69-page judgement from the High Court of the Republic of Singapore. The complete document published on 21 October 2022 is available here.

UniCredit Bank on Friday (21 October) lost a USD 37 million (exact: USD 37,209,550.35) claim against Glencore Singapore in a transaction related to liquidated oil trader Hin Leong at the High Court of Singapore. 

The Milan-based banking group was claiming against Glencore over fraud or deceit by Glencore, a conspiracy between Glencore and Hin Leong to injure UniCredit by unlawful means, and unjust enrichment, amongst others.

Judge Andre Maniam J concluded the judgement by dismissing all of UniCredit’s claims against Glencore in regards to a letter of credit (LC) UniCredit issued on 29 November 2019 to Hin Leong to finance the purchase of some 150,000 metric tonnes (mt) of high sulphur fuel oil (HSFO) from Glencore. 

“Glencore was entitled to the payment which it received from UniCredit under the LC (letter of credit). Glencore did not defraud or deceive UniCredit; it did not conspire with Hin Leong to injure UniCredit; it was not unjustly enriched. UniCredit is not entitled to rescind the LC, or to recover the payment it made to Glencore,” he said.

“I award Glencore, as the successful party, costs to be assessed. I will address the quantum of those costs separately.”

In its conspiracy claim, Judge Maniam stated though UniCredit emphasised about how Hin Leong defrauded it, the claim failed as the bank was unsuccessful on an earlier fraud / deceit related allegation.

“What is left is a general plea that Hin Leong and Glencore conspired to defraud UniCredit,  but there is no evidence of any such conspiracy. To the extent that the conspiracy is based on the allegation that the Sale Contract was a sham or fictitious transaction, I have found that the Sale Contract was not a sham, and it was not fictitious,” he said. 

 “There is no evidence that Glencore knew, or ought to have known, that Hin Leong was misrepresenting to UniCredit that the goods were ‘unsold’ when in fact Hin Leong had sold them back to Glencore by the Buyback Contract. The dealings between Hin Leong and UniCredit were not Glencore’s responsibility or concern.

“Accordingly, I dismiss UniCredit’s conspiracy claim as well.”

Background

On 22 November 2019, UniCredit granted Hin Leong banking facilities in the sum of USD 85 million, which Hin Leong could use to obtain LCs to finance the purchase of oil, petroleum products and other commodities. 

On 27 November 2019, Hin Leong applied to UniCredit for an irrevocable LC in the sum of USD 37,209,550.35 to finance the purchase of some 150,000 mt of high-sulphur fuel oil (the goods). 

Hin Leong contracted to purchase the goods from Glencore the same day (the Sale Contract). The Sale Contract stated that the goods would be shipped on board the vessel MT New Vision and delivered to Singapore in the period of 18 to 25 December 2019. 

Glencore, however, agreed to simultaneously buy back the goods from Hin Leong (the Buyback Contract).  Hin Leong and Glencore agreed that at 0001 hours on 2 December 2019, title to the goods would pass from Glencore to Hin Leong, and immediately back to Glencore.

On 28 November 2019, Hin Leong submitted to UniCredit a revised LC application. UniCredit asked Hin Leong for documents including the “Purchase and Sales contracts and/or a deal recap”.  Hin Leong replied the same day, saying that its LC application was for “Unsold cargo” and providing a copy of the Sale Contract.  However, the goods were not “unsold cargo” – Hin Leong had already contracted to sell the goods back to Glencore. 

On 13 April 2020, UniCredit issued a notice of demand to Hin Leong, demanding repayment of, among other things, the outstanding advances and accrued interest arising out of UniCredit’s financing of Hin Leong’s purchase of the goods from Glencore. By this time, Hin Leong had requested a meeting with its lenders.

On 14 April 2020, UniCredit asked Glencore if it had the original bills of lading (BLs) referred to in the LC; Glencore replied that it did not have the original BLs. 

Hin Leong was placed under interim judicial management on 27 April 2020, under judicial management on 7 August 2020, and into liquidation on 8 March 2021.

UniCredit thus found itself without repayment from Hin Leong, without the goods, without the BLs, and without security over the goods or the BLs.

Related: Singapore High Court concedes interim judicial management to Hin Leong Trading
Related: Singapore: Hin Leong Marine International liquidators issue notice of dividend
Related: Singapore: Notice of intended dividend announced for Hin Leong Marine International
Related: Lim family aims to wind up Hin Leong Trading subsidiary, Hin Leong Marine
Related: Lim family files application to wind up Hin Leong Trading subsidiary, Hin Leong Marine
Related: Judicial Managers of Hin Leong Trading Pte Ltd file for winding up order
Related: Hin Leong judicial managers to hold meeting of creditors to discuss fees incurred
Related: Hin Leong judicial managers and legal firms could rack up SGD 17.3 million in fees
Related: Bank of China takes legal action against BP Plc and Lim family to recover $312.9 million
Related: Hin Leong Trading founder denies allegations of forgery put forward by HSBC
Related: HSBC takes Lim family and Hin Leong employee to court to recover USD 85.3 million
Related: Report: Hin Leong Trading founder gave instructions to hide USD 800 million losses
Related: Argus Media: Singapore’s Hin Leong founder charged with forgery

 

Photo credit: Manifold Times
Published: 28 October, 2022

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