SINGAPORE - The civil trial of lawsuits brought by the liquidators of Hin Leong and HSBC Holdings against the oil trading firm’s embattled founder Lim Oon Kuin, better known as O.K. Lim, and his two children began on Thursday in the High Court.

The liquidators – Mr Goh Thien Phong and Mr Chan Kheng Tek – are seeking a court order to force the 81-year-old former oil tycoon, his son Evan Lim Chee Meng and daughter Lim Huey Ching to repay US$3.5 billion (S$4.7 billion) in alleged debt and US$90 million in dividends they allegedly paid themselves, even though their oil trading firm was insolvent.

In opening statements filed on behalf of the liquidators, Senior Counsel Cavinder Bull of Drew & Napier said the Lim family “dishonestly portrayed Hin Leong as a profitable, solvent company” by fabricating swaps trading gains to hide accumulated trading and other losses, creating fictitious trading profits, manipulating accounts through improper accounting entries and overstating the firm’s inventory.

HSBC Holdings, calling itself a “victim of brazen fraud”, alleged the defendants and the elder Lim’s former personal assistant, Madam Seng Hui Choo, “fabricated non-existent transactions” to get the bank to disburse US$111.7 million (S$150 million) to Hin Leong.

HSBC, which is represented by Senior Counsel Sarjit Singh Gill of Shook Lin & Bok, said in its opening statements that there were two discounting applications that had been fraudulently made by Hin Leong to obtain financing from the bank. “These are not inadvertent errors”, as portrayed by the defendants, Mr Gill told the court.

More than 60 witnesses are expected to be called in by the plaintiffs to testify in the trial, which is scheduled to run about 180 days. The present tranche of hearing dates will run till Nov 16.

The liquidators also alleged that the Lim family had breached their fiduciary duties as directors and engaged in fraudulent trading.

Hin Leong sustained net losses of about US$808.2 million in futures and swaps trading from fiscal years 2010 to 2020, which “were systematically concealed in Hin Leong’s audited financial statements by... the creation of fictitious swaps trades”, the liquidators said.

They also “located fabricated swaps trades tickets (there are in evidence a staggering 837), contracts and invoices relating to fictitious swaps trades, as well as forged banking documents such as inward remittance advices, and bank account statements”.

“The Lim family’s fingerprints are all over this massive body of evidence. O.K. Lim and Evan Lim’s names were stamped as approver and/or transactor on all the fabricated swaps trade tickets,” according to the liquidators.

Senior Counsel Davinder Singh and Mr Jaikanth Shankar of Davinder Singh Chambers, who are representing the elder Lim, said in his opening statements that Hin Leong must show that their client’s alleged breaches of fiduciary duties caused it to suffer losses of US$3.5 billion.

But Hin Leong “will not be able to do that because the US$3.5 billion is not a ‘loss’ that (it) suffered, but are liabilities that (it) allegedly incurred and are due to creditors... The loss is, therefore, the creditors’,” they said.

According to the elder Lim’s opening statements, the evidence of Hin Leong employees who claim to have been instructed by him “to create fictitious profits, overstate Hin Leong’s accounts and/or apply for financing on false premises should not be given weight because it is riddled with inconsistencies and not supported by the contemporaneous documents”.

Furthermore, Hin Leong’s “accounting records, management accounts and bank statements are incomplete, the creditors’ proofs of debt all set out alleged debts as at different dates”.

But Mr Bull told the court that “certain documents and retention policies were deleted or removed from company servers”.

According to the liquidators, Hin Leong’s former assistant IT manager Lim Chin had told them that the elder Lim instructed that accounting records earlier than Oct 31, 2016, were to be deleted.

“To achieve permanent deletion, Lim Chin instructed systems engineer Siow Kwee Keong to delete the IT system’s retention policies.

“The necessary inference is that the Lim family had purged these files in a last-ditch attempt to wipe out evidence before they had to turn Hin Leong over to the (then) interim judicial managers,” the liquidators said.

Lawyers for the elder Lim also claim Madam Seng and Ms Katherine Ong, a former senior accounts executive in Hin Leong’s treasury department, who have been subpoenaed by the liquidators to testify that they were instructed by the elder Lim to prepare fictitious documents, “have no credibility”.

Both Madam Seng and Ms Ong have shown themselves to be “untrustworthy witnesses” in a criminal trial involving the elder Lim that began in April, according to his opening statements.

Among other things, Madam Seng admitted to lying to a Commercial Affairs Department investigator in June 2020 about her recollection of circumstances relating to a transaction that is the subject of Lim’s criminal charges.

“Ms Ong, after she completed her evidence in the criminal trial, contacted other witnesses... who had not taken the stand yet, discussed her evidence with them... and coached them on what to say in an attempt to ensure that... there would consistency in their evidence”.

The elder Lim, who faces a total of 130 charges involving US$2.7 billion in alleged fraudulent loans disbursed, pleaded not guilty in April to three charges prosecutors proceeded on – two cheating charges and one of instigating forgery for the purpose of cheating.

The first tranche of Lim’s criminal trial concluded on July 19, while the next tranche is expected to start in late October.